Student loan payments: get advice and actual numbers here Forum

[Definitely Not North]

Student loan debt: about 80k
Cash saved: about 20k
401k: 6k

First year of big law. I want to pay off my loans ASAP but obviously don’t have to while forbearance is active. I know I’m supposed to invest in the stock market but what does that mean? Can someone tell me specifically where to do that and what to invest in? Thanks.

After you’ve set payroll deductions to max out your HSA, 401k (including mega back door Roth if your firm has it), and any other tax advantaged options open to you, open a brokerage account with E*TRADE (or whoever). When your next paycheck comes in, sweep whatever amount is above your cash on hand maximum (I keep max ~$20k total cash on hand, ~$10k in checking and ~$10k in high yield savings emergency fund; I’m in a MCOL city so more or less may make sense depending on where you live) into the E*TRADE account. Then buy VTI (weighted ~75%) and VXUS (weighted ~25%) (100% in VOO is probably fine too). Repeat every paycheck. Never, ever sell no matter that the market is doing.

[Sackboy]

Student loan debt: about 80k
Cash saved: about 20k
401k: 6k

First year of big law. I want to pay off my loans ASAP but obviously don’t have to while forbearance is active. I know I’m supposed to invest in the stock market but what does that mean? Can someone tell me specifically where to do that and what to invest in? Thanks.

After you’ve set payroll deductions to max out your HSA, 401k (including mega back door Roth if your firm has it), and any other tax advantaged options open to you, open a brokerage account with E*TRADE (or whoever). When your next paycheck comes in, sweep whatever amount is above your cash on hand maximum (I keep max ~$20k total cash on hand, ~$10k in checking and ~$10k in high yield savings emergency fund; I’m in a MCOL city so more or less may make sense depending on where you live) into the E*TRADE account. Then buy VTI (weighted ~75%) and VXUS (weighted ~25%) (100% in VOO is probably fine too). Repeat every paycheck. Never, ever sell no matter that the market is doing.

I'd somewhat caution against this strategy. Forbearance is going to end in about 6 months, and that's a real coin flip if the market is going to be down or up at that point, as we can really only rely on the market being up long term. I'd just throw my cash in a money market account and make my measly 0.5% right now considering you know you're going to dump it into loans in 6 months.

[Definitely Not North]

Student loan debt: about 80k
Cash saved: about 20k
401k: 6k

First year of big law. I want to pay off my loans ASAP but obviously don’t have to while forbearance is active. I know I’m supposed to invest in the stock market but what does that mean? Can someone tell me specifically where to do that and what to invest in? Thanks.

After you’ve set payroll deductions to max out your HSA, 401k (including mega back door Roth if your firm has it), and any other tax advantaged options open to you, open a brokerage account with E*TRADE (or whoever). When your next paycheck comes in, sweep whatever amount is above your cash on hand maximum (I keep max ~$20k total cash on hand, ~$10k in checking and ~$10k in high yield savings emergency fund; I’m in a MCOL city so more or less may make sense depending on where you live) into the E*TRADE account. Then buy VTI (weighted ~75%) and VXUS (weighted ~25%) (100% in VOO is probably fine too). Repeat every paycheck. Never, ever sell no matter that the market is doing.

I'd somewhat caution against this strategy. Forbearance is going to end in about 6 months, and that's a real coin flip if the market is going to be down or up at that point, as we can really only rely on the market being up long term. I'd just throw my cash in a money market account and make my measly 0.5% right now considering you know you're going to dump it into loans in 6 months.

The advice assumes OP does not plan to do aggressive loan repayment after the forbearance is lifted, since that’s not the best move (long term it’s better to have the money in the market and make minimum payments out of regular cash flow).

ETA: I guess OP did say they want to pay them off ASAP. Oh well, still not the best move

[Sackboy]

The advice assumes OP does not plan to do aggressive loan repayment after the forbearance is lifted, since that’s not the best move (long term it’s better to have the money in the market and make minimum payments out of regular cash flow).

ETA: I guess OP did say they want to pay them off ASAP. Oh well, still not the best move

What's a better move? Literally flipping a 50/50 on where the market will be in the next 6 months just isn't a good move and collecting a free 0.50% is better than 0.00%.

