by Repayable | Jul 25, 2016 | Money Matters
Are you still paying 6.7% interest on your federal student loans? I sure hope not! If you are check out Student Loan Refinancing: A Millennial’s Guide to Earnest. If you’ve read that post but still want to know more about how it works read on for 3 things that surprised me when I refinanced with Earnest.
3. It took longer than I expected
I was approved to refinance my loans with Earnest on May 10th 2016 with the expectation that it my take up to 10 days for the payment to go through with my current loan servicer. On May 20th I got an email (and a phonecall) from Earnest’s customer service with an update that they had a backlog in payoffs so it was taking longer than usual. I was instructed to keep making payments until I saw a zero balance.
My loan payoff finally went through June 1st 2016. By that time I had already made two additional payments so the payoff amount sent from Earnest was over by almost $1900. Which brings me to my next surprise.
2. It was difficult to get my overpayment back from Navient
On the same day that Earnest sent the payoff check to Navient I made a payment of $800. I called Navient two days later because the money had cleared my bank account but wasn’t posted to my Navient account as a payment. After about 15 minutes transferring around and being on hold I got in touch with a representative.
I had to upload a PDF of my bank statement showing that the $800 had cleared my checking account and then gave them my bank information so they could transfer the money back. It took almost two weeks before I got a check for $800 in the mail from Navient.
Trying to get Navient to issue a check to Earnest for the remaining $1100 I had overpaid was even worse. I had already talked to the customer service representative during my initial phone call. I emailed Earnest’s customer service June 15th and they said it could take up to 30 days for Navient to issue them a check for the amount overpaid.
By July 18th I had enough, at this point I felt like Navient had stolen my money. I emailed Earnest again and received an incredibly helpful email response. They said they were happy to help me track down the payment, told me what information they needed and even offered to contact Navient for me. I ended up contacting Navient myself and Earnest recieved the payment a full 48 days 😮 after the payoff was sent.
1. Earnest has excellent customer service
As evidenced by the above I can’t rave enough about Earnest’s customer service. Any time I have an issue they respond immediately. They communicate clearly through email but always offer to online chat or call me if that’s what I would prefer.
These are several of my interactions with their customer service that left me pleasantly surprised:
- When I was originally applying and couldn’t figure out the degree issue Earnest’s customer service online chatted with me that day and solved the problem.
- Earnest’s customer service emailed and called to update me about the payoff taking longer than expected.
- Earnest’s customer service excels at communication. It’s not just a phone call and waste 15 minutes of your life on an IVR system and holding for a customer service representative. You choose how you want to communicate.
- Earnest went above and beyond when they offered to help me communicate with my previous loan servicer. Getting the money from Navient was really no concern for them, but they offered to use their resources to help me because it mattered to me.
I’m incredibly impressed with this customer service department and I can’t say enough about it. It’s just the icing on top of my slashed interest rates (formerly 6.7% with Navient now 3.36% with Earnest).
If you’re considering refinancing your student loans check out Earnest using this link and we’ll both get $200 if you decide refinancing is right for you. If you have concerns be sure to contact their incredibly helpful customer service department. You can also head over to the Millennial Maxims Facebook Group and ask any questions you may have, several folks in that group used Earnest to refinance.
I’m curious if you’ve refinanced what surprises did you uncover? If you haven’t refinanced what’s keeping you from refinancing? Comment below or head over to the Millennial Maxims Facebook Group to share!
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by Repayable | Jul 4, 2016 | Money Matters
The mixed emotions of student loan debt as described through the 5 stages of grief.
😮 Denial 😮
That number can’t be quite right…. how much interest have my loans earned since I started college?! No way that’s right. The Department of Education is going to call and let me know they made a mistake for sure.
😡 Anger 😡
Wait a minute WTF?! Who built this system, rich old white men?! How dare they take so much of my money?! I spent a ton of time in college and delayed income for 6 years… they can’t do this to me!
