Hi! I have federal student loans through Mohela for about $30k. I’m currently paying nothing a month due to the save plan i’m on (I actually have no idea which plan i’m actually on at this point). I also have private student loans through Sallie Mae for $130k. They somehow gave me the step up program when I was a week away from defaulting because they wanted $1,700 a month from me which would only cover interest. The step up program gives me a 4% interest rate for one year and then 5% for the next year and then 6% for year 3 and year 4 it goes up to 8% and then eventually back to my original interest rate of 12.75%. Because of this program, they lowered my payment to $739 a month but i’m planning to give between $800 and $850 a month which is the max i can afford with everything else i have to pay.
i guess my main question is, do I throw like $25 – $30 a month at mohela or just ride the no payment until I eventually need to pay or they go away with all this legal stuff going on (i know there’s a super low chance of that happening). I really want to pay as much as I can to Sallie Mae before the interest rate goes back up, so I can’t tell if I should just put the $25 – $30 towards sallie mae to get closer to a $900 payment or put some money towards mohela.
Not sure what to do with federal student loans
byu/lreagan2024 inStudentLoans
Posted by lreagan2024
4 Comments
My opinion is to hold off on the fedloan payments and try to get ahead with Sallie Mae. Want to pay off a much as possible before it gets to 8%+. The Fed loans have a lot of different payment plans you can get on that will work with your income situation when you start paying.
I’d personally throw what you can at the Sallie Mae to take advantage of the step up program.
I assume you have decently low interest on the fed loans (at least compared to the Sallie Mae loan interest) so I’d let them sit. The interest will start building of course, but that’s better than not getting your Sallie Mae ones paid off as much as possible before it goes back to the 12.75
Which if you aren’t accounting for a savings account in your budget, I’d take the extra 25 and put it in a savings account. Just so you have something saved.
Definitely pay enough to be current on your Federal.
Pay as much as humanly possible on the Private.
That is a concerning mix of Private and Public. Did you go to a Private school or something?
Don’t touch your federal loans until you’re forced to. There are protections in place for them and once everything with SAVE is over you can apply for (I believe) 18 month forbearance so you can use that time to focus on the private loans. Pay literally everything you can right now while you have a low interest rate on the Sallie Mae loans.
Are your loans consolidated into one big loan or are they spread out over multiple loans through Sallie Mae? If there’s multiple loans pick whichever one is the smallest amount and throw all your extra payments at that one specifically. Try to knock out as many of the smaller loans as you can before the interest rate goes up. If it’s all in one big loan, then you can just add additional money to the monthly payment.
For the next 2 years while you have 4 or 5% interest with Sallie Mae, find ways to increase your income and decrease your spending so that you can pay additional amounts towards this monster of a loan. Even finding an additional $5-10 each week will help you out so much while the interest rate is low.