Question regarding student loans

[a student]

Hi all, I just realized that I'm not as informed about my loans than I thought. I know that there are different payment plans such as the standard 10 year, income based, and 30 year. I was wondering what is the point of going with the 10 year plan when you can just do the 30 year plan. Can't you just pay more than the minimum each month and still pay the same amount to pay it off in 10 years? This way in case there is an emergency and you can't make payments on time, your credit is not as affected?

---

Members don't see this ad.

 

[dpmd]

Hi all, I just realized that I'm not as informed about my loans than I thought. I know that there are different payment plans such as the standard 10 year, income based, and 30 year. I was wondering what is the point of going with the 10 year plan when you can just do the 30 year plan. Can't you just pay more than the minimum each month and still pay the same amount to pay it off in 10 years? This way in case there is an emergency and you can't make payments on time, your credit is not as affected?

The reason is that people who are on the 10 yrs plan are likely to pay it off in 10 yrs while if you are on the 30 yr plan each month you have to make the effort to pay extra or end up paying a ton more in interest. If you are disciplined it won't make a difference but most people will probably find excuses not to pay the extra every month even if they technically can pay it.

 

[rxgirly2012]

I am currently on the 30 year plan because I wanted flexibility. Kind of like you said, sometimes things in life happen and you want/need some extra cash. I didn't want to end up having problems if I needed some extra money and a large chunk of it was already tied up in my loan payment. Granted, not sticking to the 10-year plan tacks on a TON of added interest (like dpmd said), which is why it's ideal to pay as much toward the loan as you really can. Everyone has different situations and obligations, though. You really just have to take a hard look at your particular needs and do what's best for you. I know people on IBR, 10-year, and 30-year plans, all for different reasons that suit their particular situation.

The flexibility of being able to pay less on the loan has worked well for me. The first year or so after graduation I paid the minimum payment while I paid off debt I had accumulated during school (credit cards, etc.), plus some initial expenses I had after graduation (licensing and exam fees, moving expenses). Once that was taken care, I started paying additional amounts on top of my regular payments. With my current plan of splitting any extra income I have between additional loan payments and savings for a down payment on a house, I'll have my loans paid down in about 12 years, making my total repayment time about 15 years.

 

[Pharmist1720]

I changed my payment plan from 10 year to 30 year when I was trying to pay for a wedding. My payment went from $1800 to $800. Now the wedding is paid for so I'm putting all my extra money towards the larger loans. It is nice knowing that if something happens I'll just be able to pay for it instead of paying extra on the loans.

 

[sosoo]

one payment plan i would go for is maxing out 401k.. then pay with whatever money u have left.. that saves a lot on your taxes. later on once u have enough money in 401k, u can borrow from it to pay off your student loan...... your 401k savings will also be your emergency fund..

 

[Momus]

one payment plan i would go for is maxing out 401k.. then pay with whatever money u have left.. that saves a lot on your taxes. later on once u have enough money in 401k, u can borrow from it to pay off your student loan...... your 401k savings will also be your emergency fund..

Dumb idea using 401k for student loan or emergency funds. There are 2000 reasons I am too lazy to type.

 

[sosoo]

if ppl tap into 401k to finance a morgage, why would it not be an option to pay off student loans? the interest on that loan will build up your balance even more as u don't owe anyone any penny but yourself. n who's more responsible or trustworthy then making a loan to yourself?

 

[IlDestriero]

one payment plan i would go for is maxing out 401k.. then pay with whatever money u have left.. that saves a lot on your taxes. later on once u have enough money in 401k, u can borrow from it to pay off your student loan...... your 401k savings will also be your emergency fund..

