Student Loan Update…

I called Access Group, my student loan provider, yesterday to ask them a few questions on loan repayment. Currently, my loan repayment status/schedule is as follows but these numbers are on the low end. I just called again to find out that the estimated payment on the website does not include the interest that’s been capitalizing. Crap!!!

• Total loans: ~ $206,000
• $250 monthly beginning 1/2008 – federal unconsolidated
• $875 monthly beginning 4/2008 – private loans
• $500 monthly beginning 6/2008 – federal consolidated and federal grad plus loan

Good news for federal loans:

• I was told that my federal loans can be extended for 25 years because I have more than $30k in aggregate federal loans. This is called the extended repayment option.
• Monthly payment for my federal unconsolidated and fed grad plus loan will decrease slightly.
• Consolidated loans are already on a 30-year repayment plan at 3.5% fixed.

Repayment options for my private loans:

• Private loans have a 20 year repayment schedule
• Easy Pay 2 – interest only for 2 years and then straight-line amortization for remaining 18 years
• Easy Pay 3 – interest only for 2 years, interest and part principal for 3 years and then straight-line amortization for the remaining 15 years
• Modified (MGRS – One time option) – 6 months of 50% payment, 6 months of 75% payment, 1 year interest and then straight-line amortization for the remaining 18 years
• Forbearance options are limited to a one-time, 12-month period that you can use in 6 month increments.

Comments:

• Repayment Plan: I think I am going to go with the Easy Pay 3 option and hope that I will not have to switch to the MGRS option since you can only use it once. I may need to exhaust that option down the line.
• Student loan interest: I am looking forward to paying on my student loans. I know some people may think that’s weird but the sooner they enter repayment, the sooner my net worth really starts to improve. Right now, approximately $800/month in interest capitalizes on my loans. I try to offset this increase by paying $300 in principal on my heloc/cc, $100 on my mortgage, $400 towards retirement, and $100 towards investments. But with the large expenses I’ve been incurring and market fluctuations, my net worth has remained pretty stagnant with slight declines every month. Once the loans enter repayment, even if it’s just interest, my net worth will begin to make some strides towards improvement.
• Upcoming months/expenses: For the time being, I am trying to be patient and wait for my bar results, network to find a new job and control expenses as much as possible. Potential major expenses: Christmas of course and I may have to pay back my tuition reimbursement from my employer should I take a position outside the bank. I only have to pay back the last 2 years which would amount to approximately $11k. So, my savings would be depleted. One option is to try to get my new employer to pay the bank back in lieu of a signing bonus.

That’s where I am right now. I really put myself in a bind but I am trying not to get down about it. Push come to shove, I may have to sell my condo and downsize to an apartment or move home for a while, take the equity and pay off some of the private loans. My parents have already offered but I love my freedom and independence and it would just kill my spirit for that to happen after all of my hard work. I need to find a better paying job soon no matter what.