Student loan payments: get advice and actual numbers here Forum

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

Post by Anonymous User » Thu Sep 09, 2021 7:04 pm

Anonymous User wrote:
Thu Sep 09, 2021 6:40 pm
Anonymous User wrote:
Thu Sep 09, 2021 4:50 pm
Anonymous User wrote:
Thu Sep 09, 2021 4:45 pm
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?
My interest rate on SoFi was in the 4.3-4.5 range (variable) for a 7-year. My rate at FRB is 2.05% fixed for a 10-year (though I will pay it off well before the term). Keep in mind this was in a somewhat higher rate environment than exists now -- the difference was really large with basically identical credit scores and not long between refis. You might be able to get lower now; I definitely don't recall seeing 1.5% anywhere (like the guy above apparently has) even with great credit when I was shopping around.

The catch with FRB, at least when I refi'ed, is that you have to have 15-20% of the loan balance as cash in hand. So if I recall right I had to hold something like $25,000-30,000 sitting in cash just to get in the door. Not a problem if you've been in biglaw for a while, but it does make it hard to refi with them when you start in biglaw, if, like me, you did not have much if any savings going in. You also have to start and hold a checking account with the bank and they have relatively high minimum balances, few locations, credit-union-esque locations and services, etc.

But in googling this and trying to remember the details, it looks like FRB may have suspended its student loan refinance program: https://www.nerdwallet.com/article/loan ... -refinance. Could be better options now. But it was the gold standard for a decent while.

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

Post by Anonymous User » Thu Sep 09, 2021 7:16 pm

Anonymous User wrote:
Thu Sep 09, 2021 7:04 pm
Anonymous User wrote:
Thu Sep 09, 2021 6:40 pm
Anonymous User wrote:
Thu Sep 09, 2021 4:50 pm
Anonymous User wrote:
Thu Sep 09, 2021 4:45 pm
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?
My interest rate on SoFi was in the 4.3-4.5 range (variable) for a 7-year. My rate at FRB is 2.2% fixed for a 10-year (though I will pay it off well before the term). Keep in mind this was in a somewhat higher rate environment than exists now -- the difference was really large with basically identical credit scores and not long between refis. You might be able to get lower now; I definitely don't recall seeing 1.5% anywhere (like the guy above apparently has) even with great credit when I was shopping around.

The catch with FRB, at least when I refi'ed, is that you have to have 15-20% of the loan balance as cash in hand. So if I recall right I had to hold something like $25,000-30,000 sitting in cash just to get in the door. Not a problem if you've been in biglaw for a while, but it does make it hard to refi with them when you start in biglaw, if, like me, you did not have much if any savings going in. You also have to start and hold a checking account with the bank and they have relatively high minimum balances, few locations, credit-union-esque locations and services, etc.

But in googling this and trying to remember the details, it looks like FRB may have suspended its student loan refinance program: https://www.nerdwallet.com/article/loan ... -refinance. Could be better options now. But it was the gold standard for a decent while.
Thanks for the info. 2.2% is a great rate for 2017, would still be happy to get it now. I should be able to manage the cash in hand requirement, but it's good to know. I checked their website and they seem to have a personal line of credit program (listing loan refi as possible use) which may have replaced the specific refi program?

Do you mind sharing why you plan on paying it off early, if it's at 2.2%? Wouldn't it make sense to invest money instead?

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

Post by Anonymous User » Thu Sep 09, 2021 7:18 pm

Anonymous User wrote:
Mon Sep 06, 2021 7:48 pm
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.
Who/how did you refi with to get 1.5%?

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

Post by Anonymous User » Thu Sep 09, 2021 7:21 pm

Anonymous User wrote:
Thu Sep 09, 2021 7:16 pm
Anonymous User wrote:
Thu Sep 09, 2021 7:04 pm
Anonymous User wrote:
Thu Sep 09, 2021 6:40 pm
Anonymous User wrote:
Thu Sep 09, 2021 4:50 pm
Anonymous User wrote:
Thu Sep 09, 2021 4:45 pm
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?
My interest rate on SoFi was in the 4.3-4.5 range (variable) for a 7-year. My rate at FRB is 2.2% fixed for a 10-year (though I will pay it off well before the term). Keep in mind this was in a somewhat higher rate environment than exists now -- the difference was really large with basically identical credit scores and not long between refis. You might be able to get lower now; I definitely don't recall seeing 1.5% anywhere (like the guy above apparently has) even with great credit when I was shopping around.

The catch with FRB, at least when I refi'ed, is that you have to have 15-20% of the loan balance as cash in hand. So if I recall right I had to hold something like $25,000-30,000 sitting in cash just to get in the door. Not a problem if you've been in biglaw for a while, but it does make it hard to refi with them when you start in biglaw, if, like me, you did not have much if any savings going in. You also have to start and hold a checking account with the bank and they have relatively high minimum balances, few locations, credit-union-esque locations and services, etc.

But in googling this and trying to remember the details, it looks like FRB may have suspended its student loan refinance program: https://www.nerdwallet.com/article/loan ... -refinance. Could be better options now. But it was the gold standard for a decent while.
Thanks for the info. 2.2% is a great rate for 2017, would still be happy to get it now. I should be able to manage the cash in hand requirement, but it's good to know. I checked their website and they seem to have a personal line of credit program (listing loan refi as possible use) which may have replaced the specific refi program?

Do you mind sharing why you plan on paying it off early, if it's at 2.2%? Wouldn't it make sense to invest money instead?
I edited my post after because I found a doc saying if I kept a certain balance in my FRB accounts, (10% of the original loan value, I think), I got an additional discount on the rate down to 2.05%. Napkin math on my latest statements suggest I am getting that discount.

I just don't like having debt. Especially having clerked midway through, I have felt what it feels like to go back down to a "normal" salary, and the extra $1k/month (ish) toward loans is a real mental strain for me. I don't think I will last much longer in biglaw just as a matter of my own ability to tolerate the workload, and it's important to me to not have that anvil hanging over me when I leave, since I'm likely to take another big paycut when I do (even though at this point, the anvil is pretty small). As a matter of pure math, yes, it would be smarter to invest instead of paying off faster.

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

Post by Anonymous User » Wed Sep 22, 2021 5:00 pm

Anonymous User wrote:
Wed May 19, 2021 3:17 pm
Anonymous User wrote:
Sun May 09, 2021 10:39 pm
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,
Wow! Congratulations. Do you mind sharing what market and what your living expenses and other costs looked like?

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

Post by Anonymous User » Wed Sep 22, 2021 5:10 pm

Anonymous User wrote:
Tue Dec 15, 2020 9:42 pm
Sure. I basically paid $3,150 per month for four years ($152,200), plus threw all of my market bonuses ($7.5K + $15K + $25K + $50K + $65K = $162.5K x .7 take home = $113,750) and my above-market portions ($10K x 3 years . 7 take home = $21K) at them. That comes out to $286,950 I believe, which is about right when you take interest into account.

Summer bonus in 2018, COVID bonus this year, plus monthly extra money went into savings/investments, retirement, and house down payment. Good market returns and appreciating house value in major metro area gets me to the +$280K number.

With regard to refinancing, I immediately refinanced half of them to a very low rate, kept the other half in fed loans (on PAYE) to hedge risk of burning out, and paid the private loans off first. Got lucky and it worked out—had 0% on the fed loans due to COVID for the last 8 months.

Ate out on my own dime 1-2 per week. Took advantage of firm client development budgets to do social activities (sporting events, concerts, fancy dinners) with friends that are business professionals/lawyers.

For vacations always booked the cheapest plane ticket possible, even if it meant a weird connection on a weird airline at a weird time. Traveled a decent amount for work so used a lot of accumulated credit card points to cover a lot of hotels/some plane tickets.
wow! Do you mind sharing your living expenses?

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

Post by Anonymous User » Sun Oct 24, 2021 8:24 pm

da.goat wrote:
Sun Mar 14, 2021 1:09 pm
sparty99 wrote:
Sat Mar 13, 2021 6:48 pm
Elston Gunn wrote:
Sat Mar 13, 2021 1:58 pm
Anonymous User wrote:
Sat Mar 13, 2021 1:48 pm
Anonymous User wrote:
Sat Jan 09, 2021 6:05 pm
I'm financially illiterate so would love some thoughts from anyone experienced with PAYE/IBR:

I'm a 2020 grad in biglaw with $210k in federal loans right now (down from $220k since I've been making payments during the COVID forbearance period).

