Student Loans

[farmteam]

Mine are coming due, and it's not pleasant. What did you guys end up in doing in terms of repayment plans, consolidating, etc? Does anyone recommend consolidating via getting a loan from a credit union for the sum, then paying that loan? Also, any good resources you found particularly helpful to figure this stuff out?

[nitetrain8601]

Mine are coming due, and it's not pleasant. What did you guys end up in doing in terms of repayment plans, consolidating, etc? Does anyone recommend consolidating via getting a loan from a credit union for the sum, then paying that loan? Also, any good resources you found particularly helpful to figure this stuff out?

 

I strongly suggest consolidating all of them. Unless you can get a lower rate with a Credit Union, don't do that.

[kevo880]

Mine are coming due, and it's not pleasant. What did you guys end up in doing in terms of repayment plans, consolidating, etc? Does anyone recommend consolidating via getting a loan from a credit union for the sum, then paying that loan? Also, any good resources you found particularly helpful to figure this stuff out?

 

If you are looking for a lower monthly payment then I suggest looking at the income based repayment plan. The only reason I don't recommend that is because it just adds months/years to the length of your student loans so you will be paying them longer. I've been curious about consolidating mine as well. I have my gov't student loans then 2 private ones through Chase and Discover. Chase easily has the highest int rate of the 3.

[ChiliIrishHammock24]

I'm not 100%, but I think my parents had me consolodate all my loans. I then had to pay like $70 a month for 10 years. That's $8400 in loans. But I decided instead to pay $120 a month so I get rid of my loans quicker. I'm someone who hates having any debt or owing anything. I prefer to pay things off or pay people back immediately. So by paying that extra $50 a month, I will cut my 10 year time down to like just under 6 years. And then once I get a real career and make actual money, I am going to up that to $150 or $200 a month and cut a couple more years and total money off.

Edited February 11, 2015 by Chilihead90

[dasox24]

Consolidating can be good. It's easier to keep up with them for sure. Personally, I took out the max amount I could every year while I was in school (4.5 year period). I've been very conscientious about getting rid of that debt so I pay an extra $50/month, and I also did a one-time large payment last year that knocked off about 30% of what I owe. I will have them fully paid off in about 3 more years.

 

It all depends on your income and means of paying it back, but if you end up having the capability, I suggest paying it off as quickly as possible while still having money to invest in a retirement plan, some savings, maybe the stock market, etc. It's good to diversify. I don't think carrying student loan debt is that bad and it can even help you build credit if you pay it off on-time and in-full every month. So while I do suggest you pay a little more than necessary each month, I wouldn't say to go overboard if it limits you from putting your money other places.

 

My sister did the income adjusted repayment for a couple years until she started making more money. Then she shortened the repayment terms and increased the monthly payment (while even adding more on top than required). So you can change it up as you go. You don't have to have it all figured out right after you graduate.

[ChiSox_Sonix]

I'm sorry that I can't help OP, but on the same subject, any advice for someone who will be graduating shortly in reference to how they treat their loans? Essentially, is there anything you wish you knew after graduating?

 

If you CAN pay more, you should pay more. I did not do that for the first several years but for the past 3 or 4 I've been paying just an extra $25 a month. By doing this I am going to be done paying my loans about a year and a half earlier than I would have otherwise.

[southsider2k5]

The reality is paying back your student loans should be a lower priority than just about any other debt. If you have credit cards, a car loan, etc, those are the things that you should be paying off first. Not only are the interest rates usually lower for your student loans, but they are also a tax benefit.

[NorthSideSox72]

The reality is paying back your student loans should be a lower priority than just about any other debt. If you have credit cards, a car loan, etc, those are the things that you should be paying off first. Not only are the interest rates usually lower for your student loans, but they are also a tax benefit.

Exactly. We still have my wife's student loans. We've paid off car loans and equity line balances, but always pay the minimum on the student loan. Heck, better to put your extra money in investments than pay off that debt, unless you have capital to reach out and pay it off entirely AND monthly cash flow is a problem for you (which is an unusual combo that doesn't apply to many people).

 

My wife's loans started around 40k, they are now around 17k. Payments are about 220/month, but the rate is just 1.75%. At that rate it is basically free debt on an inflationary basis. Compare that to the car loans we've had (say 3 to 5% rates and higher monthly payment amounts), for example, and it's obvious you pay the other debts first. Or investments - if you do your garden variety mostly-large-equity mutual fund or ETF type stuff, in the long run you can expect an average return of around 8%. Again, gaining 8% is way better than 2%.

 

Now if your student loan rates are high, that's different math of course. But in the example above, we are going to basically continue paying the minimum until it pays off around 2018.

 

 

[NorthSideSox72]

Looks like this thread was closed, accidentally I assume. I've re-opened.

 

[gatnom]

Exactly. We still have my wife's student loans. We've paid off car loans and equity line balances, but always pay the minimum on the student loan. Heck, better to put your extra money in investments than pay off that debt, unless you have capital to reach out and pay it off entirely AND monthly cash flow is a problem for you (which is an unusual combo that doesn't apply to many people).

 

My wife's loans started around 40k, they are now around 17k. Payments are about 220/month, but the rate is just 1.75%. At that rate it is basically free debt on an inflationary basis. Compare that to the car loans we've had (say 3 to 5% rates and higher monthly payment amounts), for example, and it's obvious you pay the other debts first. Or investments - if you do your garden variety mostly-large-equity mutual fund or ETF type stuff, in the long run you can expect an average return of around 8%. Again, gaining 8% is way better than 2%.

 

Now if your student loan rates are high, that's different math of course. But in the example above, we are going to basically continue paying the minimum until it pays off around 2018.

 

Wow, none of my loans were below 3.4%.

 

 

[iamshack]

The reality is paying back your student loans should be a lower priority than just about any other debt. If you have credit cards, a car loan, etc, those are the things that you should be paying off first. Not only are the interest rates usually lower for your student loans, but they are also a tax benefit.

Unfortunately that is capped at a certain income level.

 

I made the mistake one year of deferring (forbearance) for about 6 months when I moved out here and took a new job so I could get a handle on what my expenses would all be, etc. Boy was that a mistake...seems like I was paying off that interest forever.

[NorthSideSox72]

Wow, none of my loans were below 3.4%.

Even at that rate though, you can do better with your money elsewhere, on other debt or investing.

 

My wife's loans were consolidated at 3%, then went down to 1.75% after 3 years of making every payment on time.

 

[southsider2k5]

Unfortunately that is capped at a certain income level.

 

I made the mistake one year of deferring (forbearance) for about 6 months when I moved out here and took a new job so I could get a handle on what my expenses would all be, etc. Boy was that a mistake...seems like I was paying off that interest forever.

 

For recent college grads, they are probably hitting a pretty low income number. Sure there are exceptions, but in general, it helps. It helps a lot more than a car loan does.

[pettie4sox]

DO NOT GET PRIVATE SCHOOL LOANS!

 

Stick with the government and try to make it work.

 

Pay them off as soon as you can or better yet, do not take out loans for them, get them from your family if you can.

[Texsox]

$5000 credit if you teach in a Title 1 area for 5 years. $10,000 if it is STEM related.

 

There are a couple simple methods for paying off your debt.

 

1. Pay the smallest bill off first then roll that money into your payment for the next lowest and keep snowballing.
2. Start with the highest interest and work your way down.

 

Either way you go, keep track monthly of your balances. Seeing results is a great motivator.

[gatnom]

Even at that rate though, you can do better with your money elsewhere, on other debt or investing.

 

My wife's loans were consolidated at 3%, then went down to 1.75% after 3 years of making every payment on time.

 

No doubt. The 1.75% figure just really stood out. I paid my loans back a bit faster than I should have, but I also had no other outstanding debt so I don't feel too bad about it.

 

 

[Chisoxfn]

DO NOT GET PRIVATE SCHOOL LOANS!

 

Stick with the government and try to make it work.

 

Pay them off as soon as you can or better yet, do not take out loans for them, get them from your family if you can.

Why do you say get the loans from your family if you can? On one hand, I understand but on the other, wouldn't you rather be able to take up some of the assistance programs, etc. to pay back vs. be in debt to family members and / or be unwilling to pay them back. Understand if there is a rich uncle that it is a "loan" but not really a "loan" but otherwise, I would think you'd be better off with the government related programs. I will caveat this as I'm not an expert as I didn't have any student debt. Went to a state school which was very low cost and commuted to college so didn't have any significant living expenses so I was able to pay my school with the earnings I generated working part time.

[pettie4sox]

Why do you say get the loans from your family if you can? On one hand, I understand but on the other, wouldn't you rather be able to take up some of the assistance programs, etc. to pay back vs. be in debt to family members and / or be unwilling to pay them back. Understand if there is a rich uncle that it is a "loan" but not really a "loan" but otherwise, I would think you'd be better off with the government related programs. I will caveat this as I'm not an expert as I didn't have any student debt. Went to a state school which was very low cost and commuted to college so didn't have any significant living expenses so I was able to pay my school with the earnings I generated working part time.

 

I was saying to close the gap if the federal loans didn't cut it. Private loans are just straight the devil and predatory at best. The governement is doing just that as well charging interest on loans when they f***ing know school is already expensive as is.

 

You should not have to go into huge debt to go to school. The level of fail in the country is unreal.

[kevo880]

Exactly. We still have my wife's student loans. We've paid off car loans and equity line balances, but always pay the minimum on the student loan. Heck, better to put your extra money in investments than pay off that debt, unless you have capital to reach out and pay it off entirely AND monthly cash flow is a problem for you (which is an unusual combo that doesn't apply to many people).

 

My wife's loans started around 40k, they are now around 17k. Payments are about 220/month, but the rate is just 1.75%. At that rate it is basically free debt on an inflationary basis. Compare that to the car loans we've had (say 3 to 5% rates and higher monthly payment amounts), for example, and it's obvious you pay the other debts first. Or investments - if you do your garden variety mostly-large-equity mutual fund or ETF type stuff, in the long run you can expect an average return of around 8%. Again, gaining 8% is way better than 2%.

 

Now if your student loan rates are high, that's different math of course. But in the example above, we are going to basically continue paying the minimum until it pays off around 2018.

 

Northside, I am extremely envious of the 1.75% int rate and a $220 payment on 40k student loan debt. I have not consolidated and pay $585 per month for 2 private and 1 federal student loan. Started with about $72k and am down to about 59k in debt. Did your wife consolidate through a credit union or how did that work out?

[NorthSideSox72]

Northside, I am extremely envious of the 1.75% int rate and a $220 payment on 40k student loan debt. I have not consolidated and pay $585 per month for 2 private and 1 federal student loan. Started with about $72k and am down to about 59k in debt. Did your wife consolidate through a credit union or how did that work out?

Well she got the loans before we were married so I'm not sure exactly how the front end worked. I do believe they were government-backed but when we got married she had just finished school and the loans went from a hold of some kind to active. They were both with Great Lakes Credit Union or something, they consolidated the two automatically into a blended rate around 3%. That was in 2004. After I think either 3 or 5 years of making all payments on time, it automatically went down to 1.75%.

 

[dasox24]

Well she got the loans before we were married so I'm not sure exactly how the front end worked. I do believe they were government-backed but when we got married she had just finished school and the loans went from a hold of some kind to active. They were both with Great Lakes Credit Union or something, they consolidated the two automatically into a blended rate around 3%. That was in 2004. After I think either 3 or 5 years of making all payments on time, it automatically went down to 1.75%.

You're very fortunate. Interest rates aren't that low anymore. Mine are around 6.5%. But my older sister who graduated in 2002 has an interest rate in the 1% range.

 

Similar thing happened to me, after making on-time payments for 1 year. They didn't lower the interest rate but knocked off around $1000 from my loan. So that's another good incentive to make on-time payments.

[kevo880]

Well she got the loans before we were married so I'm not sure exactly how the front end worked. I do believe they were government-backed but when we got married she had just finished school and the loans went from a hold of some kind to active. They were both with Great Lakes Credit Union or something, they consolidated the two automatically into a blended rate around 3%. That was in 2004. After I think either 3 or 5 years of making all payments on time, it automatically went down to 1.75%.

 

Nice, thanks for the info. When I head back to MI this summer to visit family I will probably go the Credit Union that I have had an account with for most my life and see if it is worth consolidating with them. I know their interest rate on credit cards is much lower than anywhere else that I have had a credit card with so hopefully they can help with the student loan int rat.

[Jenksismyhero]

Nice, thanks for the info. When I head back to MI this summer to visit family I will probably go the Credit Union that I have had an account with for most my life and see if it is worth consolidating with them. I know their interest rate on credit cards is much lower than anywhere else that I have had a credit card with so hopefully they can help with the student loan int rat.

 

Just keep in mind that consolidation resets the term. If you were on a 10 year term and you have been paying for 4 years, you're going back to a 10 year term. At least if you do it via the federal consolidation program. Not sure if you can negotiate that or not with a credit union.

[NorthSideSox72]

Just keep in mind that consolidation resets the term. If you were on a 10 year term and you have been paying for 4 years, you're going back to a 10 year term. At least if you do it via the federal consolidation program. Not sure if you can negotiate that or not with a credit union.

That's true. Which gives you a lower payment, but you'll pay more interest if you don't accelerate your payments.

 

For us the consolidation as soon as the term started anyway so it didn't really matter.

 

[kevo880]

Just keep in mind that consolidation resets the term. If you were on a 10 year term and you have been paying for 4 years, you're going back to a 10 year term. At least if you do it via the federal consolidation program. Not sure if you can negotiate that or not with a credit union.

 

Is the standard term a 10 year term? I never changed the term, but with the pace of how I am paying them off there is no way they will be paid off in 6 more years.

 

About 40k of my students loans are private and about 19k are federal. The federal has an int rate of about 6%, my Discover private student loan is surprisingly only 3.12%, but I only have about 7k of debt on that one. My chase private loan of 31k has an int rate of 4.76%. How strange is it that my federal student loans have the highest int rate?