Student Loans

[UteStar]

My loan is at 1.25% right now. It is a 15 year loan. Yeah, I would rather not have that monthly payment, even though it is pretty small...but it is hard for me to pay that off sooner than other things when I am at so low of an interest rate. I will just let it run its course.

[cougjunkie]

No need to list initial amounts out of school, but how many years passed before you finished paying off your student loans? For those that are still paying, how many years before you think you will have yours paid off?

My wife and I collectively have around 7k left on our student loans. Not much, or at least doesnt seem that much to me. We currently pay around double the minimum payment each month. We left school in 2000, so we are now at the decade mark.

My question is how closing out the loan will affect my credit score. Does it make it go up because we no longer have the debt? Does it make it go down because I am losing a current sample of on-time payments? Does it have no real effect on the score? We carry no credit card balance each month, we lease our cars, and sold our house last summer, so basically we have no other debt. At the same time, I'm not sure if I am currently "building" my credit, either.

I'm getting bored of this monthly payment and am tempted to just make it go away, but dont want to hurt myself in the process. Any input how closing out your student loans impacted your score, if at all?

It is all about the proportion of current balance compared to high balance/limit. So if you owe $7,000 and your high balance on them was $70,000 you are in good shape and it is actually helping your credit by not paying them off. However if it was a credit card and you owed $7000 and the limit on the card was $70,000 it would hurt you because of the potential to rack up new debt.

[doctorcoug]

My wife and I wanted to work up a sizable savings prior to paying down loans, since we have very little liquid assets. Now that this nest egg is enough to pay my mortgage for a year, that extra money is going to pay down the monthly interest on my $280,000 in loans (yup, you read that correctly).

When I graduate in a year, we plan on using the NHSC loan repayment program at 30K a year, continue the 50K lifestyle, and pay down over 75K a year to rid ourselves of debt. My 50K of debt at 2% will probably stick around for a while, however.

[TripletDaddy]

My wife and I wanted to work up a sizable savings prior to paying down loans, since we have very little liquid assets. Now that this nest egg is enough to pay my mortgage for a year, that extra money is going to pay down the monthly interest on my $280,000 in loans (yup, you read that correctly).

When I graduate in a year, we plan on using the NHSC loan repayment program at 30K a year, continue the 50K lifestyle, and pay down over 75K a year to rid ourselves of debt. My 50K of debt at 2% will probably stick around for a while, however.

My BIL will have well over 400k when he finishes med school. Insane. No thanks.

[Slim]

I'll owe over 300k in loans when I graduate. When I think about owing that much money I want to vomit.

[wuapinmon]

My wife and I wanted to work up a sizable savings prior to paying down loans, since we have very little liquid assets. Now that this nest egg is enough to pay my mortgage for a year, that extra money is going to pay down the monthly interest on my $280,000 in loans (yup, you read that correctly).

When I graduate in a year, we plan on using the NHSC loan repayment program at 30K a year, continue the 50K lifestyle, and pay down over 75K a year to rid ourselves of debt. My 50K of debt at 2% will probably stick around for a while, however.

Are you aware of this program?

http://studentaid.ed.gov/PORTALSWebApp/students/english/PSF.jsp

[MarkGrace]

That's how I feel about my student loans.

[doctorcoug]

Yes, I'm aware of that program. You know what is funny? The IRS has stated that residents are not students, but employees (and the SCOTUS agrees with them). So, imagine you are a budding cardiothoracic surgeon who completes 5 years of surgery residency then two years of thoracic fellowship and you pay your IRB payments for all seven years. Let's also suppose that you work for a 501(c)3 for your training (most of us work for these types of organizations). Boom! You only have three years left on your loans until they are forgiven.

Using this model and my current situation, my payment amount would be $0 per month for seven years. So, I make 84 payments of $0 and then I graduate from residency. I then have 3 years of payments on my 280K (which is now probably 500K) and the government then writes off the rest. So, i paid off around 75K of my initial 280 (now probably near 500). That is a sweet deal and most definitely not at all what president bush had in mind when he built this law.

[Clark Addison]

I don't think Paying off student loans is going to do much of anything one way or another with your credit score. It doesn't factor into your balance to limit ratio, since it is installment, not revolving debt.

Like many, I haven't rushed to pay off my student loans. I am 17 years out of school. I think I originally had about 15K. My interest rate is around 2%, so I have pretty much just paid the minimum. It's less than $100/month, so it's not something I notice much. It's now down to about $2,000 so I'll probably just pay it off to get rid of it.

[wuapinmon]

Yes, I'm aware of that program. You know what is funny? The IRS has stated that residents are not students, but employees (and the SCOTUS agrees with them). So, imagine you are a budding cardiothoracic surgeon who completes 5 years of surgery residency then two years of thoracic fellowship and you pay your IRB payments for all seven years. Let's also suppose that you work for a 501(c)3 for your training (most of us work for these types of organizations). Boom! You only have three years left on your loans until they are forgiven.

Using this model and my current situation, my payment amount would be $0 per month for seven years. So, I make 84 payments of $0 and then I graduate from residency. I then have 3 years of payments on my 280K (which is now probably 500K) and the government then writes off the rest. So, i paid off around 75K of my initial 280 (now probably near 500). That is a sweet deal and most definitely not at all what president bush had in mind when he built this law.

So, take advantage of it. It's one of the better laws out there for helping people who are guaranteed to pay back into the system far more than they ever took out. It also encourages people to go into public service. FYI, I don't think that $0 "payments" count.

[New Mexican Disaster]

Using this model and my current situation, my payment amount would be $0 per month for seven years. So, I make 84 payments of $0 and then I graduate from residency. I then have 3 years of payments on my 280K (which is now probably 500K) and the government then writes off the rest. So, i paid off around 75K of my initial 280 (now probably near 500). That is a sweet deal and most definitely not at all what president bush had in mind when he built this law.

They will only count actual payments. Not paying some up front that will cover several months at a time. Also, so far as I know you can't receive any other assistance from other sources on your student loans. Some of these details have yet to be worked out.

[Portland Ute]

I will not pay off my student loans any sooner than I have to.

They are at 1.125% fixed.

I have about 160K left on my loans.

I started repayment about 8 years ago.

I am in no hurry.

Everything else will get paid off first with gusto. After that, I might, but with that interest rate, it's like free money. In fact, if things get inflationary, the true cost to me on that debt actually goes down.

Other than wanting to rid myself of the 700ish payment every month, I'm not sure why I would pay this off.

[UtahDan]

I will be paying my student loans for another 22 years. Unless things take a dramatic turn for the better.

Me too more or less, but the money is so cheap that it will be the last debt I pay off so it is WAY back at the end of the line.

[doctorcoug]

They will only count actual payments. Not paying some up front that will cover several months at a time. Also, so far as I know you can't receive any other assistance from other sources on your student loans. Some of these details have yet to be worked out.

So, I make a $10 payment. This law just doesn't make a whole lot of sense for physicians from the government's pov.

Wuap: I'm not certain if I plan to work for a not-for-profit for the next ten years, though I will likely do the IRB in the event that I do. I took out an economic hardship deferment this year (so I could build some savings) and I'm likely to choose IRB.

[TripletDaddy]

Day of Liberation: made the final payment on my law school loan!

I actually still owed around $84 but they sent me an email telling me basically to forget about it. I also received a nice email confirming my new PIF status.

Time to start living a riotous lifestyle :rockon1: