Question

Hello everyone I listened to this podcast several years ago and now I'm trying to find some guidance on what would be the best decision for me to do. Currently in grad school. I have ~$34k in unsubsidized student loans (6. 06-6. 6% interest) $16k in grad student plus loans (7. 08% interest). AND I still have 1. 5 yrs of school tuition to pay for. (estimating to be over 100k in debt after graduation :( ) I've been working throughout my program to try to reduce loans. Summer tuition is coming, another $9k for tuition. Im wondering if I should be paying off the accumulated interest on my student loans right now, OR saving my income to try to pay in cash for summer tuition so I dont have to take out a summer loan. When fall comes around though, I will definitely need to take our another loan. Which would be best for me to save more money over time? any advice/input/recommendations would be appreciated! thank you!  

Answer 1

Pay tuition out of pocket as best you can. Any new loans will have automatic interest tacked on so the instant you sign the paper, you'll owe more than the 9k you borrow.  

Comments

So you think instead of tackling the interest accruing on my current 53k loans, I should just prevent taking out another loan of 9k? The thing is I have several 'repayment' periods, which means If I put money back to the loan it will act as if I never borrowed that amount of money, and any interest accrued on the amount I pay back also disappears.  

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@koziara so student loans are hard because the terms are all different. You could sit down & do the math with a loan calculator on bankrate. com but for myself, I would just try to prevent new ones as much as possible. Honestly, id be applying like mad to scholarships, financial aid, etc. Before digging deeper into debt but I get that it can be really hard to do that.  

Answer 2

Are you not able to defer the interest on your current loans since you’re still attending?  

Comments

No because I'm a graduate student. I called my loan company and they told me my daily interest is about $9 per day right now!  

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@spencer8887 interest starts to accrue from the day a loan is disbursed. Sadly.  

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@cuckooflower not if you are attending undergrad or the loans are in deferment.  

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Or at least that’s how it was back in my day.  

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That might mean you had direct subsidized loans. I had unsubsidized loans - so interest accrued from day of disbursement. Not sure what @koziara’s situation is.  

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@cuckooflower ah she said unsubsidized loans. I missed that  

Answer 3

I would suggest refinancing on a yearly basis if possible and paying tuition out of pocket. I have dropped my loans from 7% to 3. 5% by refinancing 3 years straight. You should still make about the same payment to reduce the years that I’m in debt so You don’t extend the length of the original loan.  

Comments

@glycerin did you refi through the same lender, or do a consolidation through SoFi or similar?  

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I refi with SoFi twice and then Lendkey once. I’m still with lendkey. I don’t think anyone can offer better than 3. 5%

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@koziara sounds like you should look at LendKey.  

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Wow congrats. That sounds amazing. I don't know too much about refinancing, but I thought this option was only available after I graduate school and am making a real full-time income? Also I didn't know you could refinance multiple times (especially without affecting your credit? ) I need to look more into that.  

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@glycerin do not refinance! You’re going to lose the government student loan protections

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@ensign19 what protections is that?  

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@koziara it might affect your credit a little but it will go back up especially if you’re paying loans off on time. I am not sure if you can refinance if you’re in school. You might be able to, if you have a job or a co-signer. They are going to want to see if you can pay them back.  

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@ensign19 that seems situational. I would much rather lose those protections and pay 3. 5% than pay 7. 08%.  

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I don’t think those protections apply - she doesn’t have Federal subsidized loans, and she’s in grad school. I’m with @glycerin, far better to pay less than HALF the interest rate.  

Answer 4

What are you going to school for?