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dear past prefpara: you should have applied for financial aid
September 1, 2011 1:20 PM   Subscribe

I owe lots of money because I went to law school. I have a great job, so paying my loans back should not be the end of the world. If I can figure out how to do it. Can you help me figure out how to do it?

My problem is that my understanding is at a very basic level, so when I try to learn about "smart" ways to pay back my loans I get overwhelmed very quickly by information that is too sophisticated for me, which makes me feel anxious, which makes it hard for me to absorb new information. Is there a good resource that will teach me about this stuff without being immediately with the complexity? I can handle "pay off high interest first," but that's about as far as I've gotten; meanwhile, I have a total of 12 different loans, each with its own balance, interest rate, lender, and so on. I strongly suspect I should actually be balancing all those factors somehow or doing god knows what else.

On top of that, it's not clear to me how to repay my loans as a practical matter. They're supposed to show up on myfedloan.org but not all of them do (and some show up with different balances than my records reflect). I thought my law school's financial aid office was supposed to help me with this but they've been pretty useless, repeatedly, including with this specific issue.

I suspect that really these are not super-difficult problems. It's just that they stress me out badly, which makes it hard for me to think clearly and realize what the solutions are. My hope is that since my loans don't stress out the MeFi community, you guys can just tell me what I should be doing, at which point I will breathe a sigh of relief and add another item to the very long list of "times MeFi has helped me get my shit together."

Thanks in advance for your help. For the sake of clarity, I think I tried to ask two related questions:

1. How can I learn how to repay my loans as efficiently/strategically as possible?
2. How do I repay my loans? Literally, how?
posted by prefpara to Work & Money (14 answers total) 6 users marked this as a favorite
 
I have a total of 12 different loans, each with its own balance, interest rate, lender, and so on.

Is there any reason you're not consolidating them? I can't really remember the process, but as I recall it was a simple enough thing to do at the end of law school. Even if your school's financial aid office isn't great, they should be able to explain how to do this, since it's extremely common practice. Or, hopefully, someone with a better memory (or more recent experience) than me can tell you how here.
posted by amro at 1:30 PM on September 1, 2011


This seems to be a pretty simple explanation of consolidation.
posted by amro at 1:32 PM on September 1, 2011 [1 favorite]


Your loans aren't supposed to show up on myfedloan.org unless they're being serviced through the Department of Education. It's highly unlikely that any of your servicers knows about any loans that aren't with them. You want the National Student Loan Data System.

Paying down the loans with the highest interest rate first will mean you pay out the least money in the end.
posted by one more dead town's last parade at 1:46 PM on September 1, 2011 [1 favorite]


Are your loans private or federal? Subsidized or unsubsidized?
posted by k8t at 1:46 PM on September 1, 2011


Your private loans won't show up on the NSLDS, by the way.
posted by k8t at 1:47 PM on September 1, 2011


k8t, I have all those kinds of loans. I can't find some of them on any site, including the lender's.
posted by prefpara at 1:49 PM on September 1, 2011


And these sites let you play around with different repayment options:
http://studentaid.ed.gov/PORTALSWebApp/students/english/OtherFormsOfRepay.jsp
http://www.finaid.org/calculators/loanpayments.phtml

Test out the income-based plan and see how it looks for you.

Do you work in some form of public service? If so, you can do a special repayment plan that will forgive your debt after 120 months of working in public service.
posted by k8t at 1:50 PM on September 1, 2011


Put your info into the NSLDS to get the current information on your non-private loans (and print that page out :))

And then go to one of those loan calculators, input your information from the NSLDS into it and see what makes the most financial sense of the various repayment programs.

Think of your private loans as entirely different and the ones that you'll probably want to prioritize in paying off because they probably have higher interest rates.
posted by k8t at 1:52 PM on September 1, 2011


You are a well paid professional. If it really freaks you out to deal with this, go consult another professional. Its OK to pay an accountant or hands-on financial planner to help you with this.
posted by DarlingBri at 1:58 PM on September 1, 2011 [1 favorite]


If it really freaks you out to deal with this, go consult another professional. Its OK to pay an accountant or hands-on financial planner to help you with this.

This really is the only answer you need from us. There are accountants who will help you with this. Basically, you need to bring all the paperwork for each loan to an accountant. He will then be able to tell you what the terms of each loan are (interest rate, term of the loan, total balance outstanding, etc.) and help you devise a payment plan that is commensurate with your after-tax monthly income.