[Anonymous User]

The advice assumes OP does not plan to do aggressive loan repayment after the forbearance is lifted, since that’s not the best move (long term it’s better to have the money in the market and make minimum payments out of regular cash flow).

ETA: I guess OP did say they want to pay them off ASAP. Oh well, still not the best move

What's a better move? Literally flipping a 50/50 on where the market will be in the next 6 months just isn't a good move and collecting a free 0.50% is better than 0.00%.

I’m the OP of the original post. So how would you pay off loans in my situation? Let’s say I refinance after forbearance to a really low rate. Do you make any payments? Do you dump every dollar into the market?

[Trumpet101]

Has anyone refinanced their first republic-held student loans recently, and with whom? I just learned that SoFi does not refinance student loans held by FRB as an initial matter. Looking to refinance ASAP. Apologies in advance if this topic has been discussed already in this thread. Thanks!

[Anonymous User]

$130,000 in cash.
$20,000 in 401(k).

$170,000 in federal loans (payments and interest deferred until October 2021).

Should I put it all in GME and dogecoin?

I'm somewhat serious. I'm pissed that I missed out on GME, and I don't think I should let that much cash sit around in a 0.000001% account.

[Anonymous User]

$130,000 in cash.
$20,000 in 401(k).

$170,000 in federal loans (payments and interest deferred until October 2021).

Should I put it all in GME and dogecoin?

I'm somewhat serious. I'm pissed that I missed out on GME, and I don't think I should let that much cash sit around in a 0.000001% account.

In a similar situation, but with $80k in 401(k) altogether. Leaving biglaw shortly to take a job with base comp similar to a Cravath scale second year base comp. Anything I can do with the money until repayments start up? I have been looking at refinancing. Assume it makes sense to do a large lump payment before refinancing, right?

[Anonymous User]

Debt: $195,000 (about $25,000 from undergrad, rest is law school, all federal loans)
Cash on hand: $15,000
Salary: $200,000 in the fall, currently less

C/O 2020, currently a fed. clerk making about $64,000. Will start at a market-paying firm in NY sometime in the fall (after the stub year, I'll be a second year). Assume a clerkship bonus in the neighborhood of $75,000.

I haven't made a single payment yet -- I've been using the forbearance to accumulate enough cash savings for emergencies, which I will continue to do until interest begins to accumulate again.

I haven't yet formulated a plan. I know I should max out 401(k) contributions. I feel as though I'd like to pay as little as possible in the long term, and in my mind this means aggressively paying down the loans ASAP -- maybe even putting the clerkship bonus at it. Am I stupid for not just sucking it up with minimum payments long term and throwing that money into index funds?

What's the wisdom on federal repayment plans for big law? Based on my income the ICR plan (20% of discretionary income) is the fastest/cheapest/most aggressive schedule, but I'm not sure if any of this even matters because I expect to pay above the minimum in any event.

Edit: S/O's income is about $90,000 if that's relevant

[Anonymous User]

Starting first post-grad job in the fall, want to be prepared right out of the gate.

Debt: 90,000 (All fed loans)
Cash on hand: 5,000
Salary: 160,000

I've read through the personal finance thread, but wanted some more specific advice. To be blunt, I have never been great with money, so any and all direction would be greatly appreciated!

[Anonymous User]

What's the best strategy/repayment plan if you simply want to make the smallest monthly payment possible while working at a firm?

[Anonymous User]

Debt: $195,000 (about $25,000 from undergrad, rest is law school, all federal loans)
Cash on hand: $15,000
Salary: $200,000 in the fall, currently less

C/O 2020, currently a fed. clerk making about $64,000. Will start at a market-paying firm in NY sometime in the fall (after the stub year, I'll be a second year). Assume a clerkship bonus in the neighborhood of $75,000.

I haven't made a single payment yet -- I've been using the forbearance to accumulate enough cash savings for emergencies, which I will continue to do until interest begins to accumulate again.

I haven't yet formulated a plan. I know I should max out 401(k) contributions. I feel as though I'd like to pay as little as possible in the long term, and in my mind this means aggressively paying down the loans ASAP -- maybe even putting the clerkship bonus at it. Am I stupid for not just sucking it up with minimum payments long term and throwing that money into index funds?

