Student loan payments: get advice and actual numbers here Forum

[Anonymous User]

2L here, so I owed about $27k in grad plus with 7.9% interest (out of $100K debt currently), the rest are either unsubsidized or grad plus with 5.4-6.4% interest. I do not need to take out loan in 3L year (SA gig +scholly+parental contribution).

Question is: in 3L year, should I take out the max of my unsubsidized loan ($20.5K at 5.4% interest) to put a dent into that $27K plus 7.9% interest? Unsure whether its smart to take out debt at lower interest to pay off debt at higher interest.

Edit: I think they charge something like 4% for taking out new debt

[joblawl]

2L here, so I owed about $27k in grad plus with 7.9% interest (out of $100K debt currently), the rest are either unsubsidized or grad plus with 5.4-6.4% interest. I do not need to take out loan in 3L year (SA gig +scholly+parental contribution).

Question is: in 3L year, should I take out the max of my unsubsidized loan ($20.5K at 5.4% interest) to put a dent into that $27K plus 7.9% interest? Unsure whether its smart to take out debt at lower interest to pay off debt at higher interest.

Edit: I think they charge something like 4% for taking out new debt

I'm not sure about this, but I don't think Stafford loans have the 4% initiation fee. This is a straight up math problem. If there is no 4% initiation fee, it's a no-brainer. Taking out the stafford loan to pay off the grad plus loan is a great idea.

If there is a 4% fee, do the math. Run the numbers, under both scenarios, with a few different estimates on how much time it will take to pay off the loans. If you'll be able to pay off the loan really fast, it's not worth the fee. But there will be breaking point, it might be like 3 years (I don't really have an idea what it will be), and if it takes longer than that to pay off your loans, it's worth it to use the Stafford loan to pay off the Grad plus.

I bet if you do the math and realistically assess how long it will take you to pay off the loans, you'll find that it's worth it to take the fee and pay the lower interest rate.


Edit: "Stafford loans currently have up to a 1.0% origination fee for each loan disbursement." http://www.staffordloan.com/stafford-loan-info/faq/

Do it. Borrow from Peter to pay Paul. It will be cheaper and there is no added risk.

[Tiago Splitter]

Stafford Loan origination fees are currently 1%.

[Anonymous User]

2L here, so I owed about $27k in grad plus with 7.9% interest (out of $100K debt currently), the rest are either unsubsidized or grad plus with 5.4-6.4% interest. I do not need to take out loan in 3L year (SA gig +scholly+parental contribution).

Question is: in 3L year, should I take out the max of my unsubsidized loan ($20.5K at 5.4% interest) to put a dent into that $27K plus 7.9% interest? Unsure whether its smart to take out debt at lower interest to pay off debt at higher interest.

Edit: I think they charge something like 4% for taking out new debt

I'm not sure about this, but I don't think Stafford loans have the 4% initiation fee. This is a straight up math problem. If there is no 4% initiation fee, it's a no-brainer. Taking out the stafford loan to pay off the grad plus loan is a great idea.

If there is a 4% fee, do the math. Run the numbers, under both scenarios, with a few different estimates on how much time it will take to pay off the loans. If you'll be able to pay off the loan really fast, it's not worth the fee. But there will be breaking point, it might be like 3 years (I don't really have an idea what it will be), and if it takes longer than that to pay off your loans, it's worth it to use the Stafford loan to pay off the Grad plus.

I bet if you do the math and realistically assess how long it will take you to pay off the loans, you'll find that it's worth it to take the fee and pay the lower interest rate.


Edit: "Stafford loans currently have up to a 1.0% origination fee for each loan disbursement." http://www.staffordloan.com/stafford-loan-info/faq/

Do it. Borrow from Peter to pay Paul. It will be cheaper and there is no added risk.

Awesome, thank you sir. I thought it makes sense but again, I'm unsure when it comes to loan (i.e. hidden fee).

[BuckinghamB]

Tried to ask this in the personal finance thread, but didn't get an answer. Anyone have an opinion on this?

This summer I'm lucky enough to be to be living with family for my SA, so I'll have minimal COL during the summer.
Any thoughts on whether to make substantial interest payments with the extra summer money vs. using it for COA and avoiding origination fees for the following school year?

It seems like most of what I've read on TLS suggests the latter is what most people do, but the capitalized interest makes me cringe (right now it increases by like $30 per day). Granted, if I pay down interest I'd just have to re-borrow that amount at whatever the student loan interest rate would be for next year. But if next year's rate is less than the 6.8%-7.9% range, wouldn't it make more sense to pay my highest interest loans down ASAP?

Btw, all my loans are federal. I have basically no finance background, so I apologize if this is a dumb question. Any advice is greatly appreciated. Thanks!

[wbaseball4ever]

This summer I'm lucky enough to be to be living with family for my SA, so I'll have minimal COL during the summer.
Any thoughts on whether to make substantial interest payments with the extra summer money vs. using it for COA and avoiding origination fees for the following school year?

