Student loan payments: get advice and actual numbers here Forum

[XxSpyKEx]

But are they going up by like 3-4% in the next few years to moot the endeavor? Wouldn't that be a huge jump?

I've interrogated everyone I know in the banking industry (IB doods, HF doods, PE doods and VP level corporate banking doods). The unanimous response has been that, given a payoff date in 3-4 years and considering I'm paying about 8% net, I would be a 'tard not to refi at a 4% variable.

Probably not going to be at 8% in the next 3-4 years, but who knows, anything is possible. Obviously, if you're already at 8%, it makes a lot of sense to refinance at 4%, all things being equal.

Obviously, you never know what's going to happen, but on a short term repayment, what is the argument against refi?

If you can actually repay the entire loan (or close to it) in 3-4 years, then there really isn't a great argument against refinancing. But I think it takes some balls to refinance $250k in nondischargable debt with a private lender, if you're a recent grad just about to start in biglaw. There's a huge safety net you lose by refinancing with a private lender, such as loss of long-term forbearance, unemployment deferment, only simple interest while in deferment, long-term PAYE, loan forgiveness, and PSLF. I mean even if you repay $50k /year towards your loans (which is more than what most people in NYC biglaw are going to do), you're still going to have well over $100k left after 3 years at which point you might get canned/forced to leave/rage quit biglaw and your salary is going to be a lot lower at your next job. (I.e. it's not going to be easy to repay that 6 figure debt without biglaw.) Personally, I think the loss of PLSF is significant for anyone who might want to work for fed government a few years out, because that's tax-free loan forgiveness with merely making 10% PAYE payments for 10 years (and those payments would largely be paid be a LRAP program for most people who went to t14s). I also think that there's a certain value to having the money invested, rather than a somewhat lower student loan balance (because you can always use that money to repay your loans if you get 5 years out and biglaw is looking like it's going to be a long-term thing for you). I'm sure zweitbester will jump in here disagreeing with this and advocating sofi (maybe he is a paid promoter?), but that's my 2 cents.

[Big Shrimpin]

I agree. I have 125K left clicking over to 3rd year biglaw this January.

Obvi worried about a 4/5th year stealth, but the 15-20K potential savings over the remaining repayment for me means lady shrimpin could get dat diamond or we could put it towards a down payment on a place.

[Anonymous User]

Going back to when this thread was about paying off debt. Seemed like the average debt was slightly north of $150K. However, on TLS there are numerous claims that +$250K is a normal debt, but I just don’t see it on this thread or IRL. I am not suggesting that no one has a high ticket tuition, but I doubt if it is as widespread as many claim it is.

Speaking for my T14, 95%+ of the young peoples' parents clearly pay for either all or a good chunk. The few old people either have Yellow Ribbon or banking/consulting savings or something. Then scholarships.... Seemingly all the K-JDs on TLS are just sooo independent from their parents but that is definitely not how it is irl. I mean shit half of em live in $1500-2k+/mo. apartments, loans would not even stretch far enough to do that

I'm a 3L, received no help from my parents, and barring some disaster this spring will have ~150k upon graduation. I suspect the 250k number is overblown for several reasons.

First, if you look up the calculations used to arrive at that figure, it assumes significant undergrad debt (I'm looking at Paul Campos' calculations, to be specific). If you saved on undergrad debt, already you are better off.

Most students also don't live alone, cutting rent payments significantly (as well as other expenses, like internet and utilities).

Many students get some kind of part time job, even if it's from the school itself (such as a TA/RA position, or even just sitting at the library circulation desk). Even if these are low paying, say just $300/month, the job will cut your debt by $10k+ over a 3 year period.

If you score a biglaw SA you can use the proceeds to fund living expenses your whole third year, again cutting 15-20k off your debt (just remember to get the tax refund). Granted, this is less relevant outside of the T14, but TLS basically says only go to the T14 anyway.