What's the wisdom on federal repayment plans for big law? Based on my income the ICR plan (20% of discretionary income) is the fastest/cheapest/most aggressive schedule, but I'm not sure if any of this even matters because I expect to pay above the minimum in any event.

Edit: S/O's income is about $90,000 if that's relevant

I also had a signing type bonus of about $25,000 and I threw it all at the loan. Not only was it psychologically pleasant to see a chunk of that go down, but the snowball effect is real in the sense that it took out one smaller loan and from there I was aggressive AF in paying loans down. I regret not maxing out 401(k) contributions in my first year, but because of that I was able to put that cash, bonuses, and raises all toward my loans and paid off $184k in 3 years on a $125k salary and saved about $24k in retirement savings. I essentially lived paycheck to paycheck and would calculate how much I would need for car, food, etc. and leave that and then put the rest toward the loan. I made sure to align timing of my credit card and paycheck and student loan payment. You can pick pay dates so I would use that to help you take out a lot of the guesswork. I feel so much more free to pursue investing whether it's funds, real estate, crypto, etc. now that the debt is off of my back. The mental burden of the loans were too painful to draw out minimum payments and I wanted to pay the LEAST amount over time. I pretty much made a payment twice a month (shortly after each pay day or the day of). You start to get more of an adrenaline rush each time your balance goes down and one of the 6 loans or so wipes out. It's addicting IMO,

[Sackboy]

What's the best strategy/repayment plan if you simply want to make the smallest monthly payment possible while working at a firm?

TIf that's the plan, you should refinance after forbearance is over. You can probably get down to 3.25% or something similar for a 10 year term. PSLF no longer is an option though, and you lose other gov't provided protections, so you better not expect to leave firm/in-house life for gov't/PI.

[JTIII]

Has anyone refinanced their first republic-held student loans recently, and with whom? I just learned that SoFi does not refinance student loans held by FRB as an initial matter. Looking to refinance ASAP. Apologies in advance if this topic has been discussed already in this thread. Thanks!

Yup I refinanced my FRB loans with CommonBond.

[Anonymous User]

Paid off my loans this month. Graduated in 2013 with $215,000 in loans for my T10 degree (plus another $80,000 for my SO's grad degree). 5 years of big law, 2 years of mid law, now I'm paid up and finally going into government work in a secondary market.

Good luck to everyone out there grinding.

[Anonymous User]

Paid off my loans this month. Graduated in 2013 with $215,000 in loans for my T10 degree (plus another $80,000 for my SO's grad degree). 5 years of big law, 2 years of mid law, now I'm paid up and finally going into government work in a secondary market.

Good luck to everyone out there grinding.

Huge congratulations to you (and to your SO)!! Thanks for coming back to update the group. Do you have any words of wisdom? Things that you wish you did differently or are happy that you did?

[PowerBag21]

Also wanted to chime in that I just made the final payment on my student loans last Friday. I’m class of 2015 and graduated with $240,000 of law school debt. Have been working in biglaw since and refi’d with FRB Exactly 5 years ago. I bought a house last year and have about $200k in savings.

Feels so great to finally be done!!!

[showusyourtorts]

Also wanted to chime in that I just made the final payment on my student loans last Friday. I’m class of 2015 and graduated with $240,000 of law school debt. Have been working in biglaw since and refi’d with FRB Exactly 5 years ago. I bought a house last year and have about $200k in savings.

Feels so great to finally be done!!!

Congratulations!!! Thanks for coming back to update. It feels great to see success stories. Your timeline seems pretty intense - paying off $240k debt and building up $200k in savings over six years seems relatively strong, even without a house factored in. Any recommendations (whether good or bad) from your experiences?

[houstontx1000]

Class of 2023 here. Landed a big law SA position recently and I'm wondering if it would be smart to pay off ~10k in private loans from undergrad once the summer comes. I'll have like 140-150k in federal loans after graduation, depending.

