by Repayable | Jan 23, 2017 | Money Matters
So you’re a pharmacy resident and you’re trying to keep up with your debt while in residency. The problem is, your 6.8% interest rate is killing you and making it nearly impossible to make any progress on your principal with your resident salary. Your main goal for student loan debt is to demolish it as quickly as possible.
Refinancing can save you thousand of dollars in interest but you’re not sure if you should refinance now, or wait until you’re making pharmacist salary. If you’re not sure refinancing is right for you, start by reading these two posts Three Refinancing Surprises and Four Refinancing Disasters to Avoid.
Refinancing as a Resident
There are two main things to consider about refinancing as a resident. The first is that the biggest predictor of interest rate is your debt:income ratio. As a resident this ratio is probably not very good. The second that predicts your eligibility is cash flow. If you are able to qualify for refinancing based on debt:income and cash flow it’s likely your interest rate will be less competitive.
My best suggestion is to use the freebie rate calculators to figure out if you’re eligible. You can get a rate quote from Earnest by using this link. Using the 2 minute rate calculator tool doesn’t impact your credit.
If you’re eligible for refinancing as a resident it’s almost certain your interest rate will be lower than the federal 6.8%. So will youo be stuck with a meh interest rate because you refinanced early or can you re-refinance?
With Earnest you are eligible to refinance a second time after making six months of on-time consecutive payments. You can apply to re-refinance your loans and your finances at the time of reapplication are considered.
Refinance Now or Wait?
You might be wondering how to decide if it’s right for you to refinance now, or to wait until you’re making a pharmacist salary. First, you want to be sure your main goal is to pay off your debt as quickly as possible and that you understand the downsides of refinancing. If refinancing is right for you and you’re eligible for it here are a few things to consider.
- How many months until you’re making pharmacist pay? If it’s less than six months you may want to consider waiting until you’re a pharmacist to refinance so you don’t get stuck with a higher interest rate while you’re eligible for a lower rate.
- Do you have a written job offer already? If you have a written job offer you can apply with that as long as it includes your salary and you position is starting within six months.
Are you a pharmacist who has already refinanced or are you still in residency and thinking about refinancing? I would love to hear what you decided to do and how your experience went. Leave me a comment below or head over to the Repayable Facebook Page.
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by Repayable | Dec 29, 2016 | #Millenniallife, Money Matters
Student loan misinformation abounds. It can be hard to tell what’s solid advice and what’s garbage. Read on for three pieces of advice you can throw away and three pieces you need to listen to.
1. Garbage Advice: Don’t pay on your loans until you have to.
People are telling you to take advantage of the six month grace period or take advantage of forbearance.
Good Advice: Start making at least income-based payments.
You can set up an income-based repayment plan and make monthly payments that won’t crush you. Here’s the thing, if you have a job from your college degree you should be paying on your loans. If you wait, you’re shooting yourself in the foot and accruing tons of interest and you’re also delaying your eligibility for forgiveness (most require a certain number of payments).
2. Garbage Advice: Put as much money as possible into retirement. Or Wait to contribute to retirement until your loans are repaid.
Both of the pieces of information are lacking a middle ground.
Good Advice: Put the right amount of money into retirement.
The younger you are when you put your money in retirement the more opportunity you have for that money to accrue compounding interest. That means you need to put some money away now. If you have an employer-sponsored plan like a 401K you should contribute at least enough money to get their match. Your employer’s match is free money, don’t leave it on the table. However you shouldn’t contribute more than that if your goal is to repay your loans as quickly as possible. You can guarantee that you will accrue interest on your student loans while you can’t guarantee the performance of the stock market.
3. Garbage Advice: Don’t worry about it, student loan debt is good debt.
Let’s get real, no debt is good debt.
Good Advice: Know your number and make a plan for repaying it.
It’s the easiest thing to do, to know your total debt load. It just happens to be one of the most stressful things. Go look at your loan balance and commit the number to memory. Check on it every month and notice what happens to your total amount with time and making payments. What happens when you make extra payments? Knowing your number is the very first step in building a repayment strategy that fits your goals.
There you have it, a little light in the murkiness of student loan debt advice. What do you think? Anything you disagree with? Want to share the worst advice you’ve ever gotten? I’d love to hear about it in the comments below or on the Repayable Facebook Page.
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by Repayable | Dec 28, 2016 | #Millenniallife, Money Matters
Student loan refinancing seems to good to be true. I mean how can anyone legitimately slash your interest rate and save you thousands of dollars?! It has to be a scam… right? Nope, it’s not a scam you can refinance with reputable companies and save yourself thousands of dollars, but how do you make sure you don’t goof up? Read on for four traps to avoid and four ways to get the best refinance.
*All Earnest links are my personal link. If you refinance with Earnest using the link we both get $200. I didn’t choose Earnest for the $200 referral. I chose them because they met my personal standards and gave me the best interest rate.
1. Avoid refinancing if you’re hoping to take advantage of loan forgiveness options.
A refinanced loan is a private loan. Existing loan forgiveness options are for federal loans so you would eliminate your eligibility.
2. Avoid extending your repayment period when you refinance.
Refinancing student loans is a way to repay your debt faster and more efficiently by decreasing your interest rate. Don’t use it to stretch out your repayment period or your mitigating those benefits.
3. Avoid any company with application fees, loan transfer fees, or fees for early repayment.
There are many good companies that don’t have these so don’t settle for any company that does. Your money is yours, keep it.
4. Avoid losing the borrower benefits you still need.
What borrower benefits do you need? If you’re thinking about going back to school refinancing might not be the best option because it doesn’t allow the same amount of flexibility in terms of payment deferment as federal loans. Some companies will defer loans for up to 18 months.
Get the best student loan refinancing.
1. Check out the eligibility requirements of the company.
Most lenders offer refinancing for both federal and private loans. Many lenders have minimum credit score requirements, annual income requirements, and minimum lending amounts. Some have maximum lending amounts. Find at least two or three companies whose eligibility criteria you meet.
2. Compare borrower benefits.
Choose two or three companies with the borrower benefits that matter most to you. Benefits to consider include unemployment protection, entrepreneur program (SoFi), refinancing and ability to change monthly payments (Earnest has the most flexibility), and a company that doesn’t sell your loans.
3. Choose the refinancing term and monthly payment amount that are best for you.
Some companies (like Earnest) offer ultimate flexibility in choosing monthly payment amounts. Others have set terms of repayment so you’ll want to pick the term and monthly payment that make the most sense for your financial picture.
4. Submit your application & choose the company that gives you the lowest interest rate.
You already did the vetting of each company on the front end. All that’s left for you to decide is which interest rate is lowest.
That’s your quick and dirty guide to refinancing. If you avoid the four traps and follow the four steps to get the best student loan refinancing you’ve got your bases covered. Let me know what’s stopping you from refinancing in the comments below or on the Repayable Facebook Page.
Repayable is out now and has an entire chapter dedicated to refinancing that will serve as your definitive guide. Order your copy today and being the path to student loan liberation!
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by Repayable | Dec 27, 2016 | #Millenniallife, Money Matters
When you finally graduate from college it feels like a huge accomplishment. You’re feeling excited and relieved but possibly a little anxious. All that student loan debt you’ve been using to fund your education is looming over you and needs to be addressed. But what the heck is a person to do? It’s all so overwhelming and your financial counseling was, well, lacking. Read on for the five most common mistakes new grads make and five things every single graduate should do when they graduate to make their loans repayable.
1. Using your six month grace period when you have a job.
It seems like a great idea to just not pay on or deal with your student loans for six months. I mean after all you’ve earned it right? Not so much, interest is still accruing.
2. Picking the wrong repayment plan.
Whatever financial aid said is the plan most people choose is good enough for your right? Not necessarily, each individual has different goals when it comes to repaying student loan debt. You want to pick a plan that aligns with those goals.
3. Ignoring or not acknowledging your total debt amount.
You owe a lot of money and it sucks. You don’t want to look at it. Like a child, you want to cover your eyes so it can’t see you. Here’s the thing, the debt is there accruing interest whether you acknowledge it or not.
