Student loan payments: get advice and actual numbers here Forum

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The Lsat Airbender

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Re: Student loan payments: get advice and actual numbers here

Post by The Lsat Airbender » Thu Jan 13, 2022 3:12 pm

Certainly. You'll generally come out ahead by putting money into the stock market or a mortgage (with the caveat that both stocks and RE are very expensive right now). But you're essentially leveraging yourself in that scenario which adds risk if you do end up departing biglaw (and, e.g. the stock market simultaneously tanks - indeed the two things might be correlated). So that's a separate question of risk tolerance. Either way the idea is to get your NW out of the red and into the black.

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Re: Student loan payments: get advice and actual numbers here

Post by Anonymous User » Thu Jan 13, 2022 3:25 pm

Good to sound all this out.
Seems like I’m back to square one except I am starting to feel that splitting the baby is in fact the worst option.
Will let you know what I end up doing eventually.

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Re: Student loan payments: get advice and actual numbers here

Post by Anonymous User » Sat Jan 15, 2022 12:31 am

Current 3L. Planning to clerk for a year and then do Cravath-scale BL (I will get the standard clerkship bonus plus a class year bump). I live frugally.

I currently have $50k in federal loan debt. The current interest rate is 0%; not sure what it will be after the pause lifts.

I also currently have ~$160k in savings.

My goal is to maximize my savings for retirement. The very debt-averse part of me just wants to pay off the debt using savings, but that seems financially stupid. I could probably pay most of it off using my clerkship salary given LCOL. I could certainly pay it off entirely my first year in BL. I am not really experienced/familiar with loan debt lasting more than a year (the time frame I paid off undergrad debt).

Does refinancing make sense here? Or is the effort/time needed to do that not worth it given my debt amount?

I worked before LS, but yes, I still know that my situation is fortunate.

almondbutter

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Re: Student loan payments: get advice and actual numbers here

Post by almondbutter » Sat Jan 15, 2022 12:49 pm

I don't see a good reason why you would want to avoid refinancing in your case. Obviously don't refinance now with the pause on interest accumulation but I'd do so immediately once they start again. The usual negatives of refinancing federal loans (losing federal protections) aren't as bad since you could easily pay off your loans if things really went south.

Some quick numbers. For a 5 year repayment of 50k and assuming around 6% rate for fed loans, you'd be paying around 8k in interest. If you were to refinance at an interest rate of 2.75% (easily achievable and have seen lower), you'd be paying around 3.5k in interest. Add on the bonuses that these refinancing companies offer where they give you a couple hundred bucks for refinancing and it makes even more sense. Also on the effort/time aspect, clearly everyone values their time differently but refinancing is quite easy and can easily be done in an hour.

BOSStongrl

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Re: Student loan payments: get advice and actual numbers here

Post by BOSStongrl » Sun Jan 16, 2022 1:25 pm

What are the best options for refinancing? SoFi quoted me at 3.2% for a 5 year fixed loan. But hoping to find something around 2.5% though I’m not sure where else to look. For reference 2nd year in BL with about ~250k in federal loans.

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nice

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Re: Student loan payments: get advice and actual numbers here

Post by nice » Tue Feb 08, 2022 11:43 am

Question for everyone:

Current 3L about to graduate and go into biglaw in a tertiary city @190k compressed salary.

Total debt is ~$240k.

No other real assets, except I have about $65-70k in crypto atm (put $7k in a few years back).

What's the play here? Should I cash out now (or in May once the moratorium on interest is lifted) and pay down the high-interest loans? Keep it in crypto and pay only minimums on the loans? Refinance and put the crypto money into stocks?

Sad248

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Re: Student loan payments: get advice and actual numbers here

Post by Sad248 » Sun Feb 13, 2022 7:11 pm

BOSStongrl wrote:
Sun Jan 16, 2022 1:25 pm
What are the best options for refinancing? SoFi quoted me at 3.2% for a 5 year fixed loan. But hoping to find something around 2.5% though I’m not sure where else to look. For reference 2nd year in BL with about ~250k in federal loans.
Damn, how does one even get rates like that? Third year in BL with about 100k in student loans, but I still get quotes of about 5%. Maybe it's because I'm just using their website and punching in the numbers and not talking to someone.

Anyways, I looked via Nerdwallet where they listed the general possibilities per provider.
nice wrote:
Tue Feb 08, 2022 11:43 am
Question for everyone:

Current 3L about to graduate and go into biglaw in a tertiary city @190k compressed salary.

Total debt is ~$240k.

No other real assets, except I have about $65-70k in crypto atm (put $7k in a few years back).

What's the play here? Should I cash out now (or in May once the moratorium on interest is lifted) and pay down the high-interest loans? Keep it in crypto and pay only minimums on the loans? Refinance and put the crypto money into stocks?

