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Student Loan Payment Advice
Hexmage-PA
Registered User regular
Registered User regular
I don't want to go into too much detail, but I've got a student loan I've got to pay off and want to figure out how to get it knocked-out in the fastest way possible so I can actually keep the money I earn. Anyone have tips, tricks, pointers, or massive amounts of excess wealth they're giving away?
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I haven't had anything to manage for my student loans in a while, but back when I graduated consolidation was a good idea. You locked in a lower rate, and that rate was further discounted if you made the first few payments on time and if you signed up for automatic monthly ACH payments... don't know if that's still a thing.
If consolidation is still a thing it might pay to wait until around July, when the annual consolidation rates are set. You should be able to get a good idea if next years rates will be lower or higher than the previous year's.
That tends to only happen with collection agencies and how much you can save depends a lot on the holder of the debt.
Also, student loan interest is only deductible if you make under a certain amount of money, and then there's a hard cutoff
also FWIW, even if you can negotiate a reduction in the amount due by paying lump sum, sometimes that gets marked on your credit differently than had you just paid it outright
can't remember the exact terminology
we also talk about other random shit and clown upon each other
not with student loans.
Private Loan 1
Private Loan 2
Payment History (Last 5 Payments)
As for cash on hand, I currently have nearly $16,000 in the bank.
you probably wont even resolve one of them for 16k
Loan 1 is decent.
Loan 2 is nightmarish and you have a lot of options there because the interest is so high
If your credit is good you could refi the whole thing to about 6%
You could secure a lower interest collateralized loan from a bank with your 16k savings, then take that loan money and pay off some of Loan 2
or you could just give them the 16 grand directly
I would try to get that 9% one re-financed, and if you can't then just pay the everloving shit out of it.
and put Loan 1 on interest bearing deferment, pay the interest on time, and take all your money and get rid of Loan 2 ASAP
Wells Fargo is one of the few banks who still does student loan/reconsolidation related work. If you walk in there with 16 grand, you'll at least be able to talk someone and ask questions. I recommend making an appointment.
we also talk about other random shit and clown upon each other
If it were me and I didn't have any other debt I'd probably keep 3-6k in the bank depending on monthly expenses, put the rest of that immediately toward the higher interest loan, and then every month pay the minimum on the lower interest loan and put however much more I could afford on the higher. That's the fastest way to pay down any debt as you will minimize the interest that way.
As an aside it's confusing from your description but was the 80k in loans just for the one year of art school?
As for you 16K in savings, I would calculate how much your monthly expenses are, and factor in any large purchases you think you might have in the near future (new car, house downpayment, first/last/security for moving to new apartment, ect..) and keep at least 3 months worth of expenses (plus extra for large upcoming items) then drop the rest on the high interest loan.
Just to make it abundantly clear though, private students loans are MUCH LESS SAFE than federal student loans. Unless you have rock solid job security, or the private loan is offering to more than half your interest rate, I would not transfer a federal loan over to a private loan.
however, at 9%, I don't see any way that can be a federal loan
we also talk about other random shit and clown upon each other
Yup that looks like private student loan numbers.
Pay that one of asap, like, drop all your extra money on that one and pay the minimum on the other. If the other one has a minimum of $200, pay that and drop the $1400 a month on the private loans. Get a second job if you need to and sock away 100% of that income into the private loans.
Why you ask? Because private loans will absolutely rape your ass with a bat wrapped in barbed wire. Federal loans tend to be a lot more forgiving and there's a lot of programs for not being able to afford debt there. Private loans have no such concern, and in fact, it is way more beneficial for you to default because they get money from the government (because they're the guarantor) and they can come after you legally for defaulting. So they get to double dip. What's great is that once you've defaulted, Sallie Mae (which I'm assuming that's who that 9% loan is through) actually owns the debt collection company too. So not only do they get to double dip, but they get to charge you a fee for taking over the loan for Sallie Mae (10% I think). Yeah I'm not even joking. I think it's called GRC debt management or something.
I'll actually disagree with @deebaser. They will settle with you. But you'll have to be already defaulted, and probably have already been on a chapter 13 bankruptcy for 5 years already. Maybe they'll knock 25% off it for you.
Keep that $16000 in the bank for now. But definitely slam as much towards the private student loan as you can muster. Even if it means living at home with your parents and eating ramen noodles for 3 years and letting your hair grown long.
Two things:
1 - What the heck is going on in November and February? Specifically, why did only ~$50 go to the principal in those months? If I were you, I'd find out the answer to that question and do whatever I could to maximize the amount going toward the principal every payment. That's really the secret to paying off loans faster - maximize the amount that gets paid to the principal. Every time you put a little more toward the principal, your future interest is calculated against a lower amount, meaning the same payment amount will pay off more principal in the future...lower interest calculation...success.
2 - That said, I would hang onto all or at least most of that $16000 for now. $16000 in available cash is a good thing to have going for you in a lot of situations. Instead, I would look at some of the refinancing suggestions in this thread and see if any of those can be done to get rid of that higher interest rate.
I have never heard of anyone successfully 'negotiating' a lower payoff with their student loan lender, but anecdotes, lol.
Also, I'll but against the thread and say you really should take that $16000 and make as large of a payment as you can* towards loan 2. Holy shit. Hell, just putting $10,000 of it towards that loan will save you $1000 the first year in interest!
*While still maintaining an emergency fund
Yeah I have personal experience with them and I had a certified letter from sallie mae telling me they'd knock off $1000 from my loans if I paid it in full within a week.
Yeah $1000 sure makes a difference, thanks guy. Though among my circle of friends, they most assuredly have gone down to 25% if you go long enough. But boy does it fuck your credit.