So I've had federal school loans from 1997-2000 for undergrad and then from 2009-2012 for law school. I consolidated them all w/Navient in 2012 when i finished law school. At the time of consolidation, the amount was $118k and I went w/ Navient just because they're the folks who popped up when i looked into consolidation.
From 2012 until now, I've mostly kept deferring them. Basically, the entire time from 2012 til 2019, they offered to defer for six months and then at the end of the six months, i'd pay for a couple months and then they'd offer to allow me to defer again, so i would defer again, etc. So, since the amount seemed so overwhelming to address, i just kept deferring them whenever they would allow it which was most of the time, even though i probably couldve afforded to pay at least something on them all this time.
Now, the 118k (minus sporadic payments that probably have totaled a few thousand) has ballooned into 160k due to interest and capitalizing that interest into the principal over and over.
I've been reading just recently that Navient is somewhat predatory, although i'm not informed enough to know how they are predatory. (if you can enlighten me as to that i would appreciate it!)
I've started paying 557$ per month recently. My interest rate is 5.625% on all 160k. i did the math and even with me paying 557 per month, my loan balance goes UP about 200$ per month. so, i'm effectively drowning even now that im paying.
the loans have never been behind in payments because each time i couldnt pay they'd hand me six months in deferrment, over and over again.
i'm wondering if i should somehow try to move my loans elsewhere. my Ficos are about 670s now. i literally have no debt besides these 160k in school loans. i make over 125k per year, self-employed. but my cost of living is high due to where i live, having a couple young kids, taking care of my elderly mom, etc.
as an aside, my wife, also a lawyer, has the exact same scenario except her loans total about 180k. her's are also with navient. she pays about 700$ per month i believe and her interest is more than that so the balance keeps rising. she makes about 100k/year.
what's my move here dear school loan experts?! absolutely ANY advice would be so so appreciated.
Are these regular Govt loans that are just managed by Navient?
If so, look into all the different pay plans.
Some of the plans are based on income, etc, and then when the plan is done (20 years for example) if you have a balance it is forgiven at that point.
Also, you are not a public servant are you? (Public defender, etc.)
If so, there may be 10 year plans of forgiveness also.
I would NOT refi a govt loan to private to save 1 or 2% apr because you lose some of your original benefits and options.
It seems overwelming, but just try to pay enough so they do not go up. As you have more, pay more.
I am sure as an attorney you will find this to be easier to manage as your career develops.
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yes, correct, they are all federal loans being managed by navient.
the repayment plan im on is one of the income based one, i believe. the full amount they suggested i pay (before doing any of the payment plans) was about 1100-1200 per month which would've been a bit hard so i applied and got one of the other plans to pay 557/month.
im not govt but my wife is. shes like 2 years into the 10 she needs for the rest to be forgiven. but id really like to pay off earlier than that. she doesnt necessarily want to work in public service for 8 more years, or, at least wants to have the option not to.
i absolutely expect to be making more and am hoping i can pay much more per month soon.
1% per year reduction would be 1600/year which is 125 per month.
2% reduction would be 250 per month less interest (3200 per year less interest).
my navient interest is 5.625%. i wonder how low i could go if i refi'd elsewhere. not sure how that works.
i guess another question im wondering is how navient is predatory, if they are as ive been reading. is the way they capitalize the interest and push it into the principal the way it has to be? meaning, im paying interest on the interest and then later interest on the interest on the interest, and so on. if i refi w someone else, does that stop? any thoughts?
thx so much for your prior repsonse! a lot of this is me thinking outloud and trying to understand all this. i'm just taking an absolute bath here - between my wife and i we're paying about 1700 per month in school loan interest (which is a decent mortgage!)
Navient isn't really predatory in the way that subprime banks are (unnecessary fees, sky high rates, etc.), however Navient (and other student loan servicers) use their federal backing to be... less than friendly. They don't give you all of the information you would need to keep your loans as low as possible or make paying back easier - thereby maximizing the amount they can squeeze out of you (ie: sending you into endless rounds of forebearance so you can rack up all of that nice, capitalized interest).
Since your loans are already consolidated, and it appears that you are on an income based plan, you're basically most of the way to where you need to be to take advantage of forgiveness measures. Most of the forgiveness occurs after 20-25 years of on time payments under one of these income based plans, but as you said, sometimes the payments can be difficult. I know that >30k, you qualify for the extended loans, but you will still be drowning in interest.
And yes, if your wife is working with PSLF, she would have to do the entire 10 years, and make sure she's got all of her ducks in a row because the Dept of Ed does not make PSLF easy. As far as repayment/forgiveness, it really is a great option if she can do it, though.
Outside of the different federal payment plans, you're looking at refinancing with private loans (and we just learned that Earnest is owned by Navient, so that's probably some shady stuff there). The downside to private loans is that you won't see any kind of forgiveness programs, IBRs or anything that might actually help keep you out of trouble. And honestly, at your scores, and the size of your loans - I don't see you getting better rates than the sub 6% you have, but you can try to prequalify with different lenders to see if you can, indeed, get better rates.
I'm hoping Sabii chimes in soon, they're the forgiveness/repayment guru here in the forum.
omg such amazing info!!! thanks so much you two.
if sabii has any additional input that would also be wonderful.
i can accept that im stuck with where im at with the loans - i just wanted to make sure it's as optimal as it can be - and it sounds like it might be.
but still hoping to hear from sabii!