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Another paying student loans thread (IBR?)
Posted on 4/19/12 at 12:38 pm
Posted on 4/19/12 at 12:38 pm
My wife is graduating from Med School in May. I am finishing Grad School in December. Combined we will have about $215K worth of student loans.
The best plan I have come up with is to
1)consolidate here loans into one payment since she has two servicers. All of mine are with Sallie Mae, so that shouldn't be a problem.
2) I want her to enroll in IBR because I'm not sure if we can afford what I've calculated to be around $2500/month for both our loans, but I should be able to pay around $2200-2300/month.
That a month plus mortgage, bills, etc... will have us on a pretty tight budget, but I'd like to try and pay these off within the next 7-8yrs. Keep in mind her income, and mine should go up exponentially in the next 5years.
***My concern with overpaying on the suggested IBR is whether or not they will have a problem with us paying extra? Readjust payment amounts? ***
The best plan I have come up with is to
1)consolidate here loans into one payment since she has two servicers. All of mine are with Sallie Mae, so that shouldn't be a problem.
2) I want her to enroll in IBR because I'm not sure if we can afford what I've calculated to be around $2500/month for both our loans, but I should be able to pay around $2200-2300/month.
That a month plus mortgage, bills, etc... will have us on a pretty tight budget, but I'd like to try and pay these off within the next 7-8yrs. Keep in mind her income, and mine should go up exponentially in the next 5years.
***My concern with overpaying on the suggested IBR is whether or not they will have a problem with us paying extra? Readjust payment amounts? ***
This post was edited on 4/19/12 at 12:41 pm
6
Posted on 4/19/12 at 12:58 pm to TheWiz
quote:
. Combined we will have about $215K
quote:
wife is graduating from Med School in May
Oh. That's right. Never mind.
quote:
income, and mine should go up exponentially in the next 5years.
Not to nitpick you, Wiz, but though the increase in salary may be 'exponential,' the exponent is quite small, and will probably get smaller as the years progress. But, you guys will be fine. As long as you don't buy too many bikes.
Posted on 4/19/12 at 1:32 pm to TheWiz
quote:
***My concern with overpaying on the suggested IBR is whether or not they will have a problem with us paying extra? Readjust payment amounts? ***
My Googling isn't finding an answer yet. I'm curious to know the answer to this as well.
Posted on 4/19/12 at 2:11 pm to lnomm34
quote:
Not to nitpick you, Wiz, but though the increase in salary may be 'exponential,' the exponent is quite small, and will probably get smaller as the years progress.
Well true, generally speaking, but if I end up in my projected path, then I should be making about $40-50k more than I do now in 6 or 7 years. And of course after the wife finishes fellowship in 5yrs she should make about $120k more than she will in residency.
But enough about what how my life will hopefully shape out. Is this a good plan? And should I concern paying much higher than the suggested IBR?
This post was edited on 4/19/12 at 2:22 pm
Posted on 4/19/12 at 2:50 pm to TheWiz
quote:
***My concern with overpaying on the suggested IBR is whether or not they will have a problem with us paying extra? Readjust payment amounts? ***
you should be able to pay more than what they suggest without a problem. In fact it will probably be better to pay more if you can afford it.
From what I've read, most of the time the suggested IBR payment isn't enough to cover the accruing interest (the government will subsidize up to 3 years worth of accrued interest if your IBR payments don't meet or exceed accruing interest). This means that unless they are planning on going for the 25-year IBR payment discharge of debt, most people will owe more by the time they are finished with residency or whatever else and get a "real" job. Again that's if they are only paying the suggested IBR rate.
Posted on 4/19/12 at 4:37 pm to TheWiz
I am not a financial genius, but I think you also need to consider what your interest rates are and whether you would more likely come out ahead in the long run by investing some or all of the "extra money" rather than rushing to pay off your loans ASAP.
Just another wrinkle to consider. I'm sure one of the regular money talk gurus will drop by sooner or later with some better advice.
Just another wrinkle to consider. I'm sure one of the regular money talk gurus will drop by sooner or later with some better advice.
Posted on 4/19/12 at 11:05 pm to SamuelJohnson
Isn't every payment I make on the loans, especially extra payments, like getting a 6.8% return on my money?
I can only assume debt free, from student loans anyway, the fastest way possible is the way to go. After that we'll only have a mortgage that we'll hopefully shred in no time.
I can only assume debt free, from student loans anyway, the fastest way possible is the way to go. After that we'll only have a mortgage that we'll hopefully shred in no time.
Posted on 4/20/12 at 9:18 am to TheWiz
quote:
1)consolidate here loans into one payment since she has two servicers. All of mine are with Sallie Mae, so that shouldn't be a problem.
2) I want her to enroll in IBR because I'm not sure if we can afford what I've calculated to be around $2500/month for both our loans, but I should be able to pay around $2200-2300/month.
The same advice I posted in the previous thread works here too:
For your loans:
First, find out if they are FELP loans or private loans (the former are backed by the feds).
If they are FELP loans, google "Direct Loan Consolidation" and do that. Once that gets done, apply for some income based or income contingent repayment plan. This will minimize your monthly payments, but make it take much longer to pay off.
If they are private loans, call Sallie Mae and see if there are different types of loan repayment plans. You cannot consolidate private loans so will be stuck with dealing with SM for the life of the loan.
Added:
Assuming that your wife is working for a non-profit hospital or you are going to work at a non-profit/government, you may be eligible for the public service loan forgiveness program (which forgives outstanding loan amounts after 10 years of repayment). She also may be eligible for forgiveness if she agrees to work in certain, underserved areas.
Posted on 4/20/12 at 2:07 pm to Doctor Radical
quote:
Assuming that your wife is working for a non-profit hospital or you are going to work at a non-profit/government, you may be eligible for the public service loan forgiveness program (which forgives outstanding loan amounts after 10 years of repayment). She also may be eligible for forgiveness if she agrees to work in certain, underserved areas.
I've looked into that, and we could come out considerably ahead with the 10yr loan forgiveness, but my wife wants to go into private practice after fellowship. Also, I'm afraid of the govt. pulling that program away at any time.
It is my understanding that you have to sign up for the rural thing at the beginning of Med School. Had I known that, and that Mandeville was rural, I probably could have stomached Mandeville for a few years.
Posted on 4/20/12 at 11:02 pm to TheWiz
The Rural repayments are for primary care as far as I know. If she is doing a fellowship I doubt she would qualify.
Posted on 4/21/12 at 1:53 pm to TheWiz
I deferred my loans during residency, but I was single (not sure how being married would affect this). I'd recommend deferring her loans, and paying extra on yours (assuming equivalent interest rates).
Posted on 4/23/12 at 5:14 pm to Ric Flair
I finally found the answer to the question I was searching.
According to AAMC the max payment while in IBR is the Standard amount.
According to AAMC the max payment while in IBR is the Standard amount.
Posted on 4/23/12 at 5:23 pm to TheWiz
quote:
Standard amount.
I am guessing this amount would be what they would have charged you had you done normal 25 year repayment?
Posted on 4/24/12 at 9:28 am to Teddy Ruxpin
quote:
am guessing this amount would be what they would have charged you had you done normal 25 year repayment?
Yes, except I think they initially base everything off of a 10yr plan.
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