Also, just because you weren't offered a grant/scholarship upfront does not mean you never get one. I know someone who worked for 2 years between undergrad and attending S. Her salary kept her from getting any need based aid her first year, but when she reapplied her second year, the calculation was then based on her nonexistent 1l income and she suddenly qualified for a huge grant (30k range). I've had a similar experience (not at S), with my grant increasing each year, though not nearly as dramatic.

Finally, Campos' calculation also involved compounding interest on loans while you're still in school, so if you can save money your 1l year (from a roommate, post-college summer job, whatever), you will come out with even less debt because there is no interest to compound on money you never borrow.

Now, I'm sure that 250k in debt happens, but you need to keep in mind that roommates/summer jobs/part time jobs/grants/scholarships/etc. mean this won't be the reality for many people, even without parents footing the bills.

Ehh I don't know. I have $240k in debt ($220k from CLS WITH 45k scholly) + 20k UG debt outstanding. I had an RA position all three years, worked biglaw my 2L summer, lived with roommates all three years (my first year in an 6x10 room whee!). You cannot underestimate the COL of Manhattan. It is insane. Thank goodness for Biglaw, but please watch out for NYC living costs. I have multiple friends in the same boat. We were all reasonable people.

[Old Gregg]

I'm sure zweitbester will jump in here disagreeing with this and advocating sofi (maybe he is a paid promoter?), but that's my 2 cents.

A cheap shot, to be sure. I'm a paid promoter of common economic sense. Of course, everyone's circumstance is very different, so "refinance with SoFi" isn't always the answer. My general stance on these things is "refinance where you can get the lowest interest rate possible." If it's going to be a variable rate, try also to get as low a ceiling as possible. If Common Bond is doing that for you, use them. If SoFi is doing that for you, use them. If DRB is doing that for you, use them.

When I took out loans for law school, Chase was still providing private student loans. My variable rate on those went to around 1.7% before I paid them off, so it really just varies from lender to lender and based on the quality of your credit.

In my opinion, if you can get an interest rate in mid-2%, every dollar above the minimum payment is a waste. Yeah, I get the general paranoia about getting shitcanned from biglaw, but I don't get the general paranoia that one wouldn't be able to earn at least $100,000 a year thereafter. That salary is more than enough to service this debt.

[Anonymous User]

I'm sure zweitbester will jump in here disagreeing with this and advocating sofi (maybe he is a paid promoter?), but that's my 2 cents.

A cheap shot, to be sure. I'm a paid promoter of common economic sense. Of course, everyone's circumstance is very different, so "refinance with SoFi" isn't always the answer. My general stance on these things is "refinance where you can get the lowest interest rate possible." If it's going to be a variable rate, try also to get as low a ceiling as possible. If Common Bond is doing that for you, use them. If SoFi is doing that for you, use them. If DRB is doing that for you, use them.

When I took out loans for law school, Chase was still providing private student loans. My variable rate on those went to around 1.7% before I paid them off, so it really just varies from lender to lender and based on the quality of your credit.

In my opinion, if you can get an interest rate in mid-2%, every dollar above the minimum payment is a waste. Yeah, I get the general paranoia about getting shitcanned from biglaw, but I don't get the general paranoia that one wouldn't be able to earn at least $100,000 a year thereafter. That salary is more than enough to service this debt.

I agree with this. Maybe I'm just naive, I'm just a junior associate after all, but I find it hard to believe that even if you get forced out of biglaw at year 3 or 4 you can't find a job that pays you pretty good money, i.e. close to 6 figures or above. Having the credentials to get biglaw in a major city and working that job for a few years = being able to land on your feet pretty comfortably. At my firm I'm not aware of anyone who left and isn't making legit money unless they decided to do so (public interest-y stuff). There may be folks here who have a different experience, and if so please speak up, but I don't think it's completely unreasonable to expect an income that could service 100k in debt even after you leave biglaw as a 4th/5th year.

[Big Shrimpin]

COPPED DAT 3.1% variable from SoFi YNY!

[Old Gregg]

COPPED DAT 3.1% variable from SoFi YNY!

good for you. is that including the autopay discount (which would make it 2.85%)?