😕 Bargaining 😕
Ok well I can defer my payments for a few months, that will take some pressure off at least temporarily so I can breathe. Then maybe I can figure out the income based repayment plan. Maybe I can convince my employer to start a student loan repayment matching program. Maybe I can just miraculously get a post-graduation gift from a super kind stranger. Or ooh maybe somehow the Dept of Ed will zero out my balance…
🙁 Depression 🙁
Well there’s really nothing I can do to pay these off. Either I’m condemned to a life of living in squalor never traveling or having any fun or I’m stuck paying on these for the rest of my life. I’m a broke loser with a stupid degree, I shouldn’t have gone to college.
😞 Acceptance 😞
Alright this is what it is and there’s not much I can do other than muscle through. My loan amount is definitely correct, yes the cost of education is an under recognized crime against millennials, certainly my debt isn’t disappearing without me paying it all, I’m not a loser and I will find a way to make this work. Now where do I go to find solutions?
What stages of grief do you frequent? Have you made it all the way to acceptance? If so you’re gonna love my upcoming book Repayable out January 1st! Share your hilarious thoughts and current stage of student loan debt grief in the comments below or in the Repayable Facebook Group .
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by Repayable | Jun 20, 2016 | Money Matters
The struggle is real… real annoying, real frustrating, and real overwhelming. (Yes grammar police I understand I should be using the word really). Read on for the top seven financial frustrations of our generation and pragmatic tips to alleviate their sting.
7. You want to be debt free
You see the financial mess our country is in. You may even see your parents financed to the max and stuck working jobs they hate to pay that debt. There’s gotta be some way some how to be debt free but it seems d*mn near impossible. You started your adult life with a sizable chunk of student loan debt and not a single piece of equity to your name.
What are you supposed to do? Eat ramen noodles and serve Natty Ice and Franzia at all your parties? That’s not gonna happen, college is over with and you’d like to live some semblance of a grown up life.
Tip: Find a way to decrease the cost of your student debt either by refinancing or through loan forgiveness such as PSLF. These two options don’t require a whole lot of sacrifice on your part but are smart financial moves that can save you thousands.
6. You want to travel and see the world
Oh the possibilities! The world is such a big beautiful place and there’s so much to see. You don’t have kids yet and now’s the time to indulge your wanderlust. There’s a huge problem though… travel isn’t exactly cheap. Experiences are the foundation of millennial life. You’re not satisfied going to work, coming home, sitting on the couch for a Netflix binge and calling it a life. You want more and travel fits that bill.
So what’s the move here? Wait until you’re financially stable to travel? Will you ever be financially stable enough to travel? You’ll probably be content to do nothing by the time the financial winds are in your favor.
Tip: You’re going to have to get crafty and you’re going to have to save. Pick out your big trip and set a date. Next time you’re about to mindlessly online shop remind yourself of the trip and sock that money away. Get creative with cheap Aribnb’s or hostels and use cheaper alternate transportation like bus, train, or subways to slash the cost.
5. You want to buy a house someday
Renting is starting to get old. Noisy neighbors and landlord white paint have lost their charm. You’re also getting tired of throwing away your money on rent. Here’s the thing about “throwing your money away on rent”. You’re not entirely throwing it away. When you own a home you “throw away money on property tax” every year as well. Depending on the size and price of house you would buy you’re probably not “throwing away” as much as you think on rent.
Renting is a bit of a lifestyle thing. If you’re not ready to mow a yard, shovel snow, repair roofs, and keep up with maintenance then renting is still a good option. Deciding when the time is right for you is the first step.
Tip: Start pricing homes and get an estimate of what you can afford on your current income. Start looking at homes in that price range and see if there’s anything you like, are homes selling for above, at, or below their assessed value? This will give you a feel for the housing market in your area. Realtor.com lets you search on a map so you can pick your favorite neighborhood and filter by price and other criteria. See what’s out there so when the time is right you’re ready.