This is a horrible idea. It's good to participate in a 401k plan if you can afford to while a resident and certainly as an attending, but that is your retirement account. It's not real emergency fund, nor is it a vehicle to pay off your loans.
The first thing you should do when you can is to put an emergency fund together. The anesthesia crowd refers to it as the F-you account. Ideally it should allow you to pay all of your existing expenses for at least 6 months. If something happens to your job, you can leave asap and get moving on finding another one without disrupting your life. This can also fund some of the other significant unexpected expenses that come along like large home repairs, engagement ring(s), tune up on the Ferrari, etc.
A single guy renting a small apartment might need relatively little, while a sole provider for a family with a big house and several kids in private school will need quite a bit, well more than $100k.
Once the FY acct is taken care of, beat that loan down ASAP. The interest rates on student loans today is criminal. If you are locked into 2% for 20 years like my generation was, my advice would be completely different.

 

[dpmd]

if ppl tap into 401k to finance a morgage, why would it not be an option to pay off student loans? the interest on that loan will build up your balance even more as u don't owe anyone any penny but yourself. n who's more responsible or trustworthy then making a loan to yourself?

Taking money out of your 401k for any reason (even to get a home) is bad because you lose out of the compounded gains you could have made. Sure you pay yourself interest but what do you lose by selling investments and not having them invested for however long it takes to pay the loan.

 

[pezdispenser]

one payment plan i would go for is maxing out 401k.. then pay with whatever money u have left.. that saves a lot on your taxes. later on once u have enough money in 401k, u can borrow from it to pay off your student loan...... your 401k savings will also be your emergency fund..

Very bad idea. Let's say you get laid off or fired. Then you need to pay back your 401k loan immediately. Except you don't have the $100k cash or whatever to pay it back. If you can't pay it back, it gets treated as an early withdrawal, so you will now owe taxes + 10% penalty to the IRS which is around $40-45k for a $100k early withdrawal. Don't forget you don't have a job so you have no money to pay the tax bill either. Things will get very ugly, very fast.

Using a 401k loan is just like refinancing and moving debt from one place to another. It doesn't change the amount you owe. You still have to pay it back. And having any debt could easily lead you into a situation where you are backed into the corner with no way out. That's why you should pay off all debt ASAP.

 

[BMBiology]

^ anybody who doesn't listen to pezdispenser is a fool.

 

[Dred Pirate]

This is a horrible idea. It's good to participate in a 401k plan if you can afford to while a resident and certainly as an attending, but that is your retirement account. It's not real emergency fund, nor is it a vehicle to pay off your loans.
The first thing you should do when you can is to put an emergency fund together. The anesthesia crowd refers to it as the F-you account. Ideally it should allow you to pay all of your existing expenses for at least 6 months. If something happens to your job, you can leave asap and get moving on finding another one without disrupting your life. This can also fund some of the other significant unexpected expenses that come along like large home repairs, engagement ring(s), tune up on the Ferrari, etc.
A single guy renting a small apartment might need relatively little, while a sole provider for a family with a big house and several kids in private school will need quite a bit, well more than $100k.
Once the FY acct is taken care of, beat that loan down ASAP. The interest rates on student loans today is criminal. If you are locked into 2% for 20 years like my generation was, my advice would be completely different.

I love the name of your emergency fund - f-you. I have a similar team for when my total savings reaching a set number. It is my f-you number - which means I am at the point I refuse to take any crap and I can say f-you and quit and move to the Caribbean and tend bar some where on the beach,

 

[All4MyDaughter]

Hi all, I just realized that I'm not as informed about my loans than I thought. I know that there are different payment plans such as the standard 10 year, income based, and 30 year. I was wondering what is the point of going with the 10 year plan when you can just do the 30 year plan. Can't you just pay more than the minimum each month and still pay the same amount to pay it off in 10 years? This way in case there is an emergency and you can't make payments on time, your credit is not as affected?

I went with extended repayment when I redid mine last year (I was on IBR) because I didn't want to lock into the large payment every month. We still pay extra every month, and have made tons of progress, but if we have a tight month, we're still OK. I also didn't want the larger payment affecting our DTI ratio for mortgage, etc.

 

[Ackj]

I went with IBR for that exact reason. My required payment is only a few hundred bucks, but I still throw about $3k per month toward the loan. Just good to know that if SHTF I would only be on the line for the few hundred, rather than locked in at whatever the 10 year rate was. I'll probably have it all paid off in way less than 10 years anyway.