[Anonymous User]

Class of 2017. Graduated with ~$230K of student loans

As of September 2021, net worth of ~$220K
- $5k cash in checking account (I pay off my credit card every month)
- $25K cash in HYSA
- $110k investment in brokerage account (this will be mostly used for down payment but I have no specific timeline so I'm investing in equities. No crypto though)
- $175K investment in retirement savings (401(k), roth IRA, HSA)

- $98K in student loans
I used to pay off my loans very aggressively (~$4K per month) but now I pay minimum given the interest rate around 1.5%. I regret paying off too aggressively earlier. I should have invested instead. I can definitely sleep better right now knowing that I can pay off all of it if that is what I want, however.

[Anonymous User]

Class of 2017. Graduated with ~$230K of student loans

As of September 2021, net worth of ~$220K
- $5k cash in checking account (I pay off my credit card every month)
- $25K cash in HYSA
- $110k investment in brokerage account (this will be mostly used for down payment but I have no specific timeline so I'm investing in equities. No crypto though)
- $175K investment in retirement savings (401(k), roth IRA, HSA)

- $98K in student loans
I used to pay off my loans very aggressively (~$4K per month) but now I pay minimum given the interest rate around 1.5%. I regret paying off too aggressively earlier. I should have invested instead. I can definitely sleep better right now knowing that I can pay off all of it if that is what I want, however.

How early did you refinance, and are any of your savings from before biglaw? I'm class of 2020 with a similar amount of loans. I haven't been paying, but need to think about how I'll handle when the pause ends. Looking back what would you have done differently? I want to invest as much as I can instead of paying off loans ASAP.

I am thinking about refinancing to something like a 10 year term after the loan pause ends, and paying the minimum. I am still holding out a slim bit of hope there will be some sort of permanent relief or forgiveness for federal loans, maybe foolishly. That's the one thing holding me back from refinancing ASAP once the pause ends.

[Anonymous User]

I posted in this thread a few years ago but can't find my original post for an update. But currently:

Class of 2016. Graduated with about 160k in loans and racked up ~15k in credit card debt over 3L, bar study, and all of the non-covered moving and furnishing expenses starting at a market biglaw firm. Had effectively no savings when I started off. I took a year off midway through to clerk, so I am definitely fairly behind compared to where I would be without clerking. It was 100% worth it to me but I lost more than $100k in take-home, even factoring in a clerkship bonus when I returned to biglaw after.

As of September 2021:

• Net worth: ~120k
• $5k cash in checking, $80k in savings (i realize this is Big Dumb, but it's going to be going toward a down payment fairly soon, and I didn't want to deal with putting it in / pulling it out of investments and otherwise being exposed to risk when saving toward a target amount)
• $35k in retirement savings (mix of Roth/401k)
• $5k in crypto for jokes
• $5k in debt -- probably just going to wipe this out when September special bonuses come through.
• Arguably stupid to count this, but $20-30k in watches/similar luxury goods that would be easily sold if needed and are appreciating in some cases, and not depreciating much in others

I will probably start investing more seriously sometime after house-buying. I don't regret paying down loans quickly-ish. I refi'ed in early 2017 with SoFi and then later in 2017 with First Republic so the interest rate is very low, but debt weighs on me and the psychological benefit of not worrying about it anymore is more valuable to me than an extra $10-20k (or more).

[Anonymous User]

My firm brochure has refinancing from SoFi and CommonBond. Should I use either of these? Or shop around? What rates can I expect to get?

[Anonymous User]

My firm brochure has refinancing from SoFi and CommonBond. Should I use either of these? Or shop around? What rates can I expect to get?

I'm the 2016 anon above -- I would skip SoFi if you will be able to build up the (large) reserve required for a refi with First Republic Bank, which offers (or at least offered several years ago) much better rates. My SoFi refi was a big improvement on the federal interest rate and my FRB refi was a significant enough improvement on the SoFi rate to make doing two refis in one year worthwhile. No idea about CommonBond.

[Anonymous User]

My firm brochure has refinancing from SoFi and CommonBond. Should I use either of these? Or shop around? What rates can I expect to get?

I'm the 2016 anon above -- I would skip SoFi if you will be able to build up the (large) reserve required for a refi with First Republic Bank, which offers (or at least offered several years ago) much better rates. My SoFi refi was a big improvement on the federal interest rate and my FRB refi was a significant enough improvement on the SoFi rate to make doing two refis in one year worthwhile. No idea about CommonBond.

What do you mean by large reserve? What rates did you get from FRB and SoFi? Did either of them have origination fees?