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Navient Loans - 160k$ - need advice

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Valued Contributor

Re: Navient Loans - 160k$ - need advice


@IodineNightSky wrote:

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!)


I would doubt fed loans are anything other than normal simple interest loans. 

If your plan is 557 and you are gaining 200 per month, pay 800 and you are reducing your balance and your still not paying 1200.

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Message 11 of 19
Established Contributor

Re: Navient Loans - 160k$ - need advice

The actual interest rate is already lower than 5.625%.
The subsidy of REPAYE covers all of the unpaid interest (interest unpaid by your monthly payment) for the first 3 years on subsidized loans. So if you raise your payment in the first three years, you are really only gaining something directing it to be applied to unsubsidized loans only. In addition, the unsubsidized loans and the subsidized loans after 3 years will all still have a subsidy benefit of the government paying 1/2 of the unpaid interest. If you pay more you'll be decreasing the overall interest accrued but with less effect because the gov will no kind be covering part of it. $2 to pay for otherwise $1 of actual interest accrued.
As long as you're in over your head with the loan you'll greatly benefit from loan forgiveness. On REPAYE the interest also never capitalizes.




Message 12 of 19
Contributor

Re: Navient Loans - 160k$ - need advice

Ok, another question lol. I thought I read, if you consolidate, it capitalizes the interest. Is that only if you consolidate to a private loan? Also, with the subsidized/unsubsidized issue, I guess it may be better to consolidate those in 2 separate loans, so you can still direct extra payments to the category that will be most beneficial...? I have 14 loans currently and I know I'm taking a score hit for the number of lines with a balance, but I want to consolidate in the most beneficial manner.
Message 13 of 19
Established Contributor

Re: Navient Loans - 160k$ - need advice

I do not recommend that you consolidate. It might seem like a good idea because it will put your loans into one nice neat payment (the one loan will still maintain it's subsidized and unsubsidized portions). However, it's actually creating one new loan at 100% utilization. You about after will go down, etc. That's just a federal loan consolidation. It's you do it privately you additionally lost all of your government loan benefits and options.
Not to mention you'll be losing out on 14 good payments each month. If you're worried about the concept of 14 lates, you can group your loans so you'll know have to be concerned with one payment. You'll just call up your servicer and tell them you want them grouped and it can be easily done and undone.
As far as his many points you're losing, not very many. It's just a reason they list but I'm not even sure that it's that much of a long different between one loan having a high balance or more than one. The thing about loans, especially student loans, vs credit cards is they expect your utilization to start if high and to go down over time. Mine haven't. However, you don't lose additional points once you offer more than 100% utilization. This is very important to note for those seeking loan forgiveness; don't think that a high balance on multiple loans is going to hold you off from getting a good or even great credit score.



Message 14 of 19
Contributor

Re: Navient Loans - 160k$ - need advice

Thank you for the reply. I'm actually more concerned with mortgage scores which ding you for overall number of accounts with a balance. I realize utilization doesn't mean much on installment loans, but #of accounts with a balance is an issue. I can AZEO all day, but I have 14 loans reporting a balance. I was also planning to leave my oldest student loan out of the consolidation for age. It won't completely save my age of accounts when the others fall off, but I thought it would help. To further complicate matters, I have a pending application for loan forgiveness, but that could take forever.
Message 15 of 19
Established Contributor

Re: Navient Loans - 160k$ - need advice

Whoa!! Hold it right there.
If you have a pending loan forgiveness, any consolidation will give you a brand new loan. Any and all payments you had made towards forgiveness get wiped. If your forgiveness is based on something else, you could put it in jeopardy as well.
"Consolidation may also cause you to lose certain borrower benefits—such as interest rate discounts, principal rebates, or some loan cancellation benefits—that are associated with your current loans." - https://studentaid.ed.gov/sa/repay-loans/consolidation

Even if that works out for you (and you can't undo it if it turns out to be a mistake later), i don't think it will work out the way you think it will.
Yes, loans with high balance are a factor but keep in mind most people with federal student loans will end up with the multiple loans. If your score is lower, there are other ways that you can get points in other categories.
For example, look at my scores. I have multiple student loans, so over 100% (loan forgiveness track). I also have a major delinquency. The major delinquency is what's stopping my scores from being really good. The loans... The effect is minimal. In order to gain what little points you'll gain from going from multiple loans with high balances, you'll add a brand new loan with a high balance. This would be a great question to get clarification on from the folks on the FICO score board, but I don't think you're going to get any meaningful point gain.
If you share your scores and other factors, people can also help you figure out how to raise your score in more fruitful ways.



Message 16 of 19
Contributor

Re: Navient Loans - 160k$ - need advice

Thank you so much. I thought the same thing about the consolidation messing up the loan forgiveness. A rep at Navient said it wouldn't be a problem...but we know they are full of it lol. I think I'll leave it alone, or, at least those that are included in that. I'll ask the other stuff in the FICO board. I really appreciate all your insight.
Message 17 of 19
Contributor

Re: Navient Loans - 160k$ - need advice

I should clarify it is a Borrower Defense to Repayment, not a PSLF, but I don't want to do anything to mess it up in case the DOE actually starts looking at them again.
Message 18 of 19
Valued Contributor

Re: Navient Loans - 160k$ - need advice


@TylerDurden17 wrote:
Thank you so much. I thought the same thing about the consolidation messing up the loan forgiveness. A rep at Navient said it wouldn't be a problem...but we know they are full of it lol. I think I'll leave it alone, or, at least those that are included in that. I'll ask the other stuff in the FICO board. I really appreciate all your insight.

I'm glad to hear this - I think I stopped breathing when you mentioned consolidation - I think it would be a terrible idea.

Also, Navient... grr...

Do you have confirmation that the installment loans are actually affecting your mortgage scores?  I've not spent much time looking into them, but I thought only the aggregate utilization % on installment loans mattered (and then not by much), not how many - I really thought it was just the number of revolvers reporting.  




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Message 19 of 19
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