 

[sakigt]

I set mine up for 10 year repayment and pay extra each month. Because Im a slack-ass lazy mofo and this way I dont find myself paying for my college when Im 40 years old. Hellz no.

I paid off my credit cards, cars, home depot, other debt and cash-flowing house expenses by budgeting. We are month 3 into the Dave Ramsey plan and have made HUGE gains. Its cray cray. Should have done this when I first graduated.

 

[pezdispenser]

I paid off my credit cards, cars, home depot, other debt and cash-flowing house expenses by budgeting. We are month 3 into the Dave Ramsey plan and have made HUGE gains. Its cray cray. Should have done this when I first graduated.

I didn't start listening to Dave Ramsey until after I paid off my student loans, but yeah, he still changed my life. Wish I did it sooner. Things like setting goals, focus, motivation, having a purpose in life, and of course winning with money. I'm now on Baby Step 6 and on track to pay off my mortgage this year. Feels great already! Stick to the plan and keep up the good work!

 

[dpmd]

I got as far as him saying to pay off debt in order of smallest balance rather than interest rate and decided he wasn't for me. However, for someone who needs the motivation of seeing a zero balance (rather than someone who just wants to save the most on interest and is disciplined enough to do it even if the payoff time is longer) i can see the value.

 

[pezdispenser]

I got as far as him saying to pay off debt in order of smallest balance rather than interest rate and decided he wasn't for me. However, for someone who needs the motivation of seeing a zero balance (rather than someone who just wants to save the most on interest and is disciplined enough to do it even if the payoff time is longer) i can see the value.

Sure, there is a calculator here http://unbury.me/ to compare the two methods:
1. Avalanche - highest interest rate first
2. Snowball - smallest balance first (Dave Ramsey recommends this)

And the avalanche method always comes out paying less interest and maybe a month or two faster.

But the thing is, when talking about high debt loads of $200k+ which will take 5 years and maybe even up to 25 years to pay off, will you really follow either plan exactly? Probably not, because life happens and you have to keep adjusting your budget. And that's where the true meaning of the Dave Ramsey plan comes into play. It's about changing your behavior and spending habits to get you fired up and motivated to eliminate debt. Because you know how to pay the least interest? Simply PAY OFF YOUR DEBTS in the fastest way possible!

 

[Ackj]

Sure, there is a calculator here http://unbury.me/ to compare the two methods:
1. Avalanche - highest interest rate first
2. Snowball - smallest balance first (Dave Ramsey recommends this)

And the avalanche method always comes out paying less interest and maybe a month or two faster.

But the thing is, when talking about high debt loads of $200k+ which will take 5 years and maybe even up to 25 years to pay off, will you really follow either plan exactly? Probably not, because life happens and you have to keep adjusting your budget. And that's where the true meaning of the Dave Ramsey plan comes into play. It's about changing your behavior and spending habits to get you fired up and motivated to eliminate debt. Because you know how to pay the least interest? Simply PAY OFF YOUR DEBTS in the fastest way possible!

That's a pretty cool calculator. Pretty much just convinced me it's not worth it to refinance my loans, since going from 6.5% down to even 3%(and I wouldn't get that low) only saves me a few grand and a few months time. I'll keep my IBR safety net and keep plugging away.

 

[dpmd]

Sure, there is a calculator here http://unbury.me/ to compare the two methods:
1. Avalanche - highest interest rate first
2. Snowball - smallest balance first (Dave Ramsey recommends this)

And the avalanche method always comes out paying less interest and maybe a month or two faster.

But the thing is, when talking about high debt loads of $200k+ which will take 5 years and maybe even up to 25 years to pay off, will you really follow either plan exactly? Probably not, because life happens and you have to keep adjusting your budget. And that's where the true meaning of the Dave Ramsey plan comes into play. It's about changing your behavior and spending habits to get you fired up and motivated to eliminate debt. Because you know how to pay the least interest? Simply PAY OFF YOUR DEBTS in the fastest way possible!

