Student Loan Question

[PistonFan531]

I am graduating from pharmacy school in May 14 and I have a question in regards to student loans. I am going to owe about $120,000-125,000 when I am done and I was thinking about choosing a 25 year plan where I make smaller monthly payments for 25 years. However, I was told that this is not possible for full time retail pharmacists because they will see the high salary that I will be making and as a result, I will not be allowed to pay it off in 25 years; instead, I would be required to make larger payments so that my loan would be paid off in 10 years or less. Is this true? Are full time retail pharmacists forbidden from the 25 year plan?

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[pharm4312]

I am graduating from pharmacy school in May 14 and I have a question in regards to student loans. I am going to owe about $120,000-125,000 when I am done and I was thinking about choosing a 25 year plan where I make smaller monthly payments for 25 years. However, I was told that this is not possible for full time retail pharmacists because they will see the high salary that I will be making and as a result, I will not be allowed to pay it off in 25 years; instead, I would be required to make larger payments so that my loan would be paid off in 10 years or less. Is this true? Are full time retail pharmacists forbidden from the 25 year plan?

You can choose a graduated 25 year extended repayment plan regardless of your income.

If your income is such that your payments under IBR are greater than or equal to your payments under the standard 10 year repayment plan, you will not be eligible for IBR. You will probably be right at the cutoff with your loan amount and expected income. This may be what you are referring to.

 

[vardenafil]

DON'T DO THE 25 YEAR PLAN! Take it from someone who has been down that road. I am 10 years into the 25 year plan. I have paid roughly 80k into my student loans. Doing so has only dropped my principal by only a 6 or 7 grand. the rest of my money has gone to interest and fees. I have not been able to buy a house or even fully start to save for retirement because of my student loan debt burden. Google loan calculators and do the math. doing a 10 year loan vs 25 year loan will save you about 50 grand in interest over the life of the loan. The payment difference vs the two loans isnt that big. I would take the 10 year plan and be done with it. Make ends meet. live like a poor college kid. dont buy that new car yet. Do what you have to... but dont take out a 25 year loan. if i could go back in time i would of done things different. pm me if you have questions.

 

[Amicable Angora]

DON'T DO THE 25 YEAR PLAN! Take it from someone who has been down that road. I am 10 years into the 25 year plan. I have paid roughly 80k into my student loans. Doing so has only dropped my principal by only a 6 or 7 grand. the rest of my money has gone to interest and fees. I have not been able to buy a house or even fully start to save for retirement because of my student loan debt burden. Google loan calculators and do the math. doing a 10 year loan vs 25 year loan will save you about 50 grand in interest over the life of the loan. The payment difference vs the two loans isnt that big. I would take the 10 year plan and be done with it. Make ends meet. live like a poor college kid. dont buy that new car yet. Do what you have to... but dont take out a 25 year loan. if i could go back in time i would of done things different. pm me if you have questions.

Words of wisdom.

 

[All4MyDaughter]

DON'T DO THE 25 YEAR PLAN! Take it from someone who has been down that road. I am 10 years into the 25 year plan. I have paid roughly 80k into my student loans. Doing so has only dropped my principal by only a 6 or 7 grand. the rest of my money has gone to interest and fees. I have not been able to buy a house or even fully start to save for retirement because of my student loan debt burden. Google loan calculators and do the math. doing a 10 year loan vs 25 year loan will save you about 50 grand in interest over the life of the loan. The payment difference vs the two loans isnt that big. I would take the 10 year plan and be done with it. Make ends meet. live like a poor college kid. dont buy that new car yet. Do what you have to... but dont take out a 25 year loan. if i could go back in time i would of done things different. pm me if you have questions.

I don't understand this (no disrespect intended). If you are paying the smaller monthly loan payment, and not paying extra, what are you doing with the rest of your money, if not saving for retirement and or a home purchase?

I am on IBR to get the lowest possible payment, have paid off almost $50,000 in extra principle payments, and am about to close on a new home. I also bought a vehicle last year and paid it off within a few months. A lower monthly loan obligation is actually preferable for mortgage underwriting. They don't really care about your total debt, just your monthly DTI.

 

[vardenafil]

I don't understand this (no disrespect intended). If you are paying the smaller monthly loan payment, and not paying extra, what are you doing with the rest of your money, if not saving for retirement and or a home purchase?

IDTI.

For the last 3 years I have been employed only part time. Several years back my company laid off 30 pharmacist statewide. I was lucky enough to land a part time gig. I haven't been able to find full time work yet. So thats part of my problem. I also have a child who is severely handicapped and most of my money and efforts go to making his life better.

 

[All4MyDaughter]

For the last 3 years I have been employed only part time. Several years back my company laid off 30 pharmacist statewide. I was lucky enough to land a part time gig. I haven't been able to find full time work yet. So thats part of my problem. I also have a child who is severely handicapped and most of my money and efforts go to making his life better.

Sounds difficult. That information really changes the picture. I'm not sure that others (who are not in your situation) should always opt for the 10 year payment based on your experience. Individual circumstances matter a lot.

 

[BMBiology]

I don't understand this (no disrespect intended). If you are paying the smaller monthly loan payment, and not paying extra, what are you doing with the rest of your money, if not saving for retirement and or a home purchase?

I am on IBR to get the lowest possible payment, have paid off almost $50,000 in extra principle payments, and am about to close on a new home. I also bought a vehicle last year and paid it off within a few months. A lower monthly loan obligation is actually preferable for mortgage underwriting. They don't really care about your total debt, just your monthly DTI.

But also to be fair, you are much older than most of us and you live in the midwest where it is a lot cheaper. Didn't you tell us you have already bought a house?

 

[All4MyDaughter]

But also to be fair, you are much older than most of us and you live in the midwest where it is a lot cheaper. Didn't you tell us you have already bought a house?

Age and location don't really change how mortgage financing is calculated. It's still monthly obligation/DTI regardless of how old you are or where you live.

I'm buying a new house. Closing Monday. I sold the one we've owned for 11 years.

 

[flavor123]

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[PistonFan531]

Thanks a lot for the replies guys.

 

[amox]

I made an excel sheet that takes into account principle + interest each month - payments.

You can alter interest rate, principle, and monthly payments to see how long it will take you to pay it off.

If anyone wants a copy send me your email.

125,000 @ 5% interest with 3,000 monthly payments will take 46 (~4yr) months to pay off.

125,000 @ 5% interest with 1350 monthly payments will take 120 (10yr) months to pay off.

 

[PistonFan531]

I have another question guys. Let's say that I sign up and register for the 25 year plan. But then, let's say I change my mind as soon as I start working as a pharmacist and I want to pay off all of my loans within the first two years of working. Would I be allowed to do that?

 

[All4MyDaughter]

I have another question guys. Let's say that I sign up and register for the 25 year plan. But then, let's say I change my mind as soon as I start working as a pharmacist and I want to pay off all of my loans within the first two years of working. Would I be allowed to do that?

Sure.

 

[sosoo]

i heard that you can just pay the principal without paying the interest. does anyone know how to go about it? i figure if i pay directly towards the principal, the interest will by default be lowered?

 

[pezdispenser]

i heard that you can just pay the principal without paying the interest. does anyone know how to go about it? i figure if i pay directly towards the principal, the interest will by default be lowered?

I don't think you can. If you are in in-school deferment, there could be a large chunk of accrued interest that has not been capitalized yet, that you will have to pay off first before you can pay down the principal.

If you are in repayment, then the interest from when you were in school would have been capitalized, and you only have to pay the interest that accrues each month before paying down the principal.

 

[BMBiology]

Interest is often capitalized to the principle on a daily basis so it doesn't matter