topic Re: Discover Student Loan Consolidation in Student Loans

Discover Student Loan Consolidation

macinjosh — Thu, 07 Feb 2019 17:59:33 GMT

I have one student loan from 2010 with a 6.8% interest rate, and was wondering if anyone who has/had a loan at that rate or higher that used Discover to consolidate/refinance with? What are the odds they will give the lowest fixed interest rate? My income is about $20k/yr, my credit scores in my sig are current. Owe about $5,400 on my credit cards.

My goal would be the 10 year term fixed interest if I was approved.

Re: Discover Student Loan Consolidation

Anonymous — Thu, 07 Feb 2019 23:12:57 GMT

Is this the loan you have right now a federal loan? If yes, subsidized or unsubsidized? What is the balance?

Honestly, you might not know until you are approved. If you can get into Navy Federal Credit Union the rates might be lower. But as I will tell most people, if you have a federal loan, unless you have significant income and will have a high-paying career, you will almost certainly save the most money by sticking with the federal loan. Yes, the interest rate is higher. But the subsidized loans interest will likely be paid for you on REPAYE and your minimum payment will be near $0 at your income. You can always pay more, but this would give you room to pay down your credit card balances which are significant for your income and possibly a higher interest rate than your student loans. The interest generally will never capitalize on your federal loan either. Also if you run into any trouble paying on the Discover loans, there will be few options.

Re: Discover Student Loan Consolidation

macinjosh — Thu, 07 Feb 2019 23:22:15 GMT

Thanks for the response. It’s a federal unsubsidized loan. Original amount of loan was $6,000. Current balance is $8,600. Payoff by the last Friday of this month is around $9,000.

I’ll have to work on the NFCU thing. I’m estranged from my family, which would be the only way I’d get in with NFCU.

Re: Discover Student Loan Consolidation

Anonymous — Fri, 08 Feb 2019 00:25:30 GMT

It sounds to me like your servicer still has you on the standard repayment plan! They should have told you about IDR a long time ago...
If I were you I'd switch immediately. Like today if possible. If you sign up for a Income-driven repayment (IDR) plan today online, probably Income-based repayment or REPAYE, it should stop the payment from being due. If you didn't file taxes for the year required in order to link your application online with the IRS, print, sign and scan the application, scan your paycheck (? Or source of income) with the frequency written on it and upload these to your servicer. When they receive it to process it, your account should be put on an administrative hold for 30 days.
Check with the Dept of Education right away if this correct.
If you do have to do a private loan, USAA accepts membership with a very small donation ~$10-20) to certain organizations. They also have low rates.
If you need any help with the IDR application or anything, feel free to ask questions or message me.

Re: Discover Student Loan Consolidation

macinjosh — Fri, 08 Feb 2019 00:47:17 GMT

Actually, I am on IDR REPAYE. Just submitted my renewal this morning. My monthly payments are $0.
I’m starting a business and I anticipate enough disposable income to start paying my loans down, but since this is my highest interest loan, I really want to get that rate lower.

Re: Discover Student Loan Consolidation

Anonymous — Fri, 08 Feb 2019 01:37:00 GMT

Oh! I thought you meant the balance was going to be due later this month.

But your real interest rate isn't 6.8% unless it's actually 13.6%. Since you have a $0 payment good for at least the next year, on REPAYE half the interest will be paid by the government. Additionaly you can always recertify early to secure a year again.
I takes a minute but you might want to double-check that they're actually applying the proper interest rate.
When did you start on an IDR plan? Sounds like you're well on the path to forgiveness.

Re: Discover Student Loan Consolidation

macinjosh — Fri, 08 Feb 2019 02:33:07 GMT

I signed the original loan at 6.8%. All my loans have been on REPAYE since I believe 2015.

Also, the government pays half the interest on unsubsidized loans, or just subsidized?

Re: Discover Student Loan Consolidation

Anonymous — Fri, 08 Feb 2019 02:56:26 GMT

Then due to the fact that you don't pay the interest, your real interest rate is 3.4% (fixed, right). loan forgiveness after 20 years, unless you qualify for PSLF or another type of forgiveness like for teaching.

Another tip is to recertify with your lowest income month. So let's say when you get your business, for the month of November it's your lowest month. You certify early then by paycheck/letter/etc. and they'll take this number instead of your annual IRS income. It's on the paperwork. Payment will be good for a year, you aren't forced to recertify early with a change in pay.

Here is the article on interest subsidy:
"RePAYE Student Loan Interest Subsidy
If your monthly student loan payment doesn’t cover all the interest that accrues on your loan, the student loan interest subsidy kicks in. The government will pay for 100% of accruing interest on subsidized loans for the first three years. After three years, they will pay for half of the accruing interest.

If you have unsubsidized loans, the federal government will pay 50% of the interest due."
https://thecollegeinvestor.com/19246/repaye-student-loan-interest-subsidy/

I was actually skeptical but they sent me the regulations spelling it out. So I went back to my servicer and created a spreadsheet.... surprise! My interest rates were all over the place. It's a hassle but if I were you and I decided to go with a private loan because your payments started covering the interest, I'd definitely go back and calculate all of your interest for all the months you paid. I can almost bet you they've overcharged you. Which doesn't matter on REPAYE with forgiveness, but would of you refinanced.

Re: Discover Student Loan Consolidation

macinjosh — Fri, 08 Feb 2019 03:30:22 GMT

Thank you for the information. I’ll take this all to heart. I really appreciate your help.

Re: Discover Student Loan Consolidation

Anonymous — Fri, 08 Feb 2019 05:14:09 GMT

You're welcome. 🙂

Re: Discover Student Loan Consolidation

Anonymous — Sun, 10 Feb 2019 00:27:02 GMT

I signed a variable student loan with Discover in 2018 for 45K. Original APR was 7.8% Yikes I know, but without a cosigned this is what they gave me. As of a week ago, that variable rate went up to 10.11% lmao.