[Big Shrimpin]

COPPED DAT 3.1% variable from SoFi YNY!

good for you. is that including the autopay discount (which would make it 2.85%)?

Na 3.41 w/o but gonna autopay.

FYI re autopay if it hasn't already been said - you can change your autopay amount by month. So I like to pay 3.5K/mo which is going to be way above my min but if I wanted to pay min or more you apparently just fill out a form and that payment amount will roll into the next month. Very convenient.

[Old Gregg]

frankly, i think 3.1% interest is low enough to the point where you should just pay min payments. if you crunch the numbers, after a 10 year term, the total payout is only slightly larger than paying it all off now. plus, you get extra liquidity from saving your cash.

if you're afraid of getting shitcanned, youll at least be able tof ind a job that can service the debt payments. but if not, you'll have a ton of savings laying around that you can use to throw at it. i just sort of view it as a win win.


i have a friend who did nyc biglaw and managed to pay off all her debt after 2 years. she then got fired. she has zero money saved up and no debt. not sure whether thats preferable to being fired with like $80k of debt and $80k saved up.

[Big Shrimpin]

frankly, i think 3.1% interest is low enough to the point where you should just pay min payments. if you crunch the numbers, after a 10 year term, the total payout is only slightly larger than paying it all off now. plus, you get extra liquidity from saving your cash.

if you're afraid of getting shitcanned, youll at least be able tof ind a job that can service the debt payments. but if not, you'll have a ton of savings laying around that you can use to throw at it. i just sort of view it as a win win.


i have a friend who did nyc biglaw and managed to pay off all her debt after 2 years. she then got fired. she has zero money saved up and no debt. not sure whether thats preferable to being fired with like $80k of debt and $80k saved up.

Hmmmm. Maybe I'll just pay a bit less to start? I guess my only thing is like if I pay smaller amount of money for a few years then rates creep back up to like 5-6-7%.

Good point tho dood will consider this seriously.

[Old Gregg]

FYI a decent post about variable interest rates:

https://www.sofi.com/blog/evaluating-a- ... dent-loan/

10 year LIBOR high is at around 5.8%... still lower than the fed fixed rate.

[Old Gregg]

frankly, i think 3.1% interest is low enough to the point where you should just pay min payments. if you crunch the numbers, after a 10 year term, the total payout is only slightly larger than paying it all off now. plus, you get extra liquidity from saving your cash.

if you're afraid of getting shitcanned, youll at least be able tof ind a job that can service the debt payments. but if not, you'll have a ton of savings laying around that you can use to throw at it. i just sort of view it as a win win.


i have a friend who did nyc biglaw and managed to pay off all her debt after 2 years. she then got fired. she has zero money saved up and no debt. not sure whether thats preferable to being fired with like $80k of debt and $80k saved up.

Hmmmm. Maybe I'll just pay a bit less to start? I guess my only thing is like if I pay smaller amount of money for a few years then rates creep back up to like 5-6-7%.

Good point tho dood will consider this seriously.

dude the highest point libor has gotten to in 10 years is 5.82%. that's from the economic boom times. even if rates go up in the next year or two, it would probably go up 1... maybe 2%? but any higher and you need corresponding economic growth thats leaps and bounds above what we're seeing now. that kind of economic growth also sees wage increases, so it's not all that bad if rates do go up again to 5.85%.

anyways, all im trying to say is--treat yoself dude. it's so great to come home and see money in the bank account rather than living in nyc, seeing ur money go to rent, taxes... and then oh shit student loans.

[JenDarby]

Ok, so I could use some loan advice (zweit and anyone else):

I currently have around 160k in debt. The interest rates range from 5.4% to 7.9%. I signed up for PAYE but I am not sure whether PAYE with large amounts of money thrown at my highest interest debt or refinancing is my best option. My credit score is 800+ so I imagine I would get a decent refinancing rate (haven't applied yet). One main issue with PAYE will be that upon renewal next year I will max out at the highest payment level, at which point it does lose some appeal. However, the "security" that PAYE provides if I become poor and unemployed remains.

