Student loan payments: get advice and actual numbers here Forum

[Nebby]

Looking for advice on whether to jump into PSLF.

I have around $200k in student debt (all federal) and am married to a spouse with no student loans. Just finishing up a clerkship and about to begin a position at a federal agency. The plan is to remain in government/public interest.

My school has a loan assistance program which I've been on since graduating. That program puts you on a 10 year repayment plan and indexes what you need to pay per month based on your salary. The school then covers the rest of my monthly payment. I've been looking at PSLF, and if I was to jump into that I'd pay substantially less per month (like around $500 less), and so I'm considering whether I should start that.

Whether I stay in my school's program or jump into PSLF, my loans will be paid off in 10 years, but under PSLF I'll have paid substantially less. However, I'm worried about the risk of relying on a program that's subject to the whims of Congress. Any advice? Should I save money and go with PSLF, or pay extra for the safety of a program I know won't go away?

I think you may be confusing PSLF with PAYE or other income-based repayment plans. PSLF would not reduce your monthly payments. PSLF is not a payment plan.

Payment plans are either standard (such as the standard 10 year repayment plan, which is sounds like you're currently on?) or income-based repayment plans (such as PAYE, which ties your payment to 10% of discretionary income).

PSLF is a forgiveness program. It merely forgives your remaining debt after 120 qualifying payments.

Sorry if I was unclear. I know PSLF isn't a repayment plan, I was using it for shorthand to say that I would change from a standard 10-year repayment plan (which my school's LRAP requires us to be on) to REPAYE or IBR (in order to take advantage of PSLF).

Essentially my question is whether to stay on my school's LRAP (under which my monthly payments would be higher but there is no risk of the program ending and my loans would be fully paid off after 10 years) or go instead for PSLF (which would mean getting on REPAYE, having lower monthly payments, and hoping that the program will still exist 10 years from now). Does that make sense?

I am having trouble seeing what would be the possible upside of REPAYE+PSLF in your situation.

[Anonymous User]

Looking for advice on whether to jump into PSLF.

I have around $200k in student debt (all federal) and am married to a spouse with no student loans. Just finishing up a clerkship and about to begin a position at a federal agency. The plan is to remain in government/public interest.

My school has a loan assistance program which I've been on since graduating. That program puts you on a 10 year repayment plan and indexes what you need to pay per month based on your salary. The school then covers the rest of my monthly payment. I've been looking at PSLF, and if I was to jump into that I'd pay substantially less per month (like around $500 less), and so I'm considering whether I should start that.

Whether I stay in my school's program or jump into PSLF, my loans will be paid off in 10 years, but under PSLF I'll have paid substantially less. However, I'm worried about the risk of relying on a program that's subject to the whims of Congress. Any advice? Should I save money and go with PSLF, or pay extra for the safety of a program I know won't go away?

I think you may be confusing PSLF with PAYE or other income-based repayment plans. PSLF would not reduce your monthly payments. PSLF is not a payment plan.

Payment plans are either standard (such as the standard 10 year repayment plan, which is sounds like you're currently on?) or income-based repayment plans (such as PAYE, which ties your payment to 10% of discretionary income).

PSLF is a forgiveness program. It merely forgives your remaining debt after 120 qualifying payments.

Sorry if I was unclear. I know PSLF isn't a repayment plan, I was using it for shorthand to say that I would change from a standard 10-year repayment plan (which my school's LRAP requires us to be on) to REPAYE or IBR (in order to take advantage of PSLF).

Essentially my question is whether to stay on my school's LRAP (under which my monthly payments would be higher but there is no risk of the program ending and my loans would be fully paid off after 10 years) or go instead for PSLF (which would mean getting on REPAYE, having lower monthly payments, and hoping that the program will still exist 10 years from now). Does that make sense?

I am having trouble seeing what would be the possible upside of REPAYE+PSLF in your situation.

Maybe some numbers will help my question make more sense. When I begin my new position this coming fall, my school's LRAP will require me to pay $990 per month. If I was under REPAYE, my monthly payment would only be only $464. The upside is that monthly out-of-pocket savings of $500 per month over 10 years.

[Nebby]

Maybe some numbers will help my question make more sense. When I begin my new position this coming fall, my school's LRAP will require me to pay $990 per month. If I was under REPAYE, my monthly payment would only be only $464. The upside is that monthly out-of-pocket savings of $500 per month over 10 years.

