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  1. #1

    Yay time to payback student loans! (aka F********CCCCKKKKK)

    So coming up on the start of paying back my student loans and was wondering about tips. I went through the consolidation paperwork and everything is set, but I have 15 days to stop the consolidation. I was reading that I might not WANT to consolidate since my loans are all after 2006, and therefore all at fixed interest rates. Total loan amount is 55k, with a total of 110k being paid back after 10 years with Standard payment.

    I have a mixed % of rates though. Ranging from 6.8% to 1.75%. All loans are federal, never took out any private loans. So my only lenders were US Department of Education and ACS.

    Should I look into consolidation, and should I think about going with an income based repayment plan?

    I work at a community college, which is tax exempt which I believe will make me qualify for Public Service Loan Forgiveness after 10 years (I have to go check with payroll about this over the week). Which means if I go with income based, id pay less and then wipe it all away after 10 years. But that sticks me in the community college job for that time frame, which isn't a horrible gig since it's IT, and lets me get a lot of experience under my belt (I'm 30 so i'd be 40 after the shackles come off). Leaving me another 15 years at least to work something high paying in the private sector, or if anything comes up during those 10 years I could just jump if it paid very well and change my payment plan I guess.

    I also plan to get my Bachleors via the tuition reimbursement at my job, but that only pays 3k a semester which doesn't cover much.

    Any advice anyone has who's dealing with this shit?



    Also this image 100% relevant.
    http://media.riemurasia.net/albumit/...1308181252.jpg

  2. #2
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    WTF You have just as much in interest payments as principal? That doesn't make sense, though that may be due to math not being my strong point in the least. I would highly look into making more than minimum payments if you can. Even if it's only an extra 20 a month, it will add up in the long term.

  3. #3
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    Too late for this advice I guess, but I always recommend working your way through college. It took me near 10 years, but I got 3 degrees debt free. Not only debt free, but a very large chunk of additional change along with it, plus work experiance during that time that I used to jump to my "end game" job.

    I'd see about getting the money from someone in your family, pay it all off so no interest, and pay back the family member over time.
    Live with someone/family so rent is cheap/free and put everything in to paying it off.

    If youre unlucky and have no other options.. then settle in, find a good job, and put as much as you can in to it plus extra.

  4. #4
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    Unless he is going to a very cheap State school and/or is getting scholarships and grants up the wazoo, paying through college debt free isn't viable anymore.

    I just paid my first loan not 15min ago (coincidence?!) and am not thrilled. I have no advice to give except sympathy. I owe 48k plus a 10k private loan (fuck me right, 11.8% and that is priority #1 to go down).

    Be careful with the income-based repayment plan. If you aren't working public sector before the ten years are out I'm sure you are going to get boned with the amount of interest that built up and the fact you won't be forgiven after the 10 years are up.

  5. #5

    Need moar details.

    Is the "55k outstanding, 10-year period, 110k in total payments" what the consolidated plan is offering? Or what you would be dealing with if you didn't consolidate? Do you know the interest rate of the consolidated plan?

    Those figures you quoted don't seem to add up either, unless I'm having a massive brain fart or misunderstanding the situation... maybe double check them? Because for a 55k loan's 10-year repayment plan to add up to 110k in total payments, you'd need a ridiculous ~16.5% interest rate and a $940/month payment (assuming no major fees are being added in here). I'd stay away from that like the plague if that's a serious offer.

    Pay special mind to how the repayment plans work too. Some options will often start you off at a reasonable payment, and then bump you up to omgwtf levels after a few years. I finished college with almost the exact same debt situation, with a repayment plan that started at ~$378/month, until 3 years in where it jumped up to ~$780/month.

    I also wouldn't bank much of any plans on the public forgiveness aspect. Public budgets are incredibly wishywashy sketchy lately, and probably only will be moreso in the future... Wouldn't want to have to rely or count on them too much as part of your ultimate debt plan. I know quite a few people, even in the IT area, that got cut/laid-off from their public jobs because of this.

    Any and all details possible about your current option's figures vs the consolidated options can help in giving you more advice.

  6. #6
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    What rate is the consolidated rate at?

    The reason I ask is that if some of your loans are at 6.8, and others are at 1.75, unless your consolidated rate is like 2.5%, you are going to get boned.

    The interest from 10 different loans and 5% is the same as 1 loan for 10x the amount at 5%.

    However, the interest from 5 loans at 6.8% and 5 loans at 1.75% is NOT the same as 1 loan at 4%, due to the way compound interest works.

    I would do the math separately on each loan and examine how much you are going to pay in total each way. Leave the low interest loans until last, pay the high interest loans first, etc...

    Here is a super simple calculator for figuring out your loan payments: http://www.bankrate.com/calculators/...alculator.aspx

    Obviously the total amount paid per loan can be calculated by (payment amount x months x years) or (payment amount x total payments).

    If you are turning your 1.75% loan into a 6.8% loan and it is a 10,000 amount, you are basically paying an extra 2700$ over the course of 10 years for the right of...making one payment a month instead of 10.

    Don't consolidate if the math doesn't work. It's more work to keep track of multiple loans, but you are talking about tens of thousands of dollars potentially over the next decade.

  7. #7

    Looks like my interest rate is going to be 6.25% from the paper I have. Basically it reads thus:

    Loan amount = ~55k
    # of payments = 300
    Rate = 6.25%
    Payments = 365.05
    total interest = ~54k
    Total repaid = ~109k

    That's for standard payment plan.

    I also wouldn't bank much of any plans on the public forgiveness aspect. Public budgets are incredibly wishywashy sketchy lately, and probably only will be moreso in the future... Wouldn't want to have to rely or count on them too much as part of your ultimate debt plan. I know quite a few people, even in the IT area, that got cut/laid-off from their public jobs because of this.

    Any and all details possible about your current option's figures vs the consolidated options can help in giving you more advice.
    I have a total of 20 loans outstanding. 2 are less then $400 though so they can get knocked out easily and be at 18 or less.

    My lowest % loans are 2.8k, 500, 2.1k, 3.5k. Those 4 are below 5%, another is 1.7k at 5.6%. 2 are 6% and the rest are 6.8%


    I feel like maybe I should just focus on each one paying them back, and knock out the lower ones 1st to get rid of them? Saving up each month with my income and the wifes with our budget I should have 700-1k left to bank away, so I could use a portion of that and put it towards loan amounts.

    I only have 1 loan that's over 5k.

  8. #8
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    I would need to know the exact loan amounts and interest percentages to be able to determine if refinancing / consolidating is a logical choice. It usually is, but I wouldn't just assume so with a debt that large and probably almost nothing to your name. Assuming do do not refinance, there is one strategy I support when repaying student loans (it's what I did).

    What you do is after you have a few thousand dollars in the bank for emergencies (never touch this money unless you absolutely have to), you take the highest interest loan and pay it off first, at a greatly accelerated pace, ideally as fast as you possibly can. Just because the loan repayment schedule is 10 years does not mean you have to take 10 years to pay off the loan(s). Sometimes lenders play games if you pay more than 2x the recommended payment in a given month (I am looking at you, Sallie Mae), but you would have to look at the paperwork for the loans to determine that. I generally paid a little over the minimum for all of the other loans until the highest one was paid off...

    Once you pay off the first loan, you take all of the "monthly savings" you now have, and apply that to the next highest interest rate loan. Repeat this until all loans are gone. You will live dirt poor for a year or two, but it will save you tens of thousands of dollars over the course of that 10 year period, assuming you have the discipline and determination to pull it off.

  9. #9
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    So what is this about having loans paid off if you work public sector? I finished my AA in 04 and still paying that off but if I can weasel out of that last 5600 I owe, i'll take it.

  10. #10

    Quote Originally Posted by Melena View Post
    So what is this about having loans paid off if you work public sector? I finished my AA in 04 and still paying that off but if I can weasel out of that last 5600 I owe, i'll take it.

    Non-profit for 10yrs and all payments on time.

  11. #11
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    This is a rage-inducing amount of debt. We are past exchanging sympathies, I offer you my condolences.

    Not sure how people do to start their career with such a weight on their shoulders...
    Really puts the bitching people in Canada did (more Quebec really) over an augmentation of ~600$ of tuition fees in perspective.

  12. #12
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    How do you figure 300 payments over 10 years? It should be 120 payments if you're making them monthly. Whether or not consolidation is a good idea depends on the interest rate you get. It might be better to pay off the highest interest loans first while paying the absolute minimum on the lowest interest ones. I would hesitate to rely on loan forgiveness if it requires you working for ten years in the same place. They might downsize, or you might find something better. Even with every loan at 6.8%, it looks like your minimum monthly payment would be around $630 with around $21000 total going to interest.

    Quote Originally Posted by SephYuyX View Post
    Too late for this advice I guess, but I always recommend working your way through college. It took me near 10 years, but I got 3 degrees debt free. Not only debt free, but a very large chunk of additional change along with it, plus work experiance during that time that I used to jump to my "end game" job.
    You didn't get them debt free, you paid with 4~6 years of your life and probably much more. Consider how someone's salary increases with relevant work experience and how many years you went without a good salary.



    Edit: Attached shitty drawing

  13. #13
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    Quote Originally Posted by Meresgi View Post
    Looks like my interest rate is going to be 6.25% from the paper I have. Basically it reads thus:

    Loan amount = ~55k
    # of payments = 300
    Rate = 6.25%
    Payments = 365.05
    total interest = ~54k
    Total repaid = ~109k

    That's for standard payment plan.



    I have a total of 20 loans outstanding. 2 are less then $400 though so they can get knocked out easily and be at 18 or less.

    My lowest % loans are 2.8k, 500, 2.1k, 3.5k. Those 4 are below 5%, another is 1.7k at 5.6%. 2 are 6% and the rest are 6.8%


    I feel like maybe I should just focus on each one paying them back, and knock out the lower ones 1st to get rid of them? Saving up each month with my income and the wifes with our budget I should have 700-1k left to bank away, so I could use a portion of that and put it towards loan amounts.

    I only have 1 loan that's over 5k.
    Based on what you wrote here, consolidate the ones that are over 6.25%. Keep the ones that are lower separate. The interest rate is the most important thing here.