4. You want to work a job you love and make an impact
Purpose, autonomy, mastery; according to the book Drive these are the keys to professional fulfillment at work. Millennials especially connect to purpose and autonomy. You want to solve problems and do it your own way.
Remember that student loan debt? Well unfortunately you got a degree in X and are super passionate about Y which has nothing to do with your degree or any degree and doesn’t pay enough to repay your student loan debt. Now what?
Tip: Consider setting up an income-based repayment plan and taking the job you love. Be sure to negotiate pay as much as possible and think about adding on a side hustle. Don’t go back to school and take out more debt! Everyone will suggest “going back to school” like somehow more debt and being four years without income will make things magically better. At some point you need to draw the line and make the skills and degree you’ve got work for your career.
3. You want to change the world and give generously
Philanthropy is super important to you. You want to be a part of building a great community. Unfortunately it’s tough to come up with the extra money to donate to your favorite causes.
Tip: Donate a little bit of money and a little bit of time. One day make a conscious decision to pass on a fabulous cocktail while out with friends and donate that $5-$10 to your favorite charity. Then find somewhere to volunteer that’s pretty flexible (whenever/wherever) and donate an hour or two of your time a month.
2. You want to support companies that do the right thing
You want high quality stuff and you want to help a good cause. But buying everything from the right company can get a little overwhelming both financially and mentally as you try to find the right brands to buy from.
Tip: Find a shop that makes it easy. Stores that sell sustainably sourced, good for you, profit donating products exist both online and in physical shops across the country. They’ll take the work out of hunting for the best products. To abate the often higher cost of these goods focus on quality over quantity and choose products that are multi-functional.
Check out this blog post for a list 150+ socially responsibly companies.
1. You want to live a life that’s not defined by your income
At the end of the day the goal of life is just to live one you enjoy. The reality is money makes the world go round and you’ve got to know how to use yours to build the life you want. It’s not about competing with others or meeting a certain standard. It’s about defining your own legendary life and coming up with the funds to live it.
You’ve got to ask yourself what makes you happy? Is it things? Is it experiences? Is it friends and family? Some combination of all the above? Figure it out and apply your money.
Tip: The best things in life are free. Write down two things your money has gotten you that you’re super grateful for and then write down two things that money can’t buy that make you ridiculously happy. Was it harder for you to come up with two things you spend money on that you’re grateful for or two things that are free?
The financial struggle is real my fellow millennials, but that doesn’t make you a victim of your financial circumstances. Share the two things that make you most happy that can’t be bought in the comments below or in the Millennial Maxims Facebook group.
If you love these tips you’re gonna love my upcoming book title TBD due out in October!
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by Repayable | Jun 6, 2016 | Money Matters
This isn’t another generic budgeting article telling you to spend less by purchasing store brands or staying in instead of going out. That’s like reading another weight loss article saying it’s all about calories in vs calories out… no sh*t Sherlock. Budgeting at it’s core is about spending less money than what you bring in.
The real trick is focusing on how to get the most from your money. It’s about spending within your means by paying for the things that matter to you and skimping on the stuff that doesn’t. Successful spending is about getting behind your own plan by crafting a plan that’s realistic for your lifestyle and income.
I’m skipping over a bunch of budgeting basics with the assumption that you have some baseline knowledge. To bring yourself up to speed check out these three posts to avoid buying misery Part 1 Create a Budget, Part 2 Dealing with Debt, and Part 3 Emergency Funds.
Tally up How much Money You Bring In
This tip is about establishing a baseline of income above which you don’t spend.
How much money do you bring in from all streams of income every month after taxes? This is the amount you have to work with each month.
If you don’t bring in a steady income, underestimate. You can stay within budget if you make more money but if you set yourself up for failure by estimating too much income it will be tough to make the most of your money.
Tally up Your “Have To’s”
This tip isn’t about judging your spending it’s all about identifying it.
Start with the stuff you have to spend on, like it or not. Things like utilities, rent/mortgage, health insurance, groceries, student loan debt, etc.
Then add on your recurring subscription services that bill monthly (Netflix, Birchbox, cellphone bill, etc.) These may not be necessities but they come out of your account regularly.
Finally add up the other things you spend on like eating out, clothes, entertainment, hobbies, etc.
Identify Where you Waste Your Money
This tip is where you’ll free up your money to make the most impact.
You’ve pinpointed where all your money goes and it’s time to actually assess your spending.
Where do you spend absentmindedly without getting much return and enjoyment? If you’re spending without pleasure on something that’s not a basic need (food, shelter, clothing, safety) then it’s a waste of money.
For me this is ordering drinks when I eat out. I really don’t enjoy the booze and it dramatically increases the cost (and calories) of dinner!
Choose Something You Enjoy Spending Money On
This tip is the where you’ll make your money fun by identifying the most valuable things you buy. If you were good at the tip above you will have freed up some extra cash.
Identify one or two things you love that enrich your life in so many ways. It could be a hobby, your side hustle, travel, or gift-giving. Whatever it is allow yourself the freedom to spend here by mercilessly cutting spending on stuff you don’t need and don’t enjoy.
Make More Money
Oh really that’s all Jeni? Just make more money, phew thanks for that earth-shattering tip 😛
Seriously though, if you have expensive tastes and enjoy the finer things in life you’re just going to have to make more money. Start a side hustle. Check out any of these Google Search Results for ideas.
I’ve made a little extra money on the side with my book Millennial Maxims. It hasn’t been much, less than $100 and I’ve donated like $50 of that to 4 Paws for Humanity so have kept even less for myself. But I paid for the cover design and at some point will have earned enough to cover the editing.
I’m still exploring side hustle options myself because your personality determines what fits for you. My advice is to just try one you think you’d like and see what happens!
Use Mint to Track Your Finances
Mint is an app/website combo created by Intuit. This is the tool to take the grunt work out of budgeting.
Tracking your income and categorizing your spending can be a huge time suck. Mint knows the struggle is real and compiles your financial life in one spot. It has a simple and easy to read interface on both the app and the website. You can input all of your assets (home, car, investments, 401K) and all of your debts (student loans, home, car) and hook up all your accounts.
The key to Mint’s success is the ability to link all your accounts. Your savings, checking, debt accounts, credit cards, 401K, everything. This means you don’t manually have to track a thing. Mint will also categorize all your spending to the best of it’s ability. If you correct a category, Mint will remember for next time and categorize the expense correctly.
It allows a super quick overview of your overall net worth and quick views of spending. You can set financial goals (like savings, debt, or retirement goals) and track your progress. Mint even sends you updates on progress and warnings when you’re approaching budgeted spending amounts.
With these five tips and one tool you’ll have everything you need to build your financial savvy without starving or never doing anything fun ever again.
Share where you’re going to save and where you’re going to spend in the Millennial Maxims Facebook group or the comments below!
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by Repayable | May 30, 2016 | Money Matters
Student loan debt in the United States continues to grow by $2,726.03 every second. Right now the running tally is about 1.35 trillion dollars (comapared to 13.8 trillion in outstanding mortgage debt) as of March 2016. (Click here to watch our generation get buried in student loan debt). When your student loan debt is crushing you, any opportunity for reprieve is welcome. Today’s article will provide an in-depth review of one existing loan forgiveness option, Public Service Loan Forgiveness (PSLF). Or, as you may know it, 10 year loan forgiveness.
What is PSLF?
Public Service Loan Forgiveness (PSLF) was signed into law as part of the College Cost Reduction and Access Act of 2007.
Who is PSLF for?
PSLF is for anyone employed by a government or not-for-profit organization.
When did PSLF start and when will the first payout be?
PSLF started in Oct 2007, that means the first eligible borrowers can officially apply for forgiveness in Oct 2017.