That is helpful.

Yes, if I were you, I would convert to PAYE and ride out into the PSLF sunset. I am currently on PAYE+PSLF w/ my school's LRAP. My school's LRAP is pretty generous, but I have undergrad debt so it made more sense financially to do similar to what you're suggesting. So long as you are comfortable hunkering down into PI/Gov't for the next 10 years, then it makes great financial sense to reduce your monthly payment.

As an aside, I recommend submitting your PSLF certification (at least) annually so there's a constant record of your participation in the program. If it is ever repealed, you'll need proof of your detrimental reliance.

I'm anal and plan on doing it every 6 to 8 months so I can be sure that FedLoans doesn't skip any qualifying payments.

[Anonymous User]

Hello,

Looking for some general advice on how to plan/proceed with repaying my student loans:

Debt: $100k (mostly federal loans, some subsidized, some unsubsidized, can look into this further to figure out exactly where I stand, but posting this from memory at the moment)

Salary: $95k/year in the private sector (expect to be at this job for at least 3-5 years ; job comes with decent promotion/bonus prospects), hours are 8-6ish (sustainable relative to big law)

27 y/o, single, no dependents, living in an expensive neighborhood in an expensive city (rent +utilities = $2.5k a month), no savings or assets

I started this job last month (graduated from LS in May) and have yet to begin making the majority of my student loan payments. The person at the financial aid office said I'll likely start making these payments in November, which seems fine (the extra income until then is going into emergency fund). When I did my exit counseling, I chose the graduated extended repayment plan (smaller payments now, bigger payments later), mostly because I want to be able to afford rent/pay off bills/create an emergency fund/put into 401k/etc for the first few years out of LS.

General thoughts: I do not have plans or currently aspire to have a family or own property. At this moment I'm planning on living in the same city/apartment for the next ~5 years, at which point I'll consider my next move (may try to move to a new city or find a new position, could also stay at the same job for longer. Promotions at my job could lead to a salary increase to ~$150k in the next 5-8 years).

I'm currently reasonably comfortable living with a sub-zero net worth for the next couple decades (however, I am opento the idea of not doing so if there were apparent benefits to this).


Looking for advice on how to proceed, as well as any obvious blind spots or hitches in my plan (e.g. extreme negative ramifications from living with negative net worth).

Currently, I figure the following should be part of my plan:

-do not refinance/consolidate loans (job stability is decent, probably a bit more stable than biglaw)
-make whatever payments I'm required to make under the graduated extended repayment plan
-put maximum amounts into 401k
-build a decent emergency fund
-spend some $ on self (vacations, tickets to sporting events, etc) while plugging obvious financial leaks (i.e. spend less on eating out/coffee)
-reevaluate after several years


Appreciate any feedback!

[A. Nony Mouse]

I'm anal and plan on doing it every 6 to 8 months so I can be sure that FedLoans doesn't skip any qualifying payments.

Seriously??

[Nebby]

I'm anal and plan on doing it every 6 to 8 months so I can be sure that FedLoans doesn't skip any qualifying payments.

Seriously??

What's the harm?

[A. Nony Mouse]

I'm anal and plan on doing it every 6 to 8 months so I can be sure that FedLoans doesn't skip any qualifying payments.

Seriously??

What's the harm?

Wasting time. Being obsessive.

[Nebby]

I'm anal and plan on doing it every 6 to 8 months so I can be sure that FedLoans doesn't skip any qualifying payments.

Seriously??

What's the harm?

Wasting time. Being obsessive.

Think if all the things I could be doing in the five minutes it takes to complete and fax the form!

[A. Nony Mouse]

I'm anal and plan on doing it every 6 to 8 months so I can be sure that FedLoans doesn't skip any qualifying payments.

Seriously??

What's the harm?

Wasting time. Being obsessive.

Think if all the things I could be doing in the five minutes it takes to complete and fax the form!

You have to get your HR person to fill it out, though.

[Nebby]

I'm anal and plan on doing it every 6 to 8 months so I can be sure that FedLoans doesn't skip any qualifying payments.

Seriously??

What's the harm?

Wasting time. Being obsessive.

Think if all the things I could be doing in the five minutes it takes to complete and fax the form!

You have to get your HR person to fill it out, though.

Lol

Beuracracy

I just walk down the hall and say "Hey, Deputy Director John, can you sign this paper certifying we're a 501c3?"