I am pretty miserable and know for sure I don't want to be here for the years it would take to fully pay off my loans. I would like to leave at the 1-year mark (or the 6-month mark if I really want out). I have enough savings right now to pay for about 10 months of rent and will continue to save aggressively. I absolutely refuse to feel trapped in this shitty job so please don't tell me to refinance and stick it out for 3 years or whatever. I'd probably jump at the first available opportunity that pays $60-$70k a year and offers a 40-hour workweek, even if that means not practicing law.

Best path forward re: loan repayment? I'm not sure whether to make large payments or minimum payments while saving more. Don't really have a good grasp on the tax consequences. Any advice appreciated (other than to refinance/grind it out in biglaw).
Reviving this bc I'm in the exact same situation but didn't see any responses - any advice?
Do you know what you want to exit to? If public interest/gov, you probably want to leave open the possibility of PSLF forgiveness.

Definitely max out 401k. After that, for now, I would aggressively save at least until the government starts charging interest on the loans again. Since you already sound like you have too much cash, you probably want to put the money in an index fun (betterment, vanguard etc).

At a Biglaw salary there really aren’t tax consequences to speak of in the short term, beyond large tax benefits to maxing your 401k, and the fact that any gains in your brokerage account will be taxed eventually.

If you’re talking about the “tax bomb” from using PAYE, that doesn’t apply if you go the PSLF route. If you do stay in the private sector, but get some amount forgiven after 20 years of PAYE, you would be taxed as if the amount forgiven was income for that year (at least under current law). I wouldn’t make a decision about whether to pursue this route until you know what your long term path is.
You would be STUPID AS HELL if you quit after 6 months or a year with your debt load. You also have 10 month of rent payments? So what is that? $10,000 to $20,000? That should definitely be going to your loans or the stock market. If you would of had $10,000 in Rocket Loans it would have been worth $20,000 last week. You need to stay in Big law for 2-3 years. You put yourself in this horrible position and the only way to get out is to stick with it and fight through it. It is not that hard to lateral after 1 year to a new firm and do that for 1 year. You haven't even been working that long, how are you miserable? Is this your first job? Again, you have $210,000 in debt which is a house payment. You aint going nowhere with that much hanging over your head. YOu aint thinking long term. You can easily be out of this mess in 3 years. Whereas a job paying $70,000 would get you nowhere with that large debt load.
Maybe this is flame, but if this is a serious post I'm not sure I get it. First, if biglaw is miserable enough to the point it affects your mental health, no amount of debt/money is worth that. Second, assuming all of these loans are through the government, what is the drawback of taking a lower paying job and doing IDR? Worst case scenario, your job pays less but your payments are capped, and if it's not paid off in 25 years, it gets forgiven (with the caveat that the tax bomb exists). And if you go government/public interest, there's PSLF that reduces that down to 10 years of capped payments with no tax bomb. Of course, this is very binary and doesn't account for the people that like biglaw/have private loans, but if the choice is "extremely miserable for 3-5 years and debt free" vs "good work-life balance and a continued affordable monthly payment," I don't see how it's dumb to choose the latter.
I am the original "financially illiterate" poster.

I quit biglaw shortly after that post, did a coding bootcamp and now working my first job in tech making 6 figures (just barely—$100k exactly) and fully remote. And there is so much growth potential!

I am a million times happier. I didn't know it was possible to enjoy work this much. And I never work on weekends.

I live with my SO and a roommate so only pay $1100 a month in rent + utilities. Have a $15k emergency fund and max out my roth IRA + 401(k) match. I will likely refinance on a 7 or 10-year plan when forbearance is over. With my living expenses being as low as they are right now, I plan on putting around $2.5k a month towards student loans.

I am so grateful to be in this position and have 0 regrets. For anyone else struggling, your only options are not biglaw and financial ruin.

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

Post by Anonymous User » Sun Oct 24, 2021 9:33 pm

Anonymous User wrote:
Sun Oct 24, 2021 8:24 pm
I am the original "financially illiterate" poster.

I quit biglaw shortly after that post, did a coding bootcamp and now working my first job in tech making 6 figures (just barely—$100k exactly) and fully remote. And there is so much growth potential!

I am a million times happier. I didn't know it was possible to enjoy work this much. And I never work on weekends.

I live with my SO and a roommate so only pay $1100 a month in rent + utilities. Have a $15k emergency fund and max out my roth IRA + 401(k) match. I will likely refinance on a 7 or 10-year plan when forbearance is over. With my living expenses being as low as they are right now, I plan on putting around $2.5k a month towards student loans.