Why did PSLF start?
PSLF was started to relieve the pressure of high student loan debt for borrowers working in public service where pay is often lower than private sector work.
How does PSLF work?
After 120 payments on an eligible payment plan are made (10 years worth) the remaining balance is forgiven (tax free).
Those are the basics of PSLF but you’re not after the basics because you know the devil is in the details. You might be wondering How do I know if my employer qualifies? What if I change jobs? What if I’m in deferment? How many people are doing this? Can PSLF go away? Who does PSLF make financial sense for?
There are no short answers to any of these questions but stick with me because a financial decision this big is worth some thought.
Qualifying employers
Government organizations including federal, state, local, or tribal organizations qualify. Not-for profit tax exempt organizations under 501(c)(3) and private not-for-profit organizations that provide a public service (not religious, labor union, or partisan political group) qualify.
Changing jobs and periods of no payments (deferment, grace periods, in school status, forbearance)
Changing jobs is no big deal when it comes to PSLF. The requirements are straightforward. You need to make 120 payments while employed by a qualifying organization and then you’re eligible for forgiveness. The 120 payments don’t have to be consecutive, so if you’re between jobs any payments you make won’t count toward your 120 total. The same is true during any time your’e not required to make a payment. Any payments made during these periods don’t count toward your 120 total until you enroll in an income-driven payment plan.
Enrollment by the numbers
As of June 2015 there were about 335,520 individuals enrolled in PSLF.
Unfortunately of the enrolled borrowers 17% were currently signed up for a 10 year standard repayment plan. DON’T DO THIS! That completely mitigates the entire point of the loan forgiveness because you will have paid your loan off in 10 years.
How PSLF can disappear
“The Department [of education] cannot make any guarantees regarding the future availability of PSLF. The PSLF Program was created by Congress, and, while not likely, Congress could change or end the PSLF Program.” Yep it’s really that straightforward. Congress could vote and repeal PSLF. Some folks have suggested that there could be a class action lawsuit by borrowers against the government but I don’t think so. Technically no one in this program is eligible for anything until 120 payments have been made. So there’s nothing being promised and then not delivered…
In 2015 President Obama proposed capping the amount of loan forgiveness at $57,000. The republican party has proposed stopping the program all together. However the cap and cancelling the program have been quiet for a little while so I think you’re safe from both… for now.
Deciding if PSLF makes sense for you
Objectively:
Financially, deciding if PSLF is right for you is relatively straight forward but requires making a few assumptions. Calculate the amount you’re going to pay over 10 years like this: Monthly payment (in your income-driven repayment plan of choice) X 120 = the total amount you will pay over 10 years. Huge assumption number one is that you will make the same income and therefore payment. This is unlikely because you will probably get raises over 10 years and your payments will slowly increase. The second assumption is that you will be continuously working full-time for an eligible employer. If you take breaks between jobs or work a stretch for an ineligible employer you could seriously reduce the amount of loans forgiven because payments made during that time won’t count toward your 120.
If the amount you calculate is significantly less than the amount you owe, for example if you owe $150K and you calculate you’ll repay $110K on an income-based plan then it might make financial sense for you to do it.
Other considerations:
Can you get out of debt faster on your own? If your income enables you to pay enough each month to shorten your repayment period by years then I propose that’s the route you take.
Nothing in this payment plan is a guarantee and holding onto debt comes at it’s own cost. It leads to the cliche’d stuff like delaying marriage, first home, and kids. But it also leads to more subtle entrapment. You may feel trapped in a certain type of employment or at a specific job or employer. Even if your job isn’t meeting your needs you may stay for the sake of loan forgiveness.
If this gets revoked you essentially handed yourself a bunch of interest. All it takes is a vote by the old, rich Americans in congress who have a track record for not caring a whole lot about the cost of education (if you don’t believe me see rising costs of tuition, outrageous federal interest rates, and the student debt doomsday clock). You could hope that existing participants would be grandfathered in. However, 10 years is a long time to make payments. If this were to be revoked you would end up paying a lot more than if you went after it early.