My two cents: I'd keep the crypto as is and not touch it for a good few more years (I'm assuming this is invested in more of a stablecoin as opposed to something that fluctuates massively per week). I'd try to live relatively frugally and put about equal amounts to stocks (mutual funds or ETFs) and the other equal amount to paying off your student debt. It depends a bit on your interest rate, of course, but that's the approach I've taken with my student debt interest rate only being a bit below what one would expect to get back on interest in the stock market, so I felt an equal amount would be a wise way to hedge my debt.

PhonKeyrosler

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Re: Student loan payments: get advice and actual numbers here

Post by PhonKeyrosler » Tue Feb 22, 2022 8:05 am

These big loans put a lot of pressure on morale.

Res Ipsa Loquitter

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Re: Student loan payments: get advice and actual numbers here

Post by Res Ipsa Loquitter » Mon Mar 21, 2022 12:49 pm

nice wrote:
Tue Feb 08, 2022 11:43 am
Question for everyone:

Current 3L about to graduate and go into biglaw in a tertiary city @190k compressed salary.

Total debt is ~$240k.

No other real assets, except I have about $65-70k in crypto atm (put $7k in a few years back).

What's the play here? Should I cash out now (or in May once the moratorium on interest is lifted) and pay down the high-interest loans? Keep it in crypto and pay only minimums on the loans? Refinance and put the crypto money into stocks?
The crypto could be worth millions one day, but I don't think you're in a financial position to be speculating on the value of any currency. In your position I would cash it out now, hold half in cash and put rest in standard index funds.

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Re: Student loan payments: get advice and actual numbers here

Post by Anonymous User » Mon Mar 21, 2022 3:08 pm

Res Ipsa Loquitter wrote:
Mon Mar 21, 2022 12:49 pm
nice wrote:
Tue Feb 08, 2022 11:43 am
Question for everyone:

Current 3L about to graduate and go into biglaw in a tertiary city @190k compressed salary.

Total debt is ~$240k.

No other real assets, except I have about $65-70k in crypto atm (put $7k in a few years back).

What's the play here? Should I cash out now (or in May once the moratorium on interest is lifted) and pay down the high-interest loans? Keep it in crypto and pay only minimums on the loans? Refinance and put the crypto money into stocks?
The crypto could be worth millions one day, but I don't think you're in a financial position to be speculating on the value of any currency. In your position I would cash it out now, hold half in cash and put rest in standard index funds.
OP here. Thanks. Why would you hold half in cash?

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Re: Student loan payments: get advice and actual numbers here

Post by Anonymous User » Mon Mar 21, 2022 3:20 pm

Anonymous User wrote:
Mon Mar 21, 2022 3:08 pm
Res Ipsa Loquitter wrote:
Mon Mar 21, 2022 12:49 pm
nice wrote:
Tue Feb 08, 2022 11:43 am
Question for everyone:

Current 3L about to graduate and go into biglaw in a tertiary city @190k compressed salary.

Total debt is ~$240k.

No other real assets, except I have about $65-70k in crypto atm (put $7k in a few years back).

What's the play here? Should I cash out now (or in May once the moratorium on interest is lifted) and pay down the high-interest loans? Keep it in crypto and pay only minimums on the loans? Refinance and put the crypto money into stocks?
The crypto could be worth millions one day, but I don't think you're in a financial position to be speculating on the value of any currency. In your position I would cash it out now, hold half in cash and put rest in standard index funds.
OP here. Thanks. Why would you hold half in cash?
Because you said "no other real assets" and it's important to have some cash-on-hand. I always keep about $40K in cash, and then the rest is in retirement account and various index funds. Maybe at your stage of life 1/3 of that in cash is sufficient, but you need some cash.

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Re: Student loan payments: get advice and actual numbers here

Post by Anonymous User » Sat Mar 26, 2022 10:26 pm

Is anyone else considering refinancing their loans before rates get higher? I'm clerking and owe about $110k (all federal). There's lots of uncertainty with whether the pause on federal loans will continue. I was quoted a 3.15% interest rate for a 15yr term with one company I checked.

The Lsat Airbender

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Re: Student loan payments: get advice and actual numbers here

Post by The Lsat Airbender » Tue Mar 29, 2022 10:18 pm

If you're going to biglaw next year and can live within your means I'd just steamroll that debt ASAP; interest rate doesn't matter much over a 24-36 month timeframe but the option to pull the ripcord and fall back on IBR might.