4. Not refinancing when your goal is to repay your debt as quickly as possible.
Refinancing isn’t for everyone but if your goal is to pay off your debt as fast as possible and your debt:income ratio is good (1.5:1 or less) and you have a steady job, refinancing is likely to be a good decision for you. Not refinancing cost me over $7,000 in 2015.
5. Being resigned to a life of powerless repayment.
Your loans are too much, no one else gets it, and you got the short end of the stick. We’ve all felt the self-pity and sense of powerlessness over your finances. Staying in this mindset won’t get your loans repaid.
What Every New Grad Should Do With Their Student Loans
You’ve read the mistakes and maybe even committed some of them yourself. So what exactly should you do with your student loans?
1. Start repaying your student loans as soon as you have a job.
Whatever your repayment strategy, refinancing, loan forgiveness, or income-based repayment, interest is accruing when you’re not making payments. Six months of interest adds up quickly. Also if you’re not making payments you’re not getting any closer to loan forgiveness options which require a certain number of payments before you’re eligible.
2. Take time to consider the best repayment plan for your financial goals.
What exactly is your goal with your student loans? Do you want to repay them as fast as possible? Pay the least amount of money possible? This goal will help you determine the repayment strategy that’s smartest for you. If you wan’t to pay as little as possible a loan forgiveness option that takes 10, 20, or 25 years might be your best bet. If you want to pay them as quickly as possible refinancing may be best for you.
3. Know your number and own it.
Your unwillingness to look at your student loan debt amount doesn’t do you any good. You still owe a lot, even if you’re in denial about it. You will have to pay it back. So you might as well make your payments work as efficiently as possible for you. To do that you need to look at your total debt amount and own it. Don’t feel ashamed about it, just take care of it.
4. Check out refinancing and see if it’s right for you.
Tomorrow’s post and video will be all about refinancing so you can explore this further. The simplest explanation of good candidates for refinancing are those with higher interest loans, good credit, and good income who want to repay their loans as quickly as possible.
5. Know your power in repayment.
Your repayment strategy is in your control. You can no longer control the amount of debt you took out for your education so let it go. Educate yourself, make the best decision you can, and advocate for borrowers.
Now that you have a few do’s and don’ts for student loan repayment I would love to hear your thoughts. Have you ever made one of these mistakes? Or have you ever made a decision that really saved you some money? Comment below or on the Repayable Facebook page. If you ever have any questions you can always email me at jeni@repayable.org.
Only five days until Repayable’s release (out January 1st)! You can pre-order the e-book here.
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by Repayable | Dec 26, 2016 | #Millenniallife, Money Matters
Student loans are kind of the worst. Which means there’s no shortage of complaints. The complaints are usually valid, but that doesn’t mean you shouldn’t try to solve them. Read on for six of the most common complaints along with their solutions.
1. I have no idea what I’m doing.
Solution: Get informed. Check out the multitude of blog posts on this page, the Repayable Facebook page, or Repayable YouTube Channel for easy to digest student loan information. For super customized information you can always message me any question or post on the Repayable Facebook Page.
2. Who cares how much debt I have? I’ll be paying on it forever anyway.
Solution: Know your number. Denial doesn’t make your debt go away. If you don’t fully recognize your debt load you won’t be able to make the smartest decisions with your money.
3. We got screwed, tons of debt, and less jobs.
Solution: We did get a lot of debt and some of you graduated when the job market was tight. Today’s job market has rebounded pretty well and the skills you built during the tough job market will serve you well in the future. That grit is only going to help you.
4. College is expensive and borrowers are the only ones who care.
Solution: It’s your job to make people care. Of course they don’t care, they have no idea what it’s like to have this much debt when you start young adult life. Contact your Congressman about a student loan-related piece of legislation (there’s a whole chapter on this in Repayable).
5. Money is a sensitive subject, I don’t want to talk about my debt.
Solution: “An eccentricity made a regular thing of ceases to provoke remark.” Sylvia Townsend Warner. Start by talking about your debt with people in the same profession who are on a similar payscale. Lose the shame, most graduates have debt, there’s nothing to be ashamed of.