I am so grateful to be in this position and have 0 regrets. For anyone else struggling, your only options are not biglaw and financial ruin.
How was the coding bootcamp process? Was it difficult to get accepted into one? Do you know if most people got jobs following it?

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

Post by Anonymous User » Sun Oct 24, 2021 9:51 pm

Anonymous User wrote:
Sun Oct 24, 2021 9:33 pm
Anonymous User wrote:
Sun Oct 24, 2021 8:24 pm
I am the original "financially illiterate" poster.

I quit biglaw shortly after that post, did a coding bootcamp and now working my first job in tech making 6 figures (just barely—$100k exactly) and fully remote. And there is so much growth potential!

I am a million times happier. I didn't know it was possible to enjoy work this much. And I never work on weekends.

I live with my SO and a roommate so only pay $1100 a month in rent + utilities. Have a $15k emergency fund and max out my roth IRA + 401(k) match. I will likely refinance on a 7 or 10-year plan when forbearance is over. With my living expenses being as low as they are right now, I plan on putting around $2.5k a month towards student loans.

I am so grateful to be in this position and have 0 regrets. For anyone else struggling, your only options are not biglaw and financial ruin.
How was the coding bootcamp process? Was it difficult to get accepted into one? Do you know if most people got jobs following it?
I would say about half of the people in my class had to retake the admissions assessment (some more than once)—so, decently difficult. I'd been coding as a hobby here and there for a few years, so I didn't find it to be that difficult. Took me about 3 weeks to prepare because I didn't know the language, and that was probably overkill.

Probably 30-40% of the people that started on day 1 dropped out or got asked to leave before graduation.

My class graduated end of July and more than half of us have jobs already. I'd say a good portion of the people who don't were not very aggressive about the job search (i.e., took a long vacation as soon as bootcamp was over and lost momentum). I work in legal tech and my HYS JD definitely sped up the hiring process—I had a much shorter than average job search.

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almondbutter

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

Post by almondbutter » Sun Oct 24, 2021 10:10 pm

Do you mind pm'ing me directly? Would love to ask you some more questions if you're willing!

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

Post by Anonymous User » Sun Oct 24, 2021 10:18 pm

almondbutter wrote:
Sun Oct 24, 2021 10:10 pm
Do you mind pm'ing me directly? Would love to ask you some more questions if you're willing!
Sure! Just did!

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

Post by Anonymous User » Thu Oct 28, 2021 2:48 am

Anonymous User wrote:
Wed Sep 22, 2021 5:10 pm
Anonymous User wrote:
Tue Dec 15, 2020 9:42 pm
Sure. I basically paid $3,150 per month for four years ($152,200), plus threw all of my market bonuses ($7.5K + $15K + $25K + $50K + $65K = $162.5K x .7 take home = $113,750) and my above-market portions ($10K x 3 years . 7 take home = $21K) at them. That comes out to $286,950 I believe, which is about right when you take interest into account.

Summer bonus in 2018, COVID bonus this year, plus monthly extra money went into savings/investments, retirement, and house down payment. Good market returns and appreciating house value in major metro area gets me to the +$280K number.

With regard to refinancing, I immediately refinanced half of them to a very low rate, kept the other half in fed loans (on PAYE) to hedge risk of burning out, and paid the private loans off first. Got lucky and it worked out—had 0% on the fed loans due to COVID for the last 8 months.

Ate out on my own dime 1-2 per week. Took advantage of firm client development budgets to do social activities (sporting events, concerts, fancy dinners) with friends that are business professionals/lawyers.

For vacations always booked the cheapest plane ticket possible, even if it meant a weird connection on a weird airline at a weird time. Traveled a decent amount for work so used a lot of accumulated credit card points to cover a lot of hotels/some plane tickets.
wow! Do you mind sharing your living expenses?
My rent was about $2,000 per month before I bought my house. I didn’t track my other expenses that closely—was just focused on making sure I had enough left over to hit that $3150 loan payment every month.

Also, as an update here I am now finishing my fifth year and once that bonus hits my net worth will be around $500K. So went from -$245K at graduation to +$500K after five years of biglaw.

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

Post by Sad248 » Wed Nov 03, 2021 6:28 am

Anonymous User wrote:
Sun Oct 24, 2021 10:18 pm
almondbutter wrote:
Sun Oct 24, 2021 10:10 pm
Do you mind pm'ing me directly? Would love to ask you some more questions if you're willing!
Sure! Just did!
Could you send me a PM as well? It would be much appreciated!