As I typed that I get the sense that refinancing will be the obvious answer, but all the same. I also have about 20k that I could throw at my 7.9% loans now (without depleting savings) that would make it possible to pay my 7.9% loans off in the next 6 months, which would bring my average down to around 6.2%. At that point I would still be able to throw money at the 6.8% loans and drop that average down even lower.

Thoughts?

[Anonymous User]

anything lower than a +2.75% margin on a 15-yr variable plan available? seems like DR Bank had the lowest margin at that amortization level but they recently raised it to +3%. paying 2.74% variable rate /w autopay discount is incredible. basically means i save not only interest rate but all the money i would have spent above min. payments to get my higher-rate loan down asap.

[Old Gregg]

Ok, so I could use some loan advice (zweit and anyone else):

I currently have around 160k in debt. The interest rates range from 5.4% to 7.9%. I signed up for PAYE but I am not sure whether PAYE with large amounts of money thrown at my highest interest debt or refinancing is my best option. My credit score is 800+ so I imagine I would get a decent refinancing rate (haven't applied yet). One main issue with PAYE will be that upon renewal next year I will max out at the highest payment level, at which point it does lose some appeal. However, the "security" that PAYE provides if I become poor and unemployed remains.

As I typed that I get the sense that refinancing will be the obvious answer, but all the same. I also have about 20k that I could throw at my 7.9% loans now (without depleting savings) that would make it possible to pay my 7.9% loans off in the next 6 months, which would bring my average down to around 6.2%. At that point I would still be able to throw money at the 6.8% loans and drop that average down even lower.

Thoughts?

it's difficult to say. best bet is to make a spreadsheet and crunch the numbers that way. make sure you add in all your PAYE numbers over 20 years, plus some sort of realistic tax bomb. and then you acn use the sofi calcultor for finding out how much youd pay in 10 years total. i found that when i did the math on my end, the sofi came out lower in terms of total dollars out of pocket compared to PAYE, but im in biglaw.

[Old Gregg]

anything lower than a +2.75% margin on a 15-yr variable plan available? seems like DR Bank had the lowest margin at that amortization level but they recently raised it to +3%. paying 2.74% variable rate /w autopay discount is incredible. basically means i save not only interest rate but all the money i would have spent above min. payments to get my higher-rate loan down asap.

dont think so, which is a shame. before the crisis hit, you wouldnt believe how easy it was to get private loans for student debt. nowadays it's just blatant profiteering. that said, i think 2.74% is very good for six figure debt. the only other six figure debt with interest that low is mortgage debt, but even then you're maybe looking at 3.4% with absolutely spotless credit.

[Big Shrimpin]

Thanks zweit.

I'm finna TREAT MYSELF!

[Old Gregg]

Thanks zweit.

I'm finna TREAT MYSELF!

music to my ears buddy. im sick of hearing about biglaw lawyers living hand to mouth. have some dignity amirite?

that said, strongly urge you to run my statements by experienced financial buddies. i dont want to rain on your parade, but i also want to make sure that you have a fully informed decision about your finances as opposed to just mine. nothing i say here is gospel and id truly feel horrible if what i said led to some sort of shitstorm down the line.

so... treat yoself... but fact check!

[Big Shrimpin]

Thanks zweit.

I'm finna TREAT MYSELF!

music to my ears buddy. im sick of hearing about biglaw lawyers living hand to mouth. have some dignity amirite?

that said, strongly urge you to run my statements by experienced financial buddies. i dont want to rain on your parade, but i also want to make sure that you have a fully informed decision about your finances as opposed to just mine. nothing i say here is gospel and id truly feel horrible if what i said led to some sort of shitstorm down the line.

so... treat yoself... but fact check!

Ya I have they've all told me I'm an idiot for not having done it sooner.

[JenDarby]

Ok, so I could use some loan advice (zweit and anyone else):

I currently have around 160k in debt. The interest rates range from 5.4% to 7.9%. I signed up for PAYE but I am not sure whether PAYE with large amounts of money thrown at my highest interest debt or refinancing is my best option. My credit score is 800+ so I imagine I would get a decent refinancing rate (haven't applied yet). One main issue with PAYE will be that upon renewal next year I will max out at the highest payment level, at which point it does lose some appeal. However, the "security" that PAYE provides if I become poor and unemployed remains.

