Discover Student Loan Consolidation

[Anonymous]

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. 

[macinjosh]

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@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. 

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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?

[Anonymous]

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.

[macinjosh]

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.

[Anonymous]

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+.

[macinjosh]

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?

[Anonymous]

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/

[macinjosh]

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!