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

Post by Anonymous User » Thu Nov 04, 2021 4:40 pm

Sad248 wrote:
Wed Nov 03, 2021 6:28 am
Anonymous User wrote:
Sun Oct 24, 2021 10:18 pm
almondbutter wrote:
Sun Oct 24, 2021 10:10 pm
Do you mind pm'ing me directly? Would love to ask you some more questions if you're willing!
Sure! Just did!
Could you send me a PM as well? It would be much appreciated!
Yep!

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

Post by Vertiginous » Fri Nov 05, 2021 8:43 pm

coding anon: would appreciate a pm as well if you wouldn't mind

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

Post by Anonymous User » Sun Nov 07, 2021 8:25 pm

Vertiginous wrote:
Fri Nov 05, 2021 8:43 pm
coding anon: would appreciate a pm as well if you wouldn't mind
PMed!

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

Post by Vertiginous » Sun Nov 07, 2021 10:02 pm

well this site won't let me reply to a pm until I've posted more, apparently, so I guess I have to start spamming lol

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

Post by Anonymous User » Tue Dec 21, 2021 8:26 am

I got enough money saved up in cash (100k) to pay off all my student debt now before interest starts accruing again in February. Just wanted to check if you all think it's wise to just pay it all off now on Jan 31, or hold off for a bit, chancing that some student debt relief may come? My interest rates are around 5%. I'm in biglaw as a third year, but planning on leaving anywhere between now and 2 years.

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

Post by Sackboy » Sat Dec 25, 2021 2:37 am

Anonymous User wrote:
Tue Dec 21, 2021 8:26 am
I got enough money saved up in cash (100k) to pay off all my student debt now before interest starts accruing again in February. Just wanted to check if you all think it's wise to just pay it all off now on Jan 31, or hold off for a bit, chancing that some student debt relief may come? My interest rates are around 5%. I'm in biglaw as a third year, but planning on leaving anywhere between now and 2 years.
What is the goal to leave to? In-house with a ~$150-$250k all in comp? If so, just refinance this on a 20yr loan at 3.5% and come out with an extra $500k-$1M by retirement.

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

Post by Anonymous User » Sat Dec 25, 2021 10:29 am

Anonymous User wrote:
Tue Dec 21, 2021 8:26 am
I got enough money saved up in cash (100k) to pay off all my student debt now before interest starts accruing again in February. Just wanted to check if you all think it's wise to just pay it all off now on Jan 31, or hold off for a bit, chancing that some student debt relief may come? My interest rates are around 5%. I'm in biglaw as a third year, but planning on leaving anywhere between now and 2 years.
Well you can at the very least hold off on paying down the loans until May 1, since the Biden Administration extended the repayment freeze

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

Post by Anonymous User » Mon Jan 10, 2022 2:01 pm

I could really use some advice here.

Graduated class of 2019. Took a low income job after passing the bar exam. Have been in IDR for past two years, but haven’t had to make any payments.

I have just joined a top-10 litigation practice (cost of living = NYC). Expected salary with standard bonus should be roughly 250K.

Current outstanding loans: 300K @ ≈6.5% interest. (I know. I turned down decent scholarships at t-40ish to pay sticker at a t-20. Fml. Though the friends I made there made it worth it.)

Immediate “needs” / expected costs:
-My rent/utilities/internet etc. will be about 3,000 to start. Might be more. (This is an expensive city).
-I’d like to buy a car (45K)(finance/lease?)
-Estimate another 1K per month on food, entertainment, gym fee.

I think those will be my main expenditures for the first few years.

I don’t know if I prefer to carry the loan for an extended period and enjoy a higher quality of life, or to pay it off quickly but live “like a student” (other than the decent little apartment and nice car..)

I’m also a little bit scared of re-financing. Joining a biglaw environment for the first time and though I’m excited I don’t know how I will feel in two or three years. (Current mindset is optimistic that I’ll like it. I’m lucky that I’m joining a specific practice that I’m genuinely interested in and familiar with — though it is intense.)

Thanks in advance to whoever has been in a similar spot and has any insight for me. All views welcome.

