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paying off student loans
Started by Concepcion10
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depends on how much money your going to make. Say you graduate and you start working 40 hours per week, 150k a year. These are just rough estimates, say about 50k goes into your taxes, another 20-30k goes into your living expense (cheap living style), you get to pay off about 70k a year.
70k * 5 years = 350k (almost paid off)
70k * 5 years = 350k (almost paid off)
Important Point #1: Many new grads are accepting jobs closer to $100k-$115k. And in many areas, cheap living requires closer to $35k.
*these are very rough numbers, highly variable based on income and location*
$105k income - $30k taxes - $35k living = $40k available
Important Point #2: Current students are forced to borrow at awful rates, ranging from 6.5%-8.5% (first $40k is at lower rate, past that is higher rate). So if you have $300k at avg. 7.5% interest, you owe $21k in interst payments alone (obviously decreases as you pay down principle). But a $40k won't pay down much principle - this is what everyone seems to forget when doing their math.
Use this calculator here: http://www.finaid.org/calculators/loanpayments.phtml
To pay back $300,000 at 7.5% would take 5 years of payments averaging $72k/yr.
To pay back $300,000 at 7.5% would take 10 years of payments averaging $42k/yr.
I recommend checking out Income-Based Repayment if you're concerned - gives you an outlet, should you need it. Not enough time to go into details about that right now...
*these are very rough numbers, highly variable based on income and location*
$105k income - $30k taxes - $35k living = $40k available
Important Point #2: Current students are forced to borrow at awful rates, ranging from 6.5%-8.5% (first $40k is at lower rate, past that is higher rate). So if you have $300k at avg. 7.5% interest, you owe $21k in interst payments alone (obviously decreases as you pay down principle). But a $40k won't pay down much principle - this is what everyone seems to forget when doing their math.
Use this calculator here: http://www.finaid.org/calculators/loanpayments.phtml
To pay back $300,000 at 7.5% would take 5 years of payments averaging $72k/yr.
To pay back $300,000 at 7.5% would take 10 years of payments averaging $42k/yr.
I recommend checking out Income-Based Repayment if you're concerned - gives you an outlet, should you need it. Not enough time to go into details about that right now...
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This thread terrifies me.
So when the student graduates he/she is on the standard 10 year repayment plan. Is it possible to pay off huge amounts ($60k+/year) the first three years and then extend rest of the amount to 15-20 years?
I would rather pay more toward student loans after graduation and less when the principle has decreased so the there is less interest compounded. Is this even possible?
I would rather pay more toward student loans after graduation and less when the principle has decreased so the there is less interest compounded. Is this even possible?
Yes, you enter into an extended repayment timeframe (25 years), and you are not penalized if you pay more or pay-off your loans early