I'd much rather keep the money for COL. If you use it to pay back loans and then run out of cash during the school year, you'll probably have already maxed out your federal loans. You'll be taking a private loan at a very high rate. Plus, you'll have origination fees.

If you're positive you'll be able to cover COL, start paying it back, but it doesn't make sense to do that if you're just going to have to take another loan out to cover COL.

[SleekFire]

Figured I'd post this to help some of you. I took advantage of the offer below. credit card balance transfer to 4.99% for the life of the transfer w/ no BT fees. Worked out great for me, but be careful not to "max out" the card to minimize the effect on your credit score.

Also, remember that federal loans have certain protections (IBR, forbearance, etc). You will lose that on the amount you transfer.

Note: you must become a penfed member which requires eligibility or a one time $20 donation.


https://www.penfed.org/Penfed-Promise/?WT.ac=1339

[username201]

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[username201]

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[withoutapaddle]

Holy hell that's a large monthly payment

I can't imagine the monthly payment for a JD/mba

[Orlandipo]

Debt: 155k at the end of grace period, which is a 72k scholarship at T25 school, taking out full COL.
Split: all over the place, about half at 7.9%
Plan: 25 standard, for right now
Min. Payment: $1,253 a month
Salary: $62,000 (roughly)

Quick budget breakdown:
- After medical insurance + 401k contributions + withholding I'm taking home 3,400/month.
- After loan payments I'm down to $2,150/month for all costs
- After rent/util of $750/month, that leaves $1,400 for gas, food, cell phone, cable, internet, tithing (hurts), car insurance, whatever you're trying to save, and literally anything else that you need in life.

[Anonymous User]

I can't imagine the monthly payment for a JD/mba

JD/MBA program grad. Total debt is about $263k @ an average rate of 6.35% making for a payment right around $3k/month on the 10 year plan. Going to do PAYE for as long as possible to direct all of my extra $ to the 7.9% loans.

[Anonymous User]

I can't imagine the monthly payment for a JD/mba

JD/MBA program grad. Total debt is about $263k @ an average rate of 6.35% making for a payment right around $3k/month on the 10 year plan. Going to do PAYE for as long as possible to direct all of my extra $ to the 7.9% loans.

Which loans are hit at 7.9%? Private?

[A. Nony Mouse]

Aren't GradPLUS loans around that?

[Anonymous User]

Aren't GradPLUS loans around that?

Grad plus that originated before the last student lending legislation went through are 7.9%

Now grad plus are 6.41%

[09042014]

Aren't GradPLUS loans around that?

Grad plus that originated before the last student lending legislation went through are 7.9%

Now grad plus are 6.41%

Man I really got assfucked by the Bush admin

[Anonymous User]

Aren't GradPLUS loans around that?

Grad plus that originated before the last student lending legislation went through are 7.9%

Now grad plus are 6.41%

And they stay at 7.9% forever? That doesn't seem right...

[09042014]

Aren't GradPLUS loans around that?

Grad plus that originated before the last student lending legislation went through are 7.9%

Now grad plus are 6.41%

And they stay at 7.9% forever? That doesn't seem right...

It's not right but it's accurate.

[Tiago Splitter]

Aren't GradPLUS loans around that?

Grad plus that originated before the last student lending legislation went through are 7.9%

Now grad plus are 6.41%

Man I really got assfucked by the Bush admin

They now vary each year so grads five or ten years from now will be talking about the assfucking obama delivered them. i just need em to stay low one more year.

[Anonymous User]

Aren't GradPLUS loans around that?

Grad plus that originated before the last student lending legislation went through are 7.9%

Now grad plus are 6.41%

Man I really got assfucked by the Bush admin

They now vary each year so grads five or ten years from now will be talking about the assfucking obama delivered them. i just need em to stay low one more year.

So a grad plus you take out your 1L could be at a different interest rate than your 2 or 3L?

[JenDarby]

So a grad plus you take out your 1L could be at a different interest rate than your 2 or 3L?

Yep.

1L/2L loans:

Grad Plus - 7.9%
Direct Subsidized and Unsibsidized - 6.8%

3L loans:

Grad Plus - 6.4%
Direct Unsibsidized - 5.4%

[Anonymous User]

So a grad plus you take out your 1L could be at a different interest rate than your 2 or 3L?

Yep.

1L/2L loans:

Grad Plus - 7.9%
Direct Subsidized and Unsibsidized - 6.8%

3L loans:

Grad Plus - 6.4%
Direct Unsibsidized - 5.4%

So how is the interest rate determined?

[hous]

Debt - 50k - Instate tuition at sticker over 3 years. I had about 8k saved up pre-law school that I used up and I worked throughout law school.
Income - Will be 65-70k
Payments - Will be making around 3k a month. Luckily my house and car are paid for and I dont plan on replacing either anytime soon.

[bk1]

So how is the interest rate determined?

It's tied to the 10 year treasury.

[Anonymous User]

So how is the interest rate determined?

It's tied to the 10 year treasury.

Okay, just read about it. Scary. Thanks for the info!