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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 » Tue Jan 11, 2022 2:31 pm

Don't buy a car (or if you absolutely must then buy used for less than twenty grand; pay cash). Don't spend $3k on housing; that's more than necessary even in Manhattan.

$300k @ 6.5% means you're fighting against $19,500 in interest alone every year. You pretty much have to refinance or else come to terms with the fact that you'll never get off IDR. In your shoes I'd refi, put $80k toward loans annually for the next four years (while also maxing 401(k) and therefore, yes, living like a student), and then you can start living the rest of your life.

The alternative is honestly to get out of biglaw and into something PSLF-eligible but then you'll never be living the six-figure lifestyle you apparently crave.

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

Post by Anonymous User » Tue Jan 11, 2022 5:10 pm

Thanks lsatairbender… I’ve been a lurker on these boards for a while and recognized your username right away. (Side note. This tls community has its quirks but overall it has been really helpful to me in a few pointed instances. I plan to start contributing where I can..)

I do need a car but maybe trying to get a nice one is too much. By 3k I was also including all extras in that.. utilities, parking space, internet/cable, any fees, etc. I will aim to keep it as low as reasonable but also I can’t deal with a studio any longer and I also don’t want a long commute to the office..

The interest rate is terrible. But if I refi and then don’t stick to biglaw that could be a real problem. Your numbers make sense, but I don’t see why you say I “crave” the lifestyle — if that were the case I’d have gone for biglaw straight away..

I am awful at understanding the nuances of the loan repayment options. If I stick with federal loans (and so keep the protections), and then overpay by a lot each month, will I lose that much long term? I think that potentially paying 60k more over 5-10 years (but having the safety net) might be wise?

I’m thinking to sign up for a regular 10 year plan graduated, but then throw like 40k plus all bonus money at it? The amount I pay per year could also go up once I have some basic savings… if I stick to biglaw I’d like it cleaned up in 5-6 years.

The Lsat Airbender

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

Post by The Lsat Airbender » Tue Jan 11, 2022 11:44 pm

If you get paid biweekly, interest is currently deleting $750 of take-home pay from every paycheck you receive.

If you're worried about biglaw longevity, getting out from under that debt ASAP is even more important. If you don't think you can do it, I'm not kidding—might as well throw in the towel and try for PSLF or something. The middle ground of paying a shit-ton of interest over the next two decades is just silly. You'll be in your mid-40's with a net worth of zero which in turn means retiring at 75, if ever.

https://edfinancial.com/TOOLS/Loan-Repayment-Calculator

Paying $60k/year, ceteris paribus it'll take you 6.1 years to pay down the loan. Refinancing down to 3.0% makes that only 5.4 years. Paying $72k/year (i.e., shaving an extra $1,000 off of monthly lifestyle expenditures) gets that down to 4.9 years. Paying $72k/year and refinancing gets you to 4.5 years.

$80k/year of payments and refinancing down to 3.0% gets you to 4.0 years. That starts to feel like something you can realistically grind out without losing sight of the finish line.
[+] Spoiler
Anonymous User wrote:
Tue Jan 11, 2022 5:10 pm
I don’t see why you say I “crave” the lifestyle — if that were the case I’d have gone for biglaw straight away..
Your initial budget involves buying a $45k car and spending $4k a month on room and board. That lifestyle alone requires a six-figure income to sustain, never mind that you also have a massive loan burden and need to find a way to save for retirement amidst all this other spending. I'm not trying to be catty, just pointing out that you literally can't afford to live on less than $200k so you might as well abandon hope of leaving biglaw in the next 5 years.

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

Post by Anonymous User » Thu Jan 13, 2022 9:41 am

Yes I see the sense in all of that.

Here is another thought: refinancing to 3% basically gets interest to under the inflation rate (and we are in an inflationary period). Therefore it would also seem to make sense to refinance and pay off this debt with future dollars. Could probably set up a payment plan that only requires paying the interest for the first few years..

Doing this frees up money that can be banked and invested, for example into real estate (added bonus of not throwing money away with rent). Again, we are in a heavy inflationary period, and real estate is an “inflationary asset”.

It would logically be “cheaper” to pay off a loan at 3% with future dollars.

At the same time current income has more market value now if those dollars are spent on growth assets. After a year could probably refi again down to 2% or 2.5% (these refi companies are hungry for business and they package it all up and sell it on anyway).

No?

Seriously? What are you waiting for?

Now there's a charge.
Just kidding ... it's still FREE!


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