6. There’s nothing I can do.
Solution: There is a ton you can do. I mean there’s enough you can do that I wrote an entire book about it. You can own your number, get informed, strategize a repayment plan that’s best for you, talk to your Congressman, eliminate the shame by talking about debt. All of this can change the story of student loan debt by making it truly repayable.
There are six days until Repayable is released. You’ve made the sacrifices to obtain a quality education, but now you’re burdened with crushing student-loan debt. Digging yourself out is not impossible—and Repayable shows you how. Pre-order Repayable for your e-reader today!
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by Repayable | Dec 19, 2016 | #Millenniallife, Money Matters
Hi everyone my name is Jeni. I want to share with you why I’m constantly talking about, writing about, and spreading the word about everything student loan debt related. I was woke to my lack of knowledge about student loans when I uncovered a $7,000 mistake. Let me get right into my tale.
I come from a working class family. My mom and dad have worked hard their entire lives. Thankfully, they’ve impressed that work ethic on me and my siblings. It’s the key ingredient to my resilience and grit.
Although neither of my parents have a college degree, they’ve always stressed the importance of doing well in school. So naturally I decided to go to college to earn myself a white collar career. One that would enable me to build a financially secure lifestyle so I wouldn’t have to worry about money. I chose to become a pharmacist because I love science and math, it helped people, and it would make me the kind of money I thought I would need for financial security.
During my six years of college I worked hard at part time jobs to ensure the only thing I had to borrow money for was tuition and books. I worked to pay for my cost of living which was no small feat. I can remember in my third year of pharmacy school working two jobs at around 20 hours per week. Sometimes, if the shifts stacked just right it was up to 30 hours. Every single break in college was an opportunity for me to work full-time. I didn’t travel, or chill and Netflix. I worked as many hours as I could get my hands on between the two jobs.
Despite working my ass off I manged to graduate with $128,000 in student loan debt. By the end of my pharmacy residency year that number rose to $132,000 even though I had paid over $6,000 toward my loans.
I can remember the relief I felt when I started to make pharmacist pay and really go after my debt. But even with aggressive payments, I didn’t feel like I was getting anywhere.
Then 2015 tax season rolled around and I filed my taxes, submitting the amount of interest I paid on my student loans into the tax form.
And then the pivotal moment in my repayment happened. I typed $13,776.15 into that box and a message came up. The message told me that my individual income was too high to claim this tax deduction. I almost lost it.
I mean this was ridiculous. The only reason I made too much as an individual to deduct the interest was because of those loans. I worked my ass off through college and residency, and now they were keeping all of my tax money?! Eff that!
So I was furious, not only had nearly half of my student loan payments gone to interest but I couldn’t even take the measly tax credit (you can only deduct $2,500). It felt like the government was taking my money twice.
But what could I do about it? Change that tax code? Yea right! Change my interest rate? Maybe but it seemed pretty sketchy. Then I heard an ad for SoFi and an add for Earnest on two different podcast shows. So I decided to do some googling to find out exactly what refinancing was all about.
I checked out both sites and submitted applications. Ultimately Earnest gave me the best interest rate so I went with them. My interest rate went from 6.8% on my federal loans to 3.36% on my refinanced loan overnight. This was in June of 2016.
My mistake and lack of knowledge cost me $7,000 in 2015. and who knows how much additional money in interest on principal that would have been paid down. If I had known about refinancing sooner my remaining debt would be <$78,000 instead of $85,000. It’s a big difference.
I wanted to do something to help people like me out. People who have made the responsible choice throughout their education but are still screwed with mountains of debt.
So for awhile I complained about debt and talked about it and annoyed everyone to death until the idea for Repayable was born. I want you to learn from me instead of having to learn the hard way at a cost. It’s tough to navigate the waters of student loan debt without guidance. It takes hours of sifting through difficult to find information to gain even a mediocre understanding.
Repayable is here to guide you, encourage you, and help liberate you from the shackles of student loans.
You can always ask me any question here in the comments, on the Repayable Facebook Page, or by sending me an email to jeni@repayable.org
For the sake of transparency, if you click my Earnest link and refinance we both get $200. I didn’t choose Earnest because of this. I chose Earnest because they have the best borrower benefits and gave me the best interest rate. Choose the refinancing company that’s right for you.
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