  14. #14

    My work offers financial counselling for free I believe so i'm going to look into doing that tomorrow while i'm at work. While I enjoy my job, working at a community college is not something I want to do for 10 years, especially in this field and around Maryland/DC area where it's booming right now and people are making at least 20k more then me with roughly the same experience starting out.

  15. #15

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    I also don't get the 300 payments in 10 years. Nonetheless..

    It sounds like you've got a good plan, and you're ready/willing to tackle the often daunting task of student loan debt as aggressively as possible. That's most of the battle right there; I've got several friends who are just constantly deferring this debt, meanwhile buying cars and shit. I'm not sure what they think is going to happen in the future.. like it's just going to all be forgiven.

    I finished paying off my student loans in Feb 2012 with almost the exact same principal as you, albeit in fewer, larger loans. I did not consolidate and just paid them off individually. You'll get there too with this mindset and planning shown here.

    Also,
    Quote Originally Posted by Seraph View Post
    [pay more and] live dirt poor for a year or two, but it will save you .. thousands .. assuming you have the discipline

  16. #16

    Quote Originally Posted by Meresgi View Post
    Looks like my interest rate is going to be 6.25% from the paper I have. Basically it reads thus:

    Loan amount = ~55k
    # of payments = 300
    Rate = 6.25%
    Payments = 365.05
    total interest = ~54k
    Total repaid = ~109k

    That's for standard payment plan.
    Something about that still doesn't add up.

    For that to make sense, the loan term would have to be for 25-years... which actually, now that I do the math for it, would fit perfectly for those numbers.

    So, that's it then; this loan arrangement would be for a 25-year pay-back period. (not 10)

    Just want to be sure you're clear and OK with that.
    Quote Originally Posted by Meresgi View Post
    I have a total of 20 loans outstanding. 2 are less then $400 though so they can get knocked out easily and be at 18 or less.

    My lowest % loans are 2.8k, 500, 2.1k, 3.5k. Those 4 are below 5%, another is 1.7k at 5.6%. 2 are 6% and the rest are 6.8%


    I feel like maybe I should just focus on each one paying them back, and knock out the lower ones 1st to get rid of them? Saving up each month with my income and the wifes with our budget I should have 700-1k left to bank away, so I could use a portion of that and put it towards loan amounts.

    I only have 1 loan that's over 5k.
    As mentioned by others, always pay the highest interest rate loan off first.

    As nice as it is to get rid of the easy ones at the lower amounts, paying off the ones with the highest interest rates will save you money.
    Quote Originally Posted by Seraph View Post
    You will live dirt poor for a year or two, but it will save you tens of thousands of dollars over the course of that 10 year period, assuming you have the discipline and determination to pull it off.
    I'd like to second (or third) this too.

    I opted to 'live minimally' for a while, as opposed to jumping into more financial commitments, obligations, or spending sprees right after finding good employment. The end result is it's saved me $20,000 in interest payments ($35k if I didn't take a consolidation option), and I'll have the entire sum paid off ~9 years ahead of schedule. That's all money that stays in my pocket, and isn't wasted on interest or constraining a monthly budget.

    The trade-off is it took 3 years to do, and while I didn't have to live like I was poor by any means, I did pass on any real vacations/travel, any major purchases outside of a new TV one black friday, and getting my own place. All very much worth it for the long-term though, IMO.

  17. #17

    By getting your own place i'm guessing you purchasing a home instead of renting? ive resigned myself to renting for the future. I might look into shortening that, because 25years is just too damn long. I dont want to finish paying it off as I get into retirement age. The $365 a month is doable right now with both myself and wife working and letting us put a little away, but I know my wife wants to go to school and find a new job (since she works for a petstore and they wont allow her to take classes).

    I see what you're saying about paying off the large ones, as those are around the 6.8% mark as well. Adding it up though as a consolidated loan in that calculator has me paying $624 a month, which is doable I THINK, but id have to check my budget and figure things out, also need to add them all up together when I get home and compare them to that number

  18. #18
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    Obviously don't put yourself in a situation where your choices are living like CS and paying your student debt. If your bill of 365 a month is doable, see about just rounding it to 400, and as you two move onto better career's up the amount while still living frugally but with enough saved in case of an emergency. I doubt you really want to go back to dumpster diving for lunch

  19. #19
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    I didn't say Cream Soda poor, I said dirt poor. Huge difference. Multiple food bowls allowed.

  20. #20

    Quote Originally Posted by Melena View Post
    Obviously don't put yourself in a situation where your choices are living like CS and paying your student debt. If your bill of 365 a month is doable, see about just rounding it to 400, and as you two move onto better career's up the amount while still living frugally but with enough saved in case of an emergency. I doubt you really want to go back to dumpster diving for lunch
    It was for dinner not lunch! And for steering wheel covers lol (btw the Trader joes put a lock on their dumpster apparently, guess others were doing it since I havnt since that original thread XD)

    Yeah, I think ill up the payment to $400, while saving up, once my emergency savings hit a certain point, ill take a chunk and throw it at the highest loan to knock it down a good deal, rinse and repeat.

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