True. It is kind of like dieting lots of people eat one thing off their diet and it snowballs into eating everything whereas if you make a concerted effort to change your lifestyle in small sustainable ways over time you are more likely to stick with it. It isn't just about paying off debt it is about your whole financial lifestyle.

 

[SClENCE]

I don't see why anyone wouldn't pay the highest interest debt first.

 

[trailerpark]

I didn't start listening to Dave Ramsey until after I paid off my student loans, but yeah, he still changed my life. Wish I did it sooner. Things like setting goals, focus, motivation, having a purpose in life, and of course winning with money. I'm now on Baby Step 6 and on track to pay off my mortgage this year. Feels great already! Stick to the plan and keep up the good work!

How low did you get your student loans before taking on a mortgage for your house?

 

[Dred Pirate]

I don't see why anyone wouldn't pay the highest interest debt first.

mathematically speaking - there is no reason - and I follow that philosophy - but if the highest interest loan is also the highest amount - lets say 70,000 and there are lower dollar/higher interest loans at 3k and 8k, there is a physiological effect of seeing those balances go away. Also, that then lowers your minimum payment if something bad happens (hours cut, need $$ for emergency, etc)

 

[IlDestriero]

If there is a lower total that you can knock off in a few months, it's one less check to send out. There's something to be said for that. Of course if you set up auto deductions, you don't have to worry at all.

 

[pezdispenser]

How low did you get your student loans before taking on a mortgage for your house?

Oh boy, I did a lot of stupid things financially at the time.

- $52k of student loans with 6 month grace period so I didn't pay any off, and instead saved for a down payment on my house. This was before tuition skyrocketed, but I was still paying $20k/yr at a private school. I still kept the loans down by working my tail off as an intern.

- Bought a $350k house 6 months after graduating. Monthly payments were quite heavy, I think $2,600/mo and had mortgage insurance because I didn't have 20% down. This was the point that I started to feel like I was drowning in debt (total ~$350k), with most of my money going out in payments and bills.

- I somehow turned it around, cut back on my lifestyle and started paying down my student loans. But after they were done, I didn't have the motivation to pay extra on my mortgage, and in fact, I added some big car loans for fancy cars. Relapsing...

- A few more years of grinding away until I start listening to Dave Ramsey. Finally I see the light. Having debt is like trying to run the wrong way up the down escalator. Sure, you can make it to the top, all huffing and puffing, but you are constantly being dragged down by debt. You can't even stand still for a moment to rest, because it constantly pulls you down. Now imagine you have no debt, and instead you have investments that pay YOU interest and earn you money. This is you on the UP escalator. You can just stand there and chill if you want, and it still carries you to the top. Or, you can start walking or even running, and you'll be shooting to the top!

 

[sakigt]

mathematically speaking - there is no reason - and I follow that philosophy - but if the highest interest loan is also the highest amount - lets say 70,000 and there are lower dollar/higher interest loans at 3k and 8k, there is a physiological effect of seeing those balances go away. Also, that then lowers your minimum payment if something bad happens (hours cut, need $$ for emergency, etc)

Im paying off two cars this year because doing so frees up ~$900 a month whereas that same $$$ amount going to the loans with a higher rate would only free up ~$250

I love Dave Ramsey but I shoot most of his kool aid back into the cup with some things. Listening to his program mostly helped get the hubbs on board. Ive been listening to Ramsey since before Pharmacy school so I agree with most of the concepts but if I had listened to his student loan advice Id still be making $10.50 an hour with about 2 years of Pharmacy school tuition saved up. /aintnobodygottimeforthat

 

[All4MyDaughter]

I went with IBR for that exact reason. My required payment is only a few hundred bucks, but I still throw about $3k per month toward the loan. Just good to know that if SHTF I would only be on the line for the few hundred, rather than locked in at whatever the 10 year rate was. I'll probably have it all paid off in way less than 10 years anyway.

Is IBR different now? My payment was low the first few years because it was based on my income during pharmacy school and residency. But when I had to recertify last year, it was going to go WAY up. The potential payment was capped at the equivalent 10 year plan payment, but I didn't want to pay that much, so I went to the extended plan.

