Nelnet loans 7.50% interest can I get anything better?

[Anonymous]

Yes, I agree. I think the Department of Education is a mess, it's overcomplicated and not efficient (regardless of which political party is in office). 

[Anonymous]

I think that's partial true regarding actions taken on loan forgiveness - DeVos has proven that that she's not above using the Dept of Education to make it the most difficult she can for students by refusing to process applications for multiple programs, etc. - but I agree that many programs have not evolved since they were created. I don't think they ever predicted that tuition and college expenses would increase so rapidly in so little time. Hence, leaving the cap out. I also believe they have absolutely no plan as to the sheer amount of money it will cost taxpayers in 9 years when the rest of the loans start being eligible for forgiveness, plans that are much not straightforward in their requirements (IDR).
I also believe that doctors, lawyers, etc. may never have intended to be covered. (They are very unlikely to be paying student loans for decades in repayment.) Hence, the requirement of being on an Income-driven repayment plan that would leave little to nothing to be forgiven. However, they never said this. The whole program lacks clarity and planning which exposes it for what it really it: a mirage of a solution for the student loan debt crisis that plagues the United States. Even the cost of education for doctors and lawyer will eventually have an impact.
Something's got to give. Without addressing the cost of education itself, any decision made about loan forgiveness imo will never truly be progress.
/ End of rant

Regarding your federal loans, I'm not understanding if you each have one large loan or multiple loans (graduate unsubsidized, undergraduate subsidized and unsubsidized, etc. ?) If it's multiple loans that haven't been consolidated, are all of the loans 7.5%? If not, if you can't get a loan for $1 million, perhaps you could just refinance the loans as the highest rates/ amounts. This would at least give you partial relief from the interest. Another question would be are the loans fixed rate or variable.
Lastly, are you done with school or employed? I was kind of confused where the loan would gain the $50k from if it is being aggressively repaid but that you were also both able to estimate the income you'll have. Either way, if you pay the interest at least it will keep it from being capitalized. If I'm not mistaken, you could also go on the Income-contingent repayment plan (or REPAYE), with the plan to pay more, but as it is an IDR plan your interest might not capitalize while on the plan.

Credit Union's might be a great place to start looking for the loan. I'm partial to the rates at Navy Federal Credit Union but I'm sure there are others.
Hope this helps!

[Green456]

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@Anonymous wrote:
I think that's partial true regarding actions taken on loan forgiveness - DeVos has proven that that she's not above using the Dept of Education to make it the most difficult she can for students by refusing to process applications for multiple programs, etc. - but I agree that many programs have not evolved since they were created. I don't think they ever predicted that tuition and college expenses would increase so rapidly in so little time. Hence, leaving the cap out. I also believe they have absolutely no plan as to the sheer amount of money it will cost taxpayers in 9 years when the rest of the loans start being eligible for forgiveness, plans that are much not straightforward in their requirements (IDR).
I also believe that doctors, lawyers, etc. may never have intended to be covered. (They are very unlikely to be paying student loans for decades in repayment.) Hence, the requirement of being on an Income-driven repayment plan that would leave little to nothing to be forgiven. However, they never said this. The whole program lacks clarity and planning which exposes it for what it really it: a mirage of a solution for the student loan debt crisis that plagues the United States. Even the cost of education for doctors and lawyer will eventually have an impact.
Something's got to give. Without addressing the cost of education itself, any decision made about loan forgiveness imo will never truly be progress.
/ End of rant

Regarding your federal loans, I'm not understanding if you each have one large loan or multiple loans (graduate unsubsidized, undergraduate subsidized and unsubsidized, etc. ?) If it's multiple loans that haven't been consolidated, are all of the loans 7.5%? If not, if you can't get a loan for $1 million, perhaps you could just refinance the loans as the highest rates/ amounts. This would at least give you partial relief from the interest. Another question would be are the loans fixed rate or variable.
Lastly, are you done with school or employed? I was kind of confused where the loan would gain the $50k from if it is being aggressively repaid but that you were also both able to estimate the income you'll have. Either way, if you pay the interest at least it will keep it from being capitalized. If I'm not mistaken, you could also go on the Income-contingent repayment plan (or REPAYE), with the plan to pay more, but as it is an IDR plan your interest might not capitalize while on the plan.

Credit Union's might be a great place to start looking for the loan. I'm partial to the rates at Navy Federal Credit Union but I'm sure there are others.
Hope this helps!

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It's hard to say whether doctors were the inteded participants of the loan forgiveness program. There is general shortage of doctors and there was suppose to be incentive to take care of underprivilaged population.

In terms of my wife and me, we are both employed, done with training. Our total loans right now are $950,000 (two undergrads, two medical school + interest + 13 years of training adds up fast). We both are consolidated with Nelnet 7.5% interest. Honestly I don't even know if interest capitalizes or not with IBR. But at 950,000 and 7.50% interest after 1 year and you got additional $71,250 in interest by my calculation. Furthermore 15% of our combined income on IBR doest cover the interest so our loans over a period of 10 years would actually go up. The way I was looking at this was to refinance my loans to somethinig like 5% with private bank and pay them down 5-6 years. Then retire from healthcare.

[Anonymous]

Green456: That's true. Not all would be earning a high wage in those scenarios.

The consolidation does make it more difficult in that the new loan(s) can only be one or two large ones. I'm assuming that you each have a consolidated loan in your own names.
If it were me I would definitely get on REPAYE or IBR as soon as possible, at least while you figure out how to refinance one or both loans. There are 4 Income-driven repayment (IDR) plans: income-based repayment or IBR (typically 15% of your disposable income - 150% poverty level) PAYE, REPAYE, which is 10% of your disposable income - 150% poverty level, and Income-contingent repayment or ICR which is the highest payment and the fewest IDR perks.

REPAYE will look at your combined incomes if you are married, regardless of how you file but will also take into account your combined federal loan debt. I think you're way overcalculating those payments over 10 years for PSLF; check out the estimator.
IBR will take into account only your income if you guys file separately but also I think ignore your combined loan debt. Not always an advantage.
- The gov may pay all or a portion of the interest if it's not covered by your payments. Double check about this on consolated loans, but subsidized is 3 years all interest not paid by payments, and remaining years 1/2 of the interest. Unsubsidized is 1/2 the interest.
- Most importantly, on IBR & REPAY your interest accrues but will not capitalize. (I looked it up and unfortunately it does capitalize on ICR).

Btw, after consolidation, were either of you ever on a standard or majority IDR repayment plan while working in public service? Because those years can count towards PSLF even though you're not on a PSLF plan yet...

Anywho, I know you said you and your wife don't want to do PSLF and I understand that. It's a gamble with them potentially capping forgiven amounts. However this doesn't prevent you from being on REPAY or IBR, keeping the benefits such as interest not capitalizing, and still making the higher payments that you want to make. If you can't refinance soon, both loans, or at all, as least this will save you that money.

Consolidated loans and payment plans:
https://studentaid.ed.gov/sa/repay-loans/consolidation

Repayment Estimator
https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action#view-repayme

[Green456]

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@Anonymous wrote:
Green456: That's true. Not all would be earning a high wage in those scenarios.

The consolidation does make it more difficult in that the new loan(s) can only be one or two large ones. I'm assuming that you each have a consolidated loan in your own names.
If it were me I would definitely get on REPAYE or IBR as soon as possible, at least while you figure out how to refinance one or both loans. There are 4 Income-driven repayment (IDR) plans: income-based repayment or IBR (typically 15% of your disposable income - 150% poverty level) PAYE, REPAYE, which is 10% of your disposable income - 150% poverty level, and Income-contingent repayment or ICR which is the highest payment and the fewest IDR perks.

REPAYE will look at your combined incomes if you are married, regardless of how you file but will also take into account your combined federal loan debt. I think you're way overcalculating those payments over 10 years for PSLF; check out the estimator.
IBR will take into account only your income if you guys file separately but also I think ignore your combined loan debt. Not always an advantage.
- The gov may pay all or a portion of the interest if it's not covered by your payments. Double check about this on consolated loans, but subsidized is 3 years all interest not paid by payments, and remaining years 1/2 of the interest. Unsubsidized is 1/2 the interest.
- Most importantly, on IBR & REPAY your interest accrues but will not capitalize. (I looked it up and unfortunately it does capitalize on ICR).

Btw, after consolidation, were either of you ever on a standard or majority IDR repayment plan while working in public service? Because those years can count towards PSLF even though you're not on a PSLF plan yet...

Anywho, I know you said you and your wife don't want to do PSLF and I understand that. It's a gamble with them potentially capping forgiven amounts. However this doesn't prevent you from being on REPAY or IBR, keeping the benefits such as interest not capitalizing, and still making the higher payments that you want to make. If you can't refinance soon, both loans, or at all, as least this will save you that money.

Consolidated loans and payment plans:
https://studentaid.ed.gov/sa/repay-loans/consolidation

Repayment Estimator
https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action#view-repayme

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Thank you! I learned something new. I plugged in my numbers . My monthly payment will be $2700 next year which will be equivalent to the monthly interest. Which means my loans 10 years from now will be exactly the same as they are today if i make the IBR payments. Now I got  to compare this to private loan which capitalizes interest.

[Anonymous]

A few questions:
1. Is your loan a direct consolidation loan, FFEL consolidation loan (only eligible for IBR) or something else? If direct loan, did it contain both subsidized and unsubsidized loans? (See my note below)

2. Is there a reason you selected IBR over REPAYE?
"the government offers a subsidy to borrowers on IBR and PAYE. For three years it will cover unpaid interest that accrues each month, but only for subsidized loans.