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Re: Student loan payments: get advice and actual numbers here

Post by Anonymous User » Tue Apr 05, 2022 9:01 pm

Anonymous User wrote:
Tue Nov 24, 2020 3:33 pm
Class of 2019 grad checking in 13 months into biglaw:

Status when starting work:
-$0 assets/savings
-$10k credit card debt
-$200k student loans
Net worth: $-210,000

Status now, 13 months later:
-no credit card debt
-$24.5k retirement investments (401k/IRA/HSA)
-$59k fully liquid emergency fund (far too much)
-176k student loans
Net worth: $-92,500

I refinanced 3 weeks into my job on a 7-year, 4.75% fixed rate at SoFi, paying $2900 a month (of which about ~$750 went to interest). I just refinanced again with Earnest to a 5-year, 2.5% variable rate, paying $3100 a month.

I built up my emergency fund so high because I was bearish on my job security/the market, but I'm now far past the point where I need to decide how aggressively I'll prepay my debt -- which I'll be paying off pretty aggressively on Earnest's 5-year schedule, anyway -- versus invest in the market. In either case, I'm also not sure how many months' expenses I'll need to leave in my emergency fund. I think that I could affirmatively refinance to a lower monthly payment if I were to be laid off, but someone else please chime in if that seems incorrect.

My firm offers the ability to do an additional $37k annually in post-tax contributions to my 401k, which I would utilize if I were to invest.

I've been living pretty frugally and am proud of the difference in net worth, even if it doesn't feel like I've made a sizeable dent in the loans yet. I'm praying that I don't get laid off and can keep up this clip for another year or two and get myself in a decent financial position. I took a half ride at a T6 versus a full ride at a lower T14 and part of me regrets it every day, though perhaps I'll feel differently in five years.

Status update now, two and a half years into biglaw:
-$140k retirement investments (401k/IRA/HSA)
-$62k fully liquid emergency fund (again, still far too much)
-92k student loans
Net worth: $+110,000

I refinanced for a third time a few months ago, this time with Commonbond, which gave me a 5-year, 2.1% fixed rate, paying $1850 a month. I have about four and a half years left on that loan if I make minimum payments every month.

I managed to get $2000 in cash gift cards just for refinancing. I'm not sure if you can still run this gambit, and if you're on federal loans then obviously don't refinance right now, but I figured I'd share. I started off at the StudentLoanPlanner website, which offered a $500 cash back bonus for refinancing from their link. I followed StudentLoanPlanner's link to Credible (basically like Kayak/Expedia but for student loans), which offered a $1000 reward for refinancing through them. I then used Credible to help me find Commonbond (the actual lender), which in turn offered another $500. Nobody cared that all three sites were each paying me a cash back bonus.

The $140k in my investment accounts is a mixture of pre- and post-tax investments. I've made the maximum investments into my pre-tax 401k, my HSA, and my backdoor Roth every year. The remainder of the money has been from post-tax investments into my 401k (i.e., the "mega" backdoor Roth). I'm not really sure whether I should pay off more of my debt versus invest more into my mega backdoor Roth while I still can (and just live off the cash I already have). It would be nice to be closer to being debt-free, but it is very nice to have an absurdly safe emergency fund and to have sub-100k debt on a fixed interest rate near 2% when inflation is going absolutely crazy.

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Re: Student loan payments: get advice and actual numbers here

Post by Anonymous User » Tue Apr 05, 2022 10:31 pm

So the latest reporting is that the federal interest/repayment freeze is extending through August and that the Dems will ultimately extend it to 2023 rather than give people an extra bill so soon before the midterms.

As someone who's wrapping up a clerkship and heading to Biglaw, I'm best off waiting to refinance until the interest freeze ends right? I'm mostly just concerned about interest rates rising so high in the meantime that refinancing becomes less attractive.

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Re: Student loan payments: get advice and actual numbers here

Post by jotarokujo » Mon May 09, 2022 4:20 pm

Anonymous User wrote:
Tue Apr 05, 2022 10:31 pm
So the latest reporting is that the federal interest/repayment freeze is extending through August and that the Dems will ultimately extend it to 2023 rather than give people an extra bill so soon before the midterms.

As someone who's wrapping up a clerkship and heading to Biglaw, I'm best off waiting to refinance until the interest freeze ends right? I'm mostly just concerned about interest rates rising so high in the meantime that refinancing becomes less attractive.
it's probably best to not refinance in terms of expected value, but i think refinance is fine if you're particularly risk averse and you're willing to pay a bit for that risk aversion

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Re: Student loan payments: get advice and actual numbers here

Post by Anonymous User » Mon May 09, 2022 6:52 pm

The Lsat Airbender wrote:
Tue Mar 29, 2022 10:18 pm
If you're going to biglaw next year and can live within your means I'd just steamroll that debt ASAP; interest rate doesn't matter much over a 24-36 month timeframe but the option to pull the ripcord and fall back on IBR might.
Class of 2023. -$250k in loans probably. Can you elaborate?

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The Lsat Airbender

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Re: Student loan payments: get advice and actual numbers here

Post by The Lsat Airbender » Mon May 09, 2022 8:57 pm

Anonymous User wrote:
Mon May 09, 2022 6:52 pm
The Lsat Airbender wrote:
Tue Mar 29, 2022 10:18 pm
If you're going to biglaw next year and can live within your means I'd just steamroll that debt ASAP; interest rate doesn't matter much over a 24-36 month timeframe but the option to pull the ripcord and fall back on IBR might.
Class of 2023. -$250k in loans probably. Can you elaborate?
That's a lot more than $110k lol

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Re: Student loan payments: get advice and actual numbers here

Post by Anonymous User » Sat May 28, 2022 11:02 am

Recent graduate, going into BigLaw for one year at market before clerking for two years in a VHCOL city and then likely never returning to BigLaw. What should I do?

-Debt: 170k (fed loans)
-Assets: 60k in an IRA, savings to cover summer living expenses, but nothing else

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Re: Student loan payments: get advice and actual numbers here

Post by Anonymous User » Sat May 28, 2022 11:37 am

Anonymous User wrote:
Sat May 28, 2022 11:02 am
Recent graduate, going into BigLaw for one year at market before clerking for two years in a VHCOL city and then likely never returning to BigLaw. What should I do?

-Debt: 170k (fed loans)
-Assets: 60k in an IRA, savings to cover summer living expenses, but nothing else
When you say "never returning to biglaw," what do you plan to do instead? would it be PSLF-eligible?

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Re: Student loan payments: get advice and actual numbers here

Post by Anonymous User » Sat May 28, 2022 12:27 pm

Anonymous User wrote:
Sat May 28, 2022 11:37 am
Anonymous User wrote:
Sat May 28, 2022 11:02 am
Recent graduate, going into BigLaw for one year at market before clerking for two years in a VHCOL city and then likely never returning to BigLaw. What should I do?

-Debt: 170k (fed loans)
-Assets: 60k in an IRA, savings to cover summer living expenses, but nothing else
When you say "never returning to biglaw," what do you plan to do instead? would it be PSLF-eligible?
Yes, PSLF-eligible

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Re: Student loan payments: get advice and actual numbers here

Post by Anonymous User » Sat May 28, 2022 2:04 pm

Anonymous User wrote:
Sat May 28, 2022 12:27 pm
Anonymous User wrote:
Sat May 28, 2022 11:37 am
Anonymous User wrote:
Sat May 28, 2022 11:02 am
Recent graduate, going into BigLaw for one year at market before clerking for two years in a VHCOL city and then likely never returning to BigLaw. What should I do?

-Debt: 170k (fed loans)
-Assets: 60k in an IRA, savings to cover summer living expenses, but nothing else
When you say "never returning to biglaw," what do you plan to do instead? would it be PSLF-eligible?
Yes, PSLF-eligible
Then get on IBR and suck up the payments for the first year, then do your 10 years and get the payments forgiven. Clerking counts toward the 10 years and the income-based payments are pretty reasonable.

Can’t comment on active investment strategies.

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Re: Student loan payments: get advice and actual numbers here

Post by Anonymous User » Mon Jun 20, 2022 1:01 pm

Hey All-- I'm a 2017 grad doing M&A at a v20 firm in NYC. I have about 250k in federal student debt with about 270 saved (240 in cash and the rest in the markets). I'd appreciate your thoughts on what I should do once the repayments begin later this year. I'm thinking about riding out until this year's bonus and then lateraling in house or into government. While my original goal during the forbearance period was to save all my money and then pay it off at once, I'm now wondering if I should instead pay about 70-80% of the debt off and refinance the rest at a lower rate. Ideally, I'd like to save some cash for a down payment or other investment opportunities. What would you all do in my situation

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Re: Student loan payments: get advice and actual numbers here

Post by masterherm » Mon Jun 20, 2022 1:38 pm

I'd see what rate you can get from refinancing - if it's like under 4 I'd probably do minimum payments and invest the remainder (except for what you need for a down payment + emergency fund), if it's closer to 7 then I'd probably just throw it all at the loan for the guaranteed return (except for down payment + emergency fund). Either way, leaving 240k parked in cash is by far the worst option.

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Re: Student loan payments: get advice and actual numbers here

Post by Sackboy » Mon Jun 20, 2022 1:41 pm

The market is currently 30-40% off from all-time highs. I would stop having $240k in cash. You can probably refinance your loans down to 3-4% on various timelines (i.e. 5/10/15/20 years). This is a market opportunity that you'll be thanking yourself for 100x over in 20 years if you jump in, despite the waters being rocky now. I wouldn't sit it out to simply kill some loans that you can refinance at low interest rates.

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