As I typed that I get the sense that refinancing will be the obvious answer, but all the same. I also have about 20k that I could throw at my 7.9% loans now (without depleting savings) that would make it possible to pay my 7.9% loans off in the next 6 months, which would bring my average down to around 6.2%. At that point I would still be able to throw money at the 6.8% loans and drop that average down even lower.

Thoughts?

it's difficult to say. best bet is to make a spreadsheet and crunch the numbers that way. make sure you add in all your PAYE numbers over 20 years, plus some sort of realistic tax bomb. and then you acn use the sofi calcultor for finding out how much youd pay in 10 years total. i found that when i did the math on my end, the sofi came out lower in terms of total dollars out of pocket compared to PAYE, but im in biglaw.

Yea so biglaw would put you on max PAYE payments and that's exactly where I will be once my payments are recalculated (without school skewing the numbers).

My intent on PAYE would be to payoff in the same period I would with SoFi. The benefit would be secured interest rates that would drop down as I paid off higher interest loans, with a federal security net for worst case scenario shit. I just can't decide if the savings with SoFi are worth losing the security of PAYE, even with a rapid payoff plan.

[Old Gregg]

My intent on PAYE would be to payoff in the same period I would be with SoFi. The benefit would be secured interest rates that would drop down as I paid off higher interest loans. I just can't decide if the savings with SoFi are worth losing the security of PAYE, even with a rapid payoff plan.

thats up to you to decide. i think people here are generally pretty skittish after the economic crisis, which is somewhat justified. i think it doesnt hurt to save more and garner a bigger safety net for yourself in general. but too many are so risk averse that they're willing to pay through their ass for high interest rates supposedly because it gives t hem a great safety net in case they're shitcanned. i mean... if you were working at a firm and in a group that has a huge revolving door... and the other side of that door is a dump.. maybe that would be justified.

so you sort of have to be introspective about where you work. i did a lot of asking around before taking the route i took. i spoke with senior associates, got their honest assessment of how often people are pushed out the door, what exits people take voluntarily or involuntarily, their thoughts on the finances of the firm, etc. i even asked my partner mentor and got pretty solid answers. of course you have to check them against your bullshit meter, but the overall tenor of their responses let me set my risk tolerance accordingly.

you cant pause your life too much over risk aversion. you'll have some big expenses down the line... from car payments to house payments, etc., and many of those obligations will come before you feel any sort of real comfort (are you telling me you'll wait 10 years to hear the partnership decision before signing for a mortgage?). at some point you just have to live life.

that said, always practice good financial judgment. save money and live within your means. but there's risk aversion to one's benefit and then there's risk aversion to one's stupidity. as with everything in life, do everything in moderation.

[JenDarby]

Thank you for holding my hand on this risk aversion ledge.

[Big Shrimpin]

Thank you for holding my hand on this risk aversion ledge.

I know that feel dooder.

We just have to make the leap.

[Old Gregg]

Thank you for holding my hand on this risk aversion ledge.

hah no worries.

ive provided a lot of info in this thread and elsewhere about consolidating debt, using 0% interest credit cards to speed off paying student loan debt, using credit cards to pay Sallie Mae. wondering if i should just start my own mega thread where i give out information.

this shit has saved me $$$ over the years. some of it found by mistake, others found by nerding it out with my friend and finding loopholes in the system.

[JenDarby]

Thank you for holding my hand on this risk aversion ledge.

hah no worries.

ive provided a lot of info in this thread and elsewhere about consolidating debt, using 0% interest credit cards to speed off paying student loan debt, using credit cards to pay Sallie Mae. wondering if i should just start my own mega thread where i give out information.

this shit has saved me $$$ over the years. some of it found by mistake, others found by nerding it out with my friend and finding loopholes in the system.

You definitely should. I asked a question in the lounge finance thread and crickets.