Student loan payments: get advice and actual numbers here Forum

[Doritos]

Tag and bumping this very useful thread.

[sgoodman]

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[Stringer6]

Is assuming an after-tax income of $9,300/month wildly optimistic for NYC?

Off of $160k? Holy shit yes. You're looking at mid-$6k if you live in one of the five burroughs.

apologize to the thread

[A. Nony Mouse]

I submitted a request to go on IBR back in August and still haven't heard anything. Does it usually take this long or should I call someone to see what's up?

Do your loan repayments kick in before November? Usually you get a 6-month grace period between graduation and when repayment starts, and I don't think they put you on a plan until the repayments start. If your payments have started already, of course, ignore that. They're also just really slow, so calling wouldn't hurt.

[r6_philly]

I submitted a request to go on IBR back in August and still haven't heard anything. Does it usually take this long or should I call someone to see what's up?

They won't process it until 30 days before first due date. I really really tried.

[sgoodman]

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[A. Nony Mouse]

I submitted a request to go on IBR back in August and still haven't heard anything. Does it usually take this long or should I call someone to see what's up?

Do your loan repayments kick in before November? Usually you get a 6-month grace period between graduation and when repayment starts, and I don't think they put you on a plan until the repayments start. If your payments have started already, of course, ignore that. They're also just really slow, so calling wouldn't hurt.

Thanks. No, all of my loans are either in deferment or in the grace period. I just knew that I would have to start making payments in November so I wanted to try to make sure everything was in order ahead of time.

Unfortunately, this is a futile hope. They don't start processing until they start processing, and in fact, then they're likely to tell you that they won't get everything processed in time for the first payment and you will have to make a standard payment or just defer for that month! (They probably will then get it done in time, but will have enjoyed freaking you out, I'm sure.)

[Anonymous User]

So... what's the consensus on paying debt aggressively from the beginning (3-4k a month) when you have a combined income of 210k in NYC and a total of 45k in debt?

[Old Gregg]

So... what's the consensus on paying debt aggressively from the beginning (3-4k a month) when you have a combined income of 210k in NYC and a total of 45k in debt?

Depends on your interest rate, as answered close to a thousand times ITT

[Anonymous User]

So... what's the consensus on paying debt aggressively from the beginning (3-4k a month) when you have a combined income of 210k in NYC and a total of 45k in debt?

Depends on your interest rate, as answered close to a thousand times ITT

Stafford i %.

I know it's been answered 1000 times but I'm looking for consensus not 1000 different answers. You posted a very thorough answer a while back and it makes sense (even though the next poster disagrees). "TL;DR: If you're sitting above 5% or so, just throw as much money as possible at them. If you're sitting high and mighty at 2.xx%, just do minimum payments. Higher liquidity and other investments are much more worth it in that case."

Is it relatively easy to get a 2.xx% loan?

[Old Gregg]

If your credit is good and income is big law market, apply to SoFi, DRB and Charter One and see who gives the lowest rate.

[Doritos]

So... what's the consensus on paying debt aggressively from the beginning (3-4k a month) when you have a combined income of 210k in NYC and a total of 45k in debt?

Only 45k and income of 210k? You can pay that off in a year or even less. You should definitely refinance as zweit said. No need to pay the extra % for PAYE, IBR, and the other protections you won't ever need. For me personally, I'd say pay off your loans since you can do it so quickly. Even if you could get a higher return elsewhere, maybe 5-6% instead of the 3-4% in interest you'll pay, but man dat feeling of satisfaction when your loans hit ZERO. I also guarantee if you spreadsheet'd it out you would miss out on only a marginal amount of money by foregoing investment options for like 10 months so you can zero out your loans. It will also help your credit.

[Anonymous User]

I'm a 3L and will make 100k (no state income tax). I'm looking at around 75k in loans.

I will have around 15k saved up at graduation (clerking at my firm now).

I want to pay off my loan ASAP. How realistic is it to pay it off within 2-4 years? While still hopefully buying a car and taking out a mortgage (which would hopefully be cheaper than my rent).

Or, if I want to buy a house and take out a larger mortgage, would it be best to have smaller monthly payments on my loan and pay it off over a 10-15 year period?

Trying to weight pros/cons of both options.

Would love to hear people's experience in a similar range. Also, thanks for everyone in this thread.

[Anonymous User]

50k in debt, job pays 65k. My house is paid for. What is the best strategy for me? I was thinking of paying it all off in 1.5 years by putting in most of my paycheck and living just a little better than I did in law school (I worked so I lived pretty decent).

My loans are Sallie Mae, 6.8% APR. I work in a private firm about 40 hours a week.

[Johann]

50k in debt, job pays 65k. My house is paid for. What is the best strategy for me? I was thinking of paying it all off in 1.5 years by putting in most of my paycheck and living just a little better than I did in law school (I worked so I lived pretty decent).

My loans are Sallie Mae, 6.8% APR. I work in a private firm about 40 hours a week.

You get a partial Ira deduction. I'd max out Ira and prolly even stick some more in the market. Pay it down but it shouldn't be your only focus.The student loan interest deduction makes this not that scary.

[Anonymous User]

50k in debt, job pays 65k. My house is paid for. What is the best strategy for me? I was thinking of paying it all off in 1.5 years by putting in most of my paycheck and living just a little better than I did in law school (I worked so I lived pretty decent).

My loans are Sallie Mae, 6.8% APR. I work in a private firm about 40 hours a week.

You get a partial Ira deduction. I'd max out Ira and prolly even stick some more in the market. Pay it down but it shouldn't be your only focus.The student loan interest deduction makes this not that scary.

What student loan interest deduction? We get a tax deduction for student loans?

[Johann]

50k in debt, job pays 65k. My house is paid for. What is the best strategy for me? I was thinking of paying it all off in 1.5 years by putting in most of my paycheck and living just a little better than I did in law school (I worked so I lived pretty decent).

My loans are Sallie Mae, 6.8% APR. I work in a private firm about 40 hours a week.

You get a partial Ira deduction. I'd max out Ira and prolly even stick some more in the market. Pay it down but it shouldn't be your only focus.The student loan interest deduction makes this not that scary.

What student loan interest deduction? We get a tax deduction for student loans?

up to 2500 a year i think. turbo tax will ask if you have student loan interest payments and handle it. its gonna be semi phased out for you though but should help offset a little.
edit: its only for interest paid, not for the actual loan.

[Anonymous User]

50k in debt, job pays 65k. My house is paid for. What is the best strategy for me? I was thinking of paying it all off in 1.5 years by putting in most of my paycheck and living just a little better than I did in law school (I worked so I lived pretty decent).

My loans are Sallie Mae, 6.8% APR. I work in a private firm about 40 hours a week.

You get a partial Ira deduction. I'd max out Ira and prolly even stick some more in the market. Pay it down but it shouldn't be your only focus.The student loan interest deduction makes this not that scary.

What student loan interest deduction? We get a tax deduction for student loans?

up to 2500 a year i think. turbo tax will ask if you have student loan interest payments and handle it. its gonna be semi phased out for you though but should help offset a little.
edit: its only for interest paid, not for the actual loan.

On Biglaw, you're phased out and student loan interest isn't deductible. Here's a layman explanation (http://taxes.about.com/od/deductionscre ... oanint.htm)

[Anonymous User]

50k in debt, job pays 65k. My house is paid for. What is the best strategy for me? I was thinking of paying it all off in 1.5 years by putting in most of my paycheck and living just a little better than I did in law school (I worked so I lived pretty decent).

My loans are Sallie Mae, 6.8% APR. I work in a private firm about 40 hours a week.

You get a partial Ira deduction. I'd max out Ira and prolly even stick some more in the market. Pay it down but it shouldn't be your only focus.The student loan interest deduction makes this not that scary.