If you have private loans you need to carefully examine what loan amount will actually be paid off. The only loans that qualify are Direct Loans. Not Perkins, FFEL, or health professionals loans. IF you want those loans to qualify consolidate them into a Direct Consolidation Loan early. You will then have to make 120 payments on that consolidation loan to be eligible for forgiveness and any previous payments made wouldn’t count.
Social vs fiscal responsibility:
If you can afford to make your student loan payments, even at a sacrifice, and pay your debt off it seems like your social responsibility to do so. The PSLF program was designed for folks who would take low-paying jobs that benefit society. Jobs that could almost certainly never generate the income needed to pay back student loans.
As a pharmacist I ended up with $132K in student loan debt. Yea it was a lot and yea I still get crabbed making massive payments and dumping money into interest. But I took out these loans and I have the means to pay them back. If all goes well I’ll have them paid off by the end of 2018. Sure I could’ve hung on to my loans for 10 years and saved myself $20-25K but at what cost to our society? Higher interest rates for future students? Additional government debt? Delaying big expenses 10 years? Guilt and worry about what might happen if they cancel the program? No thanks! I’ll just go all out and pay it off. I would suggest refinancing if you’re of a similar mindset and trying to knock down your debt. Check out this walk through of refinancing with Earnest.
From a purely financial point of view PSLF would’ve made sense. My month to month would have been more comfortable because I would have been making income-based payments. And at the end of the 10 years my balance would have been forgiven. I would’ve come out ahead and perhaps I would even have more socked away in my 401K.
In the end you need to do what feels best for you. For more information check out these resources.
https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service
https://studentaid.ed.gov/sa/glossary#Qualifying_Public_Services
https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven`
Check out the Repayable YouTube series: 5 Fast Facts, Three Things to Consider, and Three Ways PSLF Could Change.
Share your questions, worries, and experience in the comments below or head over to the Millennial Maxims Facebook group to join the discussion already underway!
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by Repayable | May 16, 2016 | Money Matters
“Hello, my name is Jeni and I have a mountain of student loan debt.” “Hello Jeni.” reply the millions of millennials drowning in debt.
I know my education was an investment in my future and this post isn’t here to whine about the high cost or to dictate what ought to change about rising costs and increasing debt. Today’s post is here to show you how to break free from student loan interest rates that are bankrupting you.
Let me take you back to January 2016 when I was filing my taxes. It was my first entire year making pharmacist pay and really taking it to my student loans. Ha! I’ll show you student loans! I shouted victoriously as I chucked thousands of dollars per month at the formidable loans. As I filed on Turbo Tax I pulled up my 1098-E and this is what I saw.
Do you see how much interest I paid Navient in 2015? Nearly $14,000 !?! Oh well I thought to myself At least the government is going to owe me a bunch of my tax money back… Haha oh how delusional was I? Turns out there’s an $80,000 cutoff for individual income. If you make over that, you can’t deduct your student loan interest… Now I was livid.
I was gonna find a way to fight this injustice. My federal loans were sitting pretty at 6.55% interest. I spent so much money on this debt and still owed six figures!
So I started looking around at refinancing options. They all seemed kinda sketchy and unreliable to me. I checked out a few options which had specific terms of repayment, fees for transferring loans, and early repayment fees all for a measly 1% interest rate discount and just weren’t worth it for me.
Then a friend (thanks Travis!) recommended I check out SoFi. Which I immediately did. I put in my income information and got quoted at about 5.4% for a fixed rate and about 4% for a variable rate… Now I was on to something. While these were lower rates they still weren’t good enough to entice me.
Then it happened. I was listening to Grammar Girl (one of my fav podcasts!) and she started talking about student loan refinancing through Earnest. So I decided to check it out and it’s the best financial decