I just graduated and have a job lined up where I’ll be making 75k and my loans are at 93k right now I have a grace period until November. Want to hear best course of action to pay them fast while also still being comfortable and building up savings. My monthly expenses will be around $1,500. Any advice on what plan, refinancing, etc would be helpful. I have all federal loans with an avg interest of 8.4% for reference.
Student Loan Repayment Advice
byu/Low-Inflation-3627 inStudentLoans
Posted by Low-Inflation-3627
2 Comments
It sounds like you’ve made up your mind between aggressive payoff vs forgiveness but since the debt to income ratio is over 1, I’d still explore all options.
If you’re dead set on aggressive payoff, then you can look at refinancing since your current interest rate is high.
You’d be giving up all federal protections on a fairly large balance of loans though, so I’d think through that very carefully.
Aside from that, not much else to do other than trim up the budget, make more money, and pay down the loans if that’s the route you choose.
> I have all federal loans with an avg interest of 8.4% for reference.
Fundamentally with federal loans your options are 1) aggressive repayment, 2) PSLF or similar employer based forgiveness programs, or 3) IDR plan based forgiveness. Thanks to the OBBB Act the IDR options will be reduced to just IBR and the income RAP plan very soon
I suspect your best bet is going to be aggressive repayment, and that you may want to sign up for the Extended Fixed plan (which would halve your payment and extend the repayment term length from 10 years to 25) *while still paying at least the 10-year Standard plan amount of ~$1,000-$1,100/month* with more of the payment going towards your highest interest rate loan first. This is what r/personalfinance calls the avalanche method, which is mathematically optimal for reducing the interest paid overall
I’d also suggest checking out the r/personalfinance money management advice in their [prime directive](https://www.reddit.com/r/personalfinance/wiki/commontopics) wiki (which also has a [flow chart version](https://i.imgur.com/lSoUQr2.png)) because it makes middle-class financial management easy and their wiki explains *a lot* in more plain language. You’re still going to want to get a 3-6 month emergency fund saved up pretty quickly, but I wouldn’t suggest refinancing away from federal loan protections