REPAYE improves upon the current system. The government offers the same subsidy the first three years in repayment, plus it will cover half the accruing interest after that, on both subsidized and unsubsidized loans"
https://www.nerdwallet.com/blog/loans/student-loans/repaye-student-loan-repayment-plan/

3. In the estimator, I halved $1M in loans and entered $400,000 for combined income (joint filing, your income rounded up and doubled) with a family size of 2. For IBR & REPAYE I get payments for a lower than $2700 (~ $1600/ each per month). That amount is might be higher than your actual payments will be because it's not asking for your income, but your AGI. Are the numbers I entered significantly off (low)?
I'm asking because for $1M in loans at 7.5% APR would be $75k in interest a year. That's more than both the estimates so the government would be picking up the tab for a large portion of that if your original loans were subsidized or unsubsidized on REPAYE. In fact, if you choose to make the overpayments to pay off the loans quicker, I would see if I could direct them to the unsubsidized loan portion for the first 3 years on REPAYE so the government would pick up all of the remaining interest on the subsidized loans.

4. Did you make any payments on the standard plan after consolating?

I looked it up on Navy Fed and the maximum amount for refinancing student loans is in the low $100k's. However I found several lenders that have no max and no origination fees.
https://lendedu.com/blog/refinance-student-loans/
Hope this all helps for comparison!

Note: "The interest benefits on a Subsidized Stafford Loan survive consolidation. This means that the federal government continues to pay the interest on the portion of the consolidation loan that resulted from the payoff of a subsidized Stafford loan while the borrower is in school or during other deferment periods. The interest benefits on a Perkins Loan, however, do not survive consolidation."
http://www.finaid.org/loans/whyconsolidate.phtml

[Green456]

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@Anonymous wrote:
A few questions:
1. Is your loan a direct consolidation loan, FFEL consolidation loan (only eligible for IBR) or something else? If direct loan, did it contain both subsidized and unsubsidized loans? (See my note below)

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I do not know. I am eligible for both IBR and repayee. I consolidated with Netlent because Naviet kept trying to tell me that I have to pay them 15% of my income despite having loans with Nelnet and despite my wife having medical school loans.

@Anonymous wrote:
2. Is there a reason you selected IBR over REPAYE?
"the government offers a subsidy to borrowers on IBR and PAYE. For three years it will cover unpaid interest that accrues each month, but only for subsidized loans.

 Ignorance at the time I was selecting repayment options. But it seems there is no difference between IBR and REPAYE exception for minimum payments.

@Anonymous wrote:
4. Did you make any payments on the standard plan after consolating?

I looked it up on Navy Fed and the maximum amount for refinancing student loans is in the low $100k's. However I found several lenders that have no max and no origination fees.
https://lendedu.com/blog/refinance-student-loans/
Hope this all helps for comparison!

Note: "The interest benefits on a Subsidized Stafford Loan survive consolidation. This means that the federal government continues to pay the interest on the portion of the consolidation loan that resulted from the payoff of a subsidized Stafford loan while the borrower is in school or during other deferment periods. The interest benefits on a Perkins Loan, however, do not survive consolidation."
http://www.finaid.org/loans/whyconsolidate.phtml

 Never made payments under standard plan. I had some subsidized loans (I think), but at this point with Nelnet none of my loans are subsidized.

[Anonymous]

1. If you're interested in the government payments towards the interest, the best thing to do is to look up the details of the loans that were included in the consolidation. That is, which portion was from loans that were subsidized and which were from the unsubsidized. You should be able to find out on the studentloans.gov website which lists the disbursements and the specific loan types.
" I had some subsidized loans (I think), but at this point with Nelnet none of my loans are subsidized."
Yes, it's one loan (each) now, but the portion that was subsidized remains subsidized.

Navient was probably taking about IBR. REPAYE was a gamechanger because it's 10% not 15% of your discretionary income (minus 150% FPL) and both of your loans will be taken into account unlike IBR.

2. The minimum payments on the estimator that are the same as the REPAYE is IBR for new borrowers; neither of you are new borrowers. The IBR plan that you would be on is the 15% one.

The additional difference of REPAYE is a longer period of interest payments by the government for
all portions of both loans. This doesn't make a difference in your minimum payments but if you choose to only have the minimum, there will be interest you won't have to pay. If you choose to pay more than the minimum, you should direct the payments to the unsubsidized portions of your consolidated loans (if possible). The only way that IBR and REPAYE could have the same benefits is if you make payments more than the minimum & so high that they cover all the interest.

At 7.5% your interest is $75,000 or $6250/month. Your minimum payments are much less than that. If you decided to make the minimum payments at any time, that could be a hefty bill that the government will be picking up for you.

If you've both consolidated, but you're not making and haven't ever made standard (10-year payment plan) or IDR plan payments after consolidation, then unfortunately you wouldn't have any payments already made towards PSLF.

At this point are you both still firmly against PSLF or reconsidering it? Paying less than $400k total over 10 years sounds pretty nice but then again it would also be great to pay it off in 5 years and be done with it.
Either way you've both got some great options!
Good luck. :-)

[ylekiot1]

Did you look at sofi.com and check out their details?