Hello! Looking for some advice and guidance on what the smartest thing to do with my loans would be. I finished undergrad last may with around 28k federal, 80k through one private lender and 86k through a different private lender. Not the best decision made by me and my parents I know but what’s done is done so now I’m just trying to figure out a plan to live something that at least resembles a normal life.
I work in sales which I feel pays pretty well and has lots of opportunities to increase income in your 20s which is why I went into this field. I’ve gathered from my research that I for sure want to refinance my private loans into one lender with hopefully a lower interest rate (right now they are between 5% and 10%). This could be totally off but the plan I’ve made in my head is to combine the private loans, and try to get as long of a term as possible and lowest interest rate possible in order to get the lowest minimum monthly payment possible, and then start overpaying as much as I can as I increase my salary to combat the long term.
My monthly payment for the 86k started in December $775 a month. The 80k is still in grace and repayment starts in February (I assume it will be around the same??) as well as federal (I’m thinking it will be around $300??) which would make me be at around 1850 a month in minimum payments😳. I currently live with my mom rent free and don’t have much other expenses so I want to be as aggressive as possible but $1850 while also trying to save just feels unsustainable to me.
I guess what I’m looking for is any guidance on how to get my minimum payments as low as possible while I’m still new in my career and not making a ton of money. I am extremely hardworking and determined and I know I can start making more money I just need some time to get on my feet. I want to be able to move out of my mom’s house and actually LIVE in my twenties (frugally of course). I’m fully aware this debt will be dragging me down for a long period of time but I’m hoping to find a way to make it manageable without it consuming my whole life. If it’s not already obvious I’m a bit of a lost puppy when it comes to financial literacy, but with all the different information out there researching has been very difficult. Any advice or guidance is greatly appreciated!!
Is there any path forward to a normal life with six figures of loans??
byu/SuperbFeeling1910 inStudentLoans
Posted by SuperbFeeling1910
6 Comments
How. Much. Do. You. Make.
Honestly just don’t save. You’re still living at home so an emergency fund isn’t really important. Throw everything at the loan. I also recommended checking out Sofi for refinancing for lower rates.
What schools did you attend?
If you attended scam schools, you can get your loans forgiven.
Put your federal loans on an income driven repayment plan if that gives you lower minimum payments.
You need to make the minimum payments on each loan to keep them in good standing. You should allocate extra payments to the private loan with the highest interest rate.
The goal with private loans is to apply to refinance all / some of them every 12-18 months at a lower fixed interest rate. You might have better luck trying to refinance only one loan at a time. Your payment term length matters a lot less than your interest rate since you will be refinancing so often.
Take measures to improve your credit score. Get a side hustle increase your income. Make extra payments on the loan with the highest interest rate. Your debt to income ratio is a factor when trying to refinance.
Contribute to 401k enough to get the company match.
Model different repayment scenarios using unbury.me. Living frugally now… rip off the bandaid will pay off.
Try to refinance a bit at a time starting with the highest interest rate. Live at home at least another year while you’re getting established. This will also help with the refinance because a years worth of payments will make you a better candidate for a lender.
You need a side hustle, dedicated to paying this down.