To be honest, once all the documents are in place, this is about ten minutes' worth of work for an accountant (or other financially savvy person) in Excel. Don't let the seeming complexity of it overwhelm you, because there are lots of people out there for whom this stuff is not overwhelming whose job it is to help other people with this kind of stuff.
posted by dfriedman at 2:06 PM on September 1, 2011 [2 favorites]


You can and should consolidate your federal student loans. This makes payment easier. , Here's the site with an extensive FAQ. If you also have private loans, those can be consolidated, too, but the interest rates are much higher. You can get a decent variable rate, but, well, it's variable. But if you have a mix of private and government loans, you won't consolidate them into one payment. You may decide that it's just simply not worth consolidating the private loans because the interest rate isn't that great on a private consolidation loan, for example. Wells Fargo and Chase both have these types of loans; not that I'd necessarily use either one, but they're examples of what's out there.

From there, it's just a matter of deciding whether you want to pay off your student loans early or do something different with the money, like invest it or save for a down payment on a house, or whatever. Personally I'd max out my 401(k) before I paid off student loans, but that's just me.

Once you've decided you want to pay down your loans, you contact the lenders and specifically ask them how to make additional payments that reduce your principal. The lenders must know that any additional payments go toward principal. Not every lender will automatically apply payments this way--they instead may consider you "prepaid" for your next so many payments. for example. You literally have to learn how to do this with each lender.

If you only have two loans you want to pay off, it makes the most sense to pay off the highest interest loans first, but you know this. If you wind up not consolidating and have a mishmash of different loans, you may instead want to consider paying off the one with the smallest balance first, then applying that amount to the next smallest loan, and so forth. There's something to be said for simply limiting the amount of lenders you have to deal with.
posted by MoonOrb at 2:13 PM on September 1, 2011 [1 favorite]


Did you just graduate? Because student loans generally have a grace period of 6+ months after graduation before repayment kicks in, and that may be where some of your confusion is coming from. If that is the case, then wait a few months and bills WILL start coming in (these are creditors and you owe them money, you won't have to track them down). Each one will have the lender address and payment amount, and you pay it like any other bill.

Give it some time, until you're reasonably confident that all are accounted for, and then call one of them about consolidation. That means they are all rolled together into one loan with one monthly payment, and it will simplify things a lot.

I didn't make enough to qualify for a consolidation loan after I graduated so I still do mine one at a time, and I was really overwhelmed at first too. But now it's perfectly manageable with a simple little Google Docs spreadsheet. By all means go to a pro if you are so inclined, but it's easier than you think to do it yourself!
posted by ella wren at 3:59 PM on September 1, 2011


This is a very simplified method, but it may work well if you're feeling overwhelmed. Grab all the paperwork you have. Open an excel sheet and make 3 columns* - Name/Lender, Amount, and Interest Rate. Type in all the information you have from the paperwork and/or copy and paste from the websites. You'll feel better when the information is all in one spot, instead of on multiple websites/pages.

Take a look at what you have. If there are any loans that you can knock off in one or two payments, set up an online bill payment and transfer the funds from your bank account for a few pay periods. You can arrange this to happen automatically, but there is something really satisfying about typing in the final amount and clicking send payment.

Next, look at your list of interest payments. The one with the highest rate is the one you focus on paying off. Arrange for the minimum payments for all the others to be automatically transferred from your bank account. When you have some surplus money in your bank account, transfer a thousand or two towards that loan. This is assuming that you can live below your means.. if you don't think you have the self-control (and for some this doesn't come naturally), set up a more structured payment plan.

This is how I paid off my six loans, and while consolidating is probably easier, it's much more satisfying to pay off a bunch of small loans than having a giant albatross of a loan. On preview, MoonOrb's advice about principal payments may be important to consider. I'm in Canada where the rules may be slightly different).

*You can also add a fourth column with account numbers, but I always have to double check the paperwork before I make a payment out of fear I've typed it in wrong and am now paying someone else's loan. YMMV.
posted by valoius at 9:04 PM on September 1, 2011


Thank you so much for your helpful advice. The NSLDS site was a great resource, and I finally have a complete list of my loans with all the relevant information there, including the account numbers. I also submitted an application to consolidate my loans today using the site MoonOrb suggested.

Once again you guys came through for me when I was all over the place. My heart swells with gratitude.
posted by prefpara at 11:28 AM on September 2, 2011


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