 

[Dred Pirate]

Is IBR different now? My payment was low the first few years because it was based on my income during pharmacy school and residency. But when I had to recertify last year, it was going to go WAY up. The potential payment was capped at the equivalent 10 year plan payment, but I didn't want to pay that much, so I went to the extended plan.

if you planned on doing the public service forgiveness, you are no longer elgible - you have to do IBR/10 year repayment plan

 

[SClENCE]

No you could have worked 40 hours during pharmacy school and borrowed the minimum.

Except Ramsey says not to borrow at all if I'm not mistaken.

 

[sosoo]

Im paying off two cars this year because doing so frees up ~$900 a month whereas that same $$$ amount going to the loans with a higher rate would only free up ~$250

i thought the same when i put $10,000 in my car loan. then i realize my car loan didn't budge. the interest on car loans do not accrue like student loans. the interest is already added in. so essentially you're not saving anything on interest whether paying it off early or not.

 

[dpmd]

Stop giving bad advice! Are you this guy's business manager?

Still paying off student loan debt? So is actor Miles Teller, co-star of the film Insurgent, which premiered over the weekend to the tune of $54 million.
Despite having starred in several blockbuster films since his graduation from New York University’s Tisch School of the Arts, the 28-year-old revealed to Vulture this past weekend that he has yet to wholly fulfill his student loan obligations.

“My business manager says the interest is so low, there’s no sense in paying them off,” Teller told Vulture. “I can, if I want to have that badge of accomplishment, but until then I still very much have my NYU loans.”

With roles in five upcoming films, including Fantastic Four, and Fantastic Four 2, and the success of previous films, including Divergent and Whiplash, it’s likely the actor has his debts under control. However, he’s one of the lucky few.

According to CNN Money, 40 million Americans now owe a collective $1.2 trillion in student loans, up from 29 million debtors in 2008. CNN also reports the average student loan balance increased from $23,000 in 2008 to $29,000 in 2014.

Of his role choices, the Whiplash actor told Vulture: “I never pick anything based on, oh, this is what’s out there… I don’t work for the sake of working. Everything that comes my way has been thought out in terms of what it’s doing.”

Regardless of what motivates Teller in finding suitable work, according tocelbritiesmoney.com, he has earned $2 million dollars since 2011.

Actually depending on when he took loans and if he consolidated it is probably entirely reasonable to not have paid off his student loans. Mine are sitting at under 2% interest so there is a lot i can do with my money before paying off the loan becomes the best thing to do. Especially since getting rid of that monthly payment s fairly insignificant to my budget at this time (although i can sympathize with the mindset that would lead to paying off a lower interest rate debt just to make your monthly required spending go down).

 

[Momus]

i thought the same when i put $10,000 in my car loan. then i realize my car loan didn't budge. the interest on car loans do not accrue like student loans. the interest is already added in. so essentially you're not saving anything on interest whether paying it off early or not.

You forgot to check the box that said "principal only" when sending your payment. LOL.

 

[Momus]

Stop giving bad advice! Are you this guy's business manager?

Still paying off student loan debt? So is actor Miles Teller, co-star of the film Insurgent, which premiered over the weekend to the tune of $54 million.
Despite having starred in several blockbuster films since his graduation from New York University’s Tisch School of the Arts, the 28-year-old revealed to Vulture this past weekend that he has yet to wholly fulfill his student loan obligations.

“My business manager says the interest is so low, there’s no sense in paying them off,” Teller told Vulture. “I can, if I want to have that badge of accomplishment, but until then I still very much have my NYU loans.”

With roles in five upcoming films, including Fantastic Four, and Fantastic Four 2, and the success of previous films, including Divergent and Whiplash, it’s likely the actor has his debts under control. However, he’s one of the lucky few.

According to CNN Money, 40 million Americans now owe a collective $1.2 trillion in student loans, up from 29 million debtors in 2008. CNN also reports the average student loan balance increased from $23,000 in 2008 to $29,000 in 2014.

