08-27-2012 02:50 PM - edited 08-27-2012 02:51 PM
I have no clue what the best way to payback student loans. I am trying to help someone out since they just graduated from college and have student loans to pay back. Just some info you may need to know. They have $1500 a month they can use to pay their college loans and they also have $5000 they can use immediately to put towards paying back a loan. Below is what their loans look like. If anyone can please help or give insight on what is the best way possible to pay these loans back? Do they consildate some of the loans and if they can't how should they pay them back. Let me know if you need any more information and I can provide it. They just graduated this past May of 2012 by the way. Thank you to whom ever can help this person out with their knowledge and advice. I know I am very thankful to have this community and the person I am doing this for cannot thank you enough. We are very grateful for your advice.
|Loans||Type of Loan||Loan Amount||Loan Date||Disbursed Amount||Outstanding Principal||Outstanding interest||Interest Rate|
|13||PRIVATE LOAN||9,655.67||2008 or 2010 I cant remember what they said||9,655.67||9,655.67||around 2,000 if I can remember correctly||9.75%|
|*All loans that are just labels unsubsized and subsidized are Stafford Loans|
08-27-2012 06:00 PM
Without busting out a calculator to work out the payments, this would be my general strategy:
Put the $5000 into that private loan right now. It has the highest interest rate, most interest accrued, and fewest options for deferrment or forbearance in the future. The only good private student loan (in my mind) is the one you didn't get followed closely by the one you quickly paid off with no lates.
Consolidate the federal loans (and check the National Student Loan Data System carefully to be sure none are missed). One lender, one payment, and I think $1500/month should cover both that and the private loan. It'll be easier to manage, and average your interest rates (so you don't wind up payment more, unless you extend your repayment plan). Put the loans on the 10 year repayment plan, you can always apply for income-based repayment if the financial situation changes, but now it looks like they can afford to be agressive in paying down their debt.
08-27-2012 06:10 PM
Thank you for your help. That is pretty much what I think I will have them do. They are currently trying to find a family memeber who is willing to consolidate their loans. By doing so they can get the best interest rate. They actually have $6000 they can put towards the Private loan so that is what they will do. One thing I have discussed with them is their budget and i want them to have some cash per month incase of an emergency or random expenses so we came up with the amount of $1000 which can be used per month to pay off the loans. They are working to find a job that pays more so they can always put more towards these loans once they start making more money. What banks consolidate loans? That is my next step. I heard Wells Fargo stopped doing student loan consolidation this past June 2012. What other banks out there does this leave? Thanks for the help
08-27-2012 08:24 PM
Whoa, whoa - why would this person consolidate a govt loan into one with a private lender? It might not be a good idea to consolidate federal loans into a private consolidation loan. This is because you will lose your rights under the federal loan programs once you choose to consolidate with a private lender. These include deferment, forbearance, cancellation, and affordable repayment rights.
If this person's just out of school, they should be eligible for a federal consolidation. Then he or she would remain eligible under the federal loan programs. Try here:
I agree with the advice to consolidate the federal loans (although NOT with a private lender!) and to focus on paying the private loans off first. Private lenders can be far, far worse than the govt. agencies, I promise.