What student loan interest deduction? We get a tax deduction for student loans?

up to 2500 a year i think. turbo tax will ask if you have student loan interest payments and handle it. its gonna be semi phased out for you though but should help offset a little.
edit: its only for interest paid, not for the actual loan.

Thanks!

My wife makes 50k so if we jointly file we will be under the phase out, atleast for the first year. a 2,500 deduction doesn't seem that large though, I think it would only save me an extra $500-600 a year. I'll have to calculate how much interest I accrue yearly on my loans to see if I can save more by paying them off sooner. I definitely plan on maxing out my IRA (roth).

[Anonymous User]

2L from T6 with Biglaw SA offer paying market.
I will exit law school with 270k debt post-interest, and at 160k I'm stuck at a top marginal tax rate, can't deduct student interest payments, and can't take advantage of any LRAP program.

Question: At what amount of debt does it actually make sense to forgo Biglaw and work bigfed with generous LRAP?

[Tiago Splitter]

2L from T6 with Biglaw SA offer paying market.
I will exit law school with 270k debt post-interest, and at 160k I'm stuck at a top marginal tax rate, can't deduct student interest payments, and can't take advantage of any LRAP program.

Question: At what amount of debt does it actually make sense to forgo Biglaw and work bigfed with generous LRAP?

If LRAP comes into play then you've probably already given up too much money.

[Anonymous User]

2L from T6 with Biglaw SA offer paying market.
I will exit law school with 270k debt post-interest, and at 160k I'm stuck at a top marginal tax rate, can't deduct student interest payments, and can't take advantage of any LRAP program.

Question: At what amount of debt does it actually make sense to forgo Biglaw and work bigfed with generous LRAP?

If LRAP comes into play then you've probably already given up too much money.

Please elaborate.

[Tiago Splitter]

Well I'm no expert on LRAP programs but I'd guess you'll have to give up many tens of thousands of after-tax dollars each year to go from biglaw to meaningful LRAP help. At least at Columbia, grads making more than 50k are expected to contribute 34.5% of their income, and for a lot of people in that 50-100k range it's probably better to just do PAYE and forego LRAP if the whole thing will be forgiven after ten years anyway. But even assuming you start at 70-80k or whatever and get some LRAP help you're probably going to give up more over ten years than you'll get forgiven at the end, and that's ignoring whatever difference in salary will exist after ten years.

Now if you're goal is just to exit to that exact government position after a few years in biglaw then you might as well just go government right away if the opportunity presents itself. But don't do government thinking you'll be better off financially because of it.

[dixiecupdrinking]

Well I'm no expert on LRAP programs but I'd guess you'll have to give up many tens of thousands of after-tax dollars each year to go from biglaw to meaningful LRAP help. At least at Columbia, grads making more than 50k are expected to contribute 34.5% of their income, and for a lot of people in that 50-100k range it's probably better to just do PAYE and forego LRAP if the whole thing will be forgiven after ten years anyway. But even assuming you start at 70-80k or whatever and get some LRAP help you're probably going to give up more over ten years than you'll get forgiven at the end, and that's ignoring whatever difference in salary will exist after ten years.

Now if you're goal is just to exit to that exact government position after a few years in biglaw then you might as well just go government right away if the opportunity presents itself. But don't do government thinking you'll be better off financially because of it.

This is basically right but I think you're probably understating how much help the LRAP is (unless CLS's is really shit).

Figure $270k on a 10 year repayment is like $3k a month minimum, post tax, and figure that for typical bigfed that payment will be completely covered for you by LRAP for at least the first few years, LRAP gives you the equivalent of an extra $60k or so gross income. Not quite a wash with biglaw, but it gets you in the ballpark.

[Elston Gunn]

I'm pretty sure that for most LRAPs, if you're in BigGov for 10 years, PAYE will help more than the LRAP because the salaries are pretty high. At Yale, I'm almost sure that's true. Once you hit $90K, which happens pretty early if you're in D.C., you're getting zero LRAP help.

Haven't thought about it that much though, and you can usually do both I think.