Of his role choices, the Whiplash actor told Vulture: “I never pick anything based on, oh, this is what’s out there… I don’t work for the sake of working. Everything that comes my way has been thought out in terms of what it’s doing.”

Regardless of what motivates Teller in finding suitable work, according tocelbritiesmoney.com, he has earned $2 million dollars since 2011.

Some people, even after they finish doctorate degree education, are financially illiterate. Should be the #1 priority to learn about this before they go make a living.

http://www.bankrate.com/financing/investing/financially-illiterate-american-kids/
http://finance.townhall.com/columni...americans-are-financially-illiterate-n1884619
http://www.cheatsheet.com/personal-...of-the-financially-illiterate.html/?a=viewall

 

[Dred Pirate]

Some people, even after they finish doctorate degree education, are financially illiterate. Should be the #1 priority to learn about this before they go make a living.

http://www.bankrate.com/financing/investing/financially-illiterate-american-kids/
http://finance.townhall.com/columni...americans-are-financially-illiterate-n1884619
http://www.cheatsheet.com/personal-...of-the-financially-illiterate.html/?a=viewall

I have advocated that all high school seniors should have to take a financial literacy 101 class in order to graduate. You will be amazed how many people (that are smart) have no clue how retirement plans work

 

[BMBiology]

I have advocated that all high school seniors should have to take a financial literacy 101 class in order to graduate. You will be amazed how many people (that are smart) have no clue how retirement plans work

Some people just dont care and some people would rather just put their head in the sand. You can easily learn about finance nowadays. Just youtube it. There are some common rules everybody should follow but yet, people refuse to follow them. No class will ever change that. They don't have anyone to blame but themselves (although I am sure they will blame someone for their misfortune).

 

[IlDestriero]

i thought the same when i put $10,000 in my car loan. then i realize my car loan didn't budge. the interest on car loans do not accrue like student loans. the interest is already added in. so essentially you're not saving anything on interest whether paying it off early or not.

What are you talking about? If you pay off the loan early, of course you save on interest.
If you borrow money for a car with a standard fixed loan they calculate the total interest over the loan period and determine your monthly payment. Say $1000/mo x 36 months. For the sake of simplicity, let's say the car loan was 30k and the calculated interest totals $6k over the 3 years for 36k total. ($1000x36)
If you decide after a month to pay an extra 15k upfront, your payment will still be $1000 a month, but you will not be paying it off for 36 months anymore, you will pay it off in about 1/2 the time, and you will have paid less in interest during that time because you have less loan (1/2) collecting interest, and it is accruing over a shorter time (1/2). You don't pay 3 years worth of interest on the 30k loan because the interest isn't accruing on the full and projected amount anymore. If you pay off the loan completely early, assume after the first month, you don't pay the 36k that you would have paid over 3 years, you call for the pay off amount (which would be about ~29k) and you're done. You would have only paid one months worth of interest. There isn't (usually) any penalty for paying off a loan early.
Home loans are similar. They payment doesn't change by making extra payments, but the end comes sooner and you will have paid less interest.

 

[HelpfulPharmer1]

i thought the same when i put $10,000 in my car loan. then i realize my car loan didn't budge. the interest on car loans do not accrue like student loans. the interest is already added in. so essentially you're not saving anything on interest whether paying it off early or not.

When I was 23 years old, I once got tricked with such car loan at small car dealership. In the contract, loan term was under "rule 78" which of course, we did not know what that meant. We also did not think we would have the money to pay off soon so we did not even ask about Early Payment Penalty or Early Payment Benefit....2 months later, when we found family loan to pay off the whole loan, interest was still the same. What's the point of paying off that loan! Could have invested the money somewhere else.
...
* The “Rule of 78’s” was adopted during the time before computers as a practical solution to calculating the actual interest charges when a loan was paid off early. However, now precomputed interest and the “rule of 78’s” are basically a hidden penalty for paying off a loan early.
...
Reference: http://thefinancialreader.com/post/8158488191/an-explanation-of-the-rule-of-78s



(Another family member just paid off Wells Fargo car loan, interest was fairly computed,

If pay off after 3 years, $1600 interest.

Paid off within 3 months, paid around $200 interest. That's fair business.)


Lesson learned the hard way. Watch out, folks...Small car dealerships have their own survival tricks for their own benefits, avoid loan with RULE 78.

 

[dpmd]

What are you talking about? If you pay off the loan early, of course you save on interest.
If you borrow money for a car with a standard fixed loan they calculate the total interest over the loan period and determine your monthly payment. Say $1000/mo x 36 months. For the sake of simplicity, let's say the car loan was 30k and the calculated interest totals $6k over the 3 years for 36k total. ($1000x36)
If you decide after a month to pay an extra 15k upfront, your payment will still be $1000 a month, but you will not be paying it off for 36 months anymore, you will pay it off in about 1/2 the time, and you will have paid less in interest during that time because you have less loan (1/2) collecting interest, and it is accruing over a shorter time (1/2). You don't pay 3 years worth of interest on the 30k loan because the interest isn't accruing on the full and projected amount anymore. If you pay off the loan completely early, assume after the first month, you don't pay the 36k that you would have paid over 3 years, you call for the pay off amount (which would be about ~29k) and you're done. You would have only paid one months worth of interest. There isn't (usually) any penalty for paying off a loan early.
Home loans are similar. They payment doesn't change by making extra payments, but the end comes sooner and you will have paid less interest.

It is possible they did what my mortgage company tried to do to me when i made extra payments, which is to consider the extra amount prepayment (at one point it was ridiculous because i was like 2 yrs ahead on payments) instead of a principal payment. Had to call and have them back out all those payments and manually reenter them correctly.

 

[sakigt]

There are exceptions. He said to invest in yourself (market place value degree, finish school) while keeping the loans to a minimum. He always talks about Ratios.
$160K loans on a a degree that makes $40K, doesn't make sense. <$100K loans on a pharmacy degree that makes +$100K is manageable but $200K loans on pharmacy degree is borderline unmanageable.

Listen:
https://www.daveramsey.com/index.cfm?event=askdave/&intContentItemId=122967

I borrrowed $11k/average a year to live on and worked 20-30 hours per week, except of couse 4th year because depending on the rotation I was pretty busy. Had a kid during Pharmacy school too. Could I have done beans and rice and spent less? Absolutely. Much less? Meh. But like I said, Im doing the Dave Ramsey light plan and yes, after 4 years making $10.50 I still would not have enough cash to pay for pharmacy school. And unfortuantly as mentioned previously amount dispersed is a far cry from the total amount due when youre actually able to start paying it back.

Ramsey talks ratios a lot. He especially like to talk ratios when talking about cars, homes but Ive never heard him talk degrees. He may slap your hand less harshly when you borrow $80k to get a $100k job but he still doesnt like it. Ive been listening to his radio program for months and the above may be a rare instance where he sadi it was ok (cant listen to it at the moment) every other caller who has called in has been told absolutely never to borrow.

 

[pezdispenser]

You forgot to check the box that said "principal only" when sending your payment. LOL.

It is possible they did what my mortgage company tried to do to me when i made extra payments, which is to consider the extra amount prepayment (at one point it was ridiculous because i was like 2 yrs ahead on payments) instead of a principal payment. Had to call and have them back out all those payments and manually reenter them correctly.

Nelnet is notoriously bad about this. They actually do have a check box when making payments on their website to tell them to apply extra payments to principal immediately. But it always gets ignored and they just hold on to extra payments and advance the next due date. My friend has had to call them up each and every time she makes an extra payment to make sure they apply it to the principal.

 

[GoldfishPharmD]

Anyone doing/planning to do the PSLF program? I'm one of those people with their head in the sands and trying to figure out with to do with my massive debt after residency. At least I found a job.

 

[gwarm01]

Anyone doing/planning to do the PSLF program? I'm one of those people with their head in the sands and trying to figure out with to do with my massive debt after residency. At least I found a job.

I'm on that program. It was pretty simple. Just print out the form, take it to HR, then do your yearly renewals. I'm not really going to have much left to forgive after 10 years, but it's better than nothing.