[A. Nony Mouse]

And I can walk upstairs and ask our HR person to do it, but still don't see any reason to do so every 6 months. You only certify your repayment plan once every 12 months.

[Nebby]

And I can walk upstairs and ask our HR person to do it, but still don't see any reason to do so every 6 months. You only certify your repayment plan once every 12 months.

I do it to make sure FedLoan adequately counts every QP. To each their own, Nony!

[A. Nony Mouse]

And I can walk upstairs and ask our HR person to do it, but still don't see any reason to do so every 6 months. You only certify your repayment plan once every 12 months.

I do it to make sure FedLoan adequately counts every QP. To each their own, Nony!

I know this horse is dead so I'll stop after this: I just think this is paranoid. FedLoan isn't going to miss payments in the middle of an uninterrupted stretch of employment/on a qualifying payment plan. People have had problems where 1) they're recertifying their income, FedLoan fucks that up/takes a long time, and they're stuck making a payment/payments before the recertification has gone through, or 2) they're changing jobs. It's on the margins that you run into problems.

[clerk1251]

Hello,

Looking for some general advice on how to plan/proceed with repaying my student loans:

Debt: $100k (mostly federal loans, some subsidized, some unsubsidized, can look into this further to figure out exactly where I stand, but posting this from memory at the moment)

Salary: $95k/year in the private sector (expect to be at this job for at least 3-5 years ; job comes with decent promotion/bonus prospects), hours are 8-6ish (sustainable relative to big law)

27 y/o, single, no dependents, living in an expensive neighborhood in an expensive city (rent +utilities = $2.5k a month), no savings or assets

I started this job last month (graduated from LS in May) and have yet to begin making the majority of my student loan payments. The person at the financial aid office said I'll likely start making these payments in November, which seems fine (the extra income until then is going into emergency fund). When I did my exit counseling, I chose the graduated extended repayment plan (smaller payments now, bigger payments later), mostly because I want to be able to afford rent/pay off bills/create an emergency fund/put into 401k/etc for the first few years out of LS.

General thoughts: I do not have plans or currently aspire to have a family or own property. At this moment I'm planning on living in the same city/apartment for the next ~5 years, at which point I'll consider my next move (may try to move to a new city or find a new position, could also stay at the same job for longer. Promotions at my job could lead to a salary increase to ~$150k in the next 5-8 years).

I'm currently reasonably comfortable living with a sub-zero net worth for the next couple decades (however, I am opento the idea of not doing so if there were apparent benefits to this).


Looking for advice on how to proceed, as well as any obvious blind spots or hitches in my plan (e.g. extreme negative ramifications from living with negative net worth).

Currently, I figure the following should be part of my plan:

-do not refinance/consolidate loans (job stability is decent, probably a bit more stable than biglaw)
-make whatever payments I'm required to make under the graduated extended repayment plan
-put maximum amounts into 401k
-build a decent emergency fund
-spend some $ on self (vacations, tickets to sporting events, etc) while plugging obvious financial leaks (i.e. spend less on eating out/coffee)
-reevaluate after several years


Appreciate any feedback!

My general thoughts are that I'm not sure why you wouldn't want to refinance? You have no plans on going government and you are planning on remaining at the same job for awhile with stability. From the sounds of it, you do not need many of the protections that the government offers, and you are paying an incredible premium on your loans with interest rates probably close to 8%.

As many on this thread have pitched, assuming you live near one of the qualifying major cities, you can refinance with First Republic. You can get a fixed rate loan for less than 4% interest and stretch it out to 10 or even 15 years if you are worried about making high monthly payments. Feel free to take a look at it here: https://www.firstrepublic.com/student-l ... efinancing

I plugged in 100k in loans and it looks like you can get payments as low as $737 if you stretched it to 15 years, although I would probably recommend going for the 10 year option which is $987.

Maxing out your 401k as opposed to paying down your debt might not be the best strategy, unless you've refinanced and locked in a lower rate. Otherwise, while yes your 401k will be compounding, so will your loans and likely at a higher rate than your 401k.

If you're worried about not having enough money, from the sounds of it, you'll be fine. I refinanced right out of LS with much more debt and much higher payments, and then ended up taking a clerkship in which I was making 60k. I didn't think it'd be possible to make ends meet but I've managed to stake by. From the sounds of it you will be much better off with much less debt.

If you're interested in refinancing with first republic, PM me and I can connect you to my banker there for some more info - if it works out, we both get a referral bonus of $200!

[Damage Over Time]

Thanks for the advice.

I did not realize my payments would be that low if I refinanced. I just looked and my interest rates are all < 6.5% (most are in the mid 5%, with a couple of 6.3% stafford loans).

Do people strongly recommend refinancing?

[beach_terror]

Thanks for the advice.

I did not realize my payments would be that low if I refinanced. I just looked and my interest rates are all < 6.5% (most are in the mid 5%, with a couple of 6.3% stafford loans).

Do people strongly recommend refinancing?

I'd give it 6 months into your current job to make sure you fit in and all of that, but after you are comfortable, definitely refinance. Also, bursting down your loans > DoTs.

[Damage Over Time]

Refinancing will be more beneficial the better my credit score is right? I have some CC debt and it now seems like the best plan of attack is to pay that off as quickly as possible (this would cause my credit score to improve, right?) before doing anything else (except maybe emergency fund).

[clerk1251]

Thanks for the advice.

I did not realize my payments would be that low if I refinanced. I just looked and my interest rates are all < 6.5% (most are in the mid 5%, with a couple of 6.3% stafford loans).

Do people strongly recommend refinancing?

Compounded over 10 years or even more, that difference in interest rates certainly makes a big difference in how much you end up paying over its lifetime. Moreover, the quicker the term you are looking for when you refinance, the lower the interest rate will be. I can't see any argument not to refinance. Think of it this way - do you plan on taking more than 10 or 15 years to pay off your loans? If not, then why not save some money over that same period?

Again, there are arguments to be made for the protections you will be giving up, but from everything you wrote, I don't think you'll have the need to utilize any of them.

[Damage Over Time]

For some reason I initially thought I would take a lot longer than 10-15 years to pay off my loans (perhaps I thought this because I chose the 25 year graduated extended repayment plan). Is there a reason to feel rushed (or at least incentivized) to pay off the loans in 10 years rather than 25? Obviously I'd be paying more interest if I paid them off in 25, but I feel like extra money in my pockets now beats out the extra interest. Is this myopic/immature/naive?

[JenDarby]

With only 100k in loans you are going to pay the full amount, assuming you generally remain gainfully employed over the next 10 years and don't take a hue pay cut.

As previously stated, your payments aren't even all that high on a refi. With the 10 year, 3.45 FRB refinance you would be at $987/month.

I wouldn't blink with a refi at that debt level (I refinanced at a higher debt level and at the time lower income).

[bk1]

Refinancing will be more beneficial the better my credit score is right? I have some CC debt and it now seems like the best plan of attack is to pay that off as quickly as possible (this would cause my credit score to improve, right?) before doing anything else (except maybe emergency fund).

As a general matter yes, but it isn't true in every situation. For example, some lenders have a single rate that you either qualify for or you don't. Sometimes your other factors (e.g., debt to income ratio, liquidity, income) are either good enough that you already qualify for the best rate that lender offers, or bad enough that raising your credit score isn't going to get you a better rate from that lender.

You should pay off your credit card debt because it is generally a bad idea to pay interest on credit card debt.

[Damage Over Time]

Refinancing will be more beneficial the better my credit score is right? I have some CC debt and it now seems like the best plan of attack is to pay that off as quickly as possible (this would cause my credit score to improve, right?) before doing anything else (except maybe emergency fund).

As a general matter yes, but it isn't true in every situation. For example, some lenders have a single rate that you either qualify for or you don't. Sometimes your other factors (e.g., debt to income ratio, liquidity, income) are either good enough that you already qualify for the best rate that lender offers, or bad enough that raising your credit score isn't going to get you a better rate from that lender.

You should pay off your credit card debt because it is generally a bad idea to pay interest on credit card debt.

Thanks. I looked at First Republic and the site said anyone with a score below 750 doesn't qualify, but I didn't do enough clicking around to see if they do offer better deals for scores significantly higher than 750. It is apparent to me that I should simply pay off my credit card ASAP and evaluate then, but I'm curious to know what I can expect w.r.t. refinancing (via First Republic or otherwise) once I get there.

Thanks again for all the advice, everyone.

[bk1]

Refinancing will be more beneficial the better my credit score is right? I have some CC debt and it now seems like the best plan of attack is to pay that off as quickly as possible (this would cause my credit score to improve, right?) before doing anything else (except maybe emergency fund).

As a general matter yes, but it isn't true in every situation. For example, some lenders have a single rate that you either qualify for or you don't. Sometimes your other factors (e.g., debt to income ratio, liquidity, income) are either good enough that you already qualify for the best rate that lender offers, or bad enough that raising your credit score isn't going to get you a better rate from that lender.

You should pay off your credit card debt because it is generally a bad idea to pay interest on credit card debt.

Thanks. I looked at First Republic and the site said anyone with a score below 750 doesn't qualify, but I didn't do enough clicking around to see if they do offer better deals for scores significantly higher than 750. It is apparent to me that I should simply pay off my credit card ASAP and evaluate then, but I'm curious to know what I can expect w.r.t. refinancing (via First Republic or otherwise) once I get there.

Thanks again for all the advice, everyone.

AFAIK First Republic only offers one set of rates. I'm not sure whether it's a large factor with other lenders (I suspect if you're already over 750 then there probably won't be much if any difference with most lenders).

[Calvin Murphy]

Maybe some numbers will help my question make more sense. When I begin my new position this coming fall, my school's LRAP will require me to pay $990 per month. If I was under REPAYE, my monthly payment would only be only $464. The upside is that monthly out-of-pocket savings of $500 per month over 10 years.

That is helpful.

Yes, if I were you, I would convert to PAYE and ride out into the PSLF sunset. I am currently on PAYE+PSLF w/ my school's LRAP. My school's LRAP is pretty generous, but I have undergrad debt so it made more sense financially to do similar to what you're suggesting. So long as you are comfortable hunkering down into PI/Gov't for the next 10 years, then it makes great financial sense to reduce your monthly payment.

As an aside, I recommend submitting your PSLF certification (at least) annually so there's a constant record of your participation in the program. If it is ever repealed, you'll need proof of your detrimental reliance.

I'm anal and plan on doing it every 6 to 8 months so I can be sure that FedLoans doesn't skip any qualifying payments.

Maybe I misunderstand PSLF, but I would think that the two main drawbacks of switching course at this point would be 1) your previous payments count toward the 10 year payoff timeline that you're on, but the PSLF timer starts at zero (meaning you have ten MORE years, as opposed to ten years minus however many payments you've already made). This is clearly less of a concern if you're only a year into repayment...but something to thing about. Also, 2) if for some reason you decide to change into a private sector job, you will have racked up interest while on PSLF and end up paying a lot more in the end. This isn't a concern for most people who go PSLF, as they're confident that they will remain govt, but it's something to think about.

[Nebby]

Maybe some numbers will help my question make more sense. When I begin my new position this coming fall, my school's LRAP will require me to pay $990 per month. If I was under REPAYE, my monthly payment would only be only $464. The upside is that monthly out-of-pocket savings of $500 per month over 10 years.

That is helpful.

Yes, if I were you, I would convert to PAYE and ride out into the PSLF sunset. I am currently on PAYE+PSLF w/ my school's LRAP. My school's LRAP is pretty generous, but I have undergrad debt so it made more sense financially to do similar to what you're suggesting. So long as you are comfortable hunkering down into PI/Gov't for the next 10 years, then it makes great financial sense to reduce your monthly payment.

As an aside, I recommend submitting your PSLF certification (at least) annually so there's a constant record of your participation in the program. If it is ever repealed, you'll need proof of your detrimental reliance.

I'm anal and plan on doing it every 6 to 8 months so I can be sure that FedLoans doesn't skip any qualifying payments.

Maybe I misunderstand PSLF, but I would think that the two main drawbacks of switching course at this point would be 1) your previous payments count toward the 10 year payoff timeline that you're on, but the PSLF timer starts at zero (meaning you have ten MORE years, as opposed to ten years minus however many payments you've already made). This is clearly less of a concern if you're only a year into repayment...but something to thing about. Also, 2) if for some reason you decide to change into a private sector job, you will have racked up interest while on PSLF and end up paying a lot more in the end. This isn't a concern for most people who go PSLF, as they're confident that they will remain govt, but it's something to think about.

(1) You misunderstand PSLF. You have to make 120 qualifying payments. Payments qualify if you're in nonprofit/govt when you make them. OP has made QPs since they started payment. PSLF is something you qualify for at 120, it's not a program you enroll in and then make progress towards. It's purely an If A, then B type of forgiveness.
(2) Yes.