I quickly submitted an application to refinance all of it with PENFED (been a member for almost 2 years) at a conditional rate of 5.1%. Thank God for credit unions.

BTW this is all private loans. My federal loans will remain with the gov't because they are 3-4.5% a piece.

Re: Discover Student Loan Consolidation

macinjosh — Sun, 10 Feb 2019 01:09:23 GMT

@Anonymous wrote:
I signed a variable student loan with Discover in 2018 for 45K. Original APR was 7.8% Yikes I know, but without a cosigned this is what they gave me. As of a week ago, that variable rate went up to 10.11% lmao.

I quickly submitted an application to refinance all of it with PENFED (been a member for almost 2 years) at a conditional rate of 5.1%. Thank God for credit unions.

BTW this is all private loans. My federal loans will remain with the gov't because they are 3-4.5% a piece.

Thank you. I’m glad that PENFED gave you a better refi rate for your private student loans.

i definitely think I’ll be leaving my federal loans where they are and as soon as I have money coming in I’ll begin an aggressive payoff of my highest interest loan and then tackle my largest balance loan 2nd.

My only other question is how much of a ding will I take to my credit scores for each loan I pay off?

Re: Discover Student Loan Consolidation

Anonymous — Sun, 10 Feb 2019 03:14:05 GMT

Notloso: that's a great point about variable vs fixed interest rate loan. The variable interest rate loans can be a real nightmare, almost designed to keep you in debt.

Macinjosh: Highest interest loan if the loans are close in balance. Sometimes, like if there is a significantly higher loan, the interest rate is lower but the actual interest that accrues is higher. In would pay durn the higher balance until the interest that accrues would be about the same $ then pay on the high interest loan completely.
If you have multiple loans, I don't think you'd take a hit, but then again it could be your oldest account. Might want to ask on the FICO score page.

Re: Discover Student Loan Consolidation

macinjosh — Sun, 10 Feb 2019 04:04:00 GMT

Sabii:

By the end of this year, if the 3 CRA's do their job, then yes, my student loans will be the oldest accounts on my reports.

My older unsubsidized loan's current balance is $8,608.01. My largest loan balance is $11,717.37.

The price for the $8600 loan I gave you the other day was the payoff amount they quoted me. Those are my 2 largest loans, both unsubsidized.

All the rest are $3,657.47 and below. Smallest is $429.78.

Re: Discover Student Loan Consolidation

Anonymous — Tue, 12 Feb 2019 18:38:59 GMT

I don't understand the payoff part. As far as I know, federal loans will always be due in full and you can pay the amount at any time, total or per loan.
I just read an article about asking your servicer to ungroup your loans. This allows you to pay a minimum payment to all but one (or however you want to arrange paying different loans.) Payments will also go to interest first, I think. So in order to progress on the principal, first you will have to pay down the interest as since you're on IDR that may be a large amount on your bill due to the fact that as long as you recertify on time, interest doesn't capitalize. Once you get that amount out of the way, your payments will at minimum need to be enough to cover all your monthly interest.
I see you got some great advice on how to pay off your loans on your other thread. Just keep in mind, if you decide to stick with the forgiveness route for the duration of your loans (15 years, right?) there's nothing wrong with that. It doesn't actually impact your credit score much with the loss of points for loan utilization. You can still be 800+.

Re: Discover Student Loan Consolidation

macinjosh — Tue, 12 Feb 2019 18:10:43 GMT

FedLoan Servicing already set it up for people to choose what they want to pay to each loan online. I’d have to check the app to see if they allow it there too.

From my understanding, the forgiveness is at 20 years, but if I was mis-informed and it’s really 15, that would be nice.

Now, there has always been something about the forgiveness part that has never been explained. Now I know when you take a settlement on a traditional debt, like a collection agency, if the amount forgiven is over a certain threshold, you get 1099’d, which makes the forgiven part income. Does that same principle apply to student loans too?

Re: Discover Student Loan Consolidation

Anonymous — Tue, 12 Feb 2019 18:37:30 GMT

Yes, I noticed it's separate for FLS. Just wasn't sure if it's the she thing officially, like if you missed a payment on just one is it going to show up late on all of them. The monthly payment quoted to me is always one amount, and it shows how it applies to each loan afterwards. I got the impression that with the request you'd get separate bills. Idk, I'm but familiar with it.

Yes, it's 20 years without a special forgiveness like PSLF. I'm sorry, I got you mixed up with someone else. I thought you'd been paying on the loan for 5 years.

Yes, at the end it will be counted as income. However, there is an article that talks about this that you might find helpful. Basically, if you're insolvent then it won't affect you. Debts include a mortgage, car loan, etc. There are several examples. Basically, most people on IDR won't have to pay taxes on the forgiven amount and there are laws in the works that will probably change it so it's not counted as income. They have years left before the first person is even eligible too. It's nothing to worry about.

UNDERSTANDING STUDENT LOAN DEBT FORGIVENESS AND INSOLVENCY
https://thecollegeinvestor.com/22725/student-loan-debt-forgiveness-insolvency/

Re: Discover Student Loan Consolidation

macinjosh — Tue, 12 Feb 2019 18:58:20 GMT

I don’t remember if I stated when I was first put on IDR. I believe it was February 2015 since there was interest that capitalized on my last 2 loans, but that was super minimal, so as of the end of this month, it’ll be 4 years since they placed me on IDR.

And thank you for confirming that the forgiven part is income at the end. I’d like to see that change if laws are passed to make it not taxable, I’m sure a whole lot of people would be ever so grateful.

I will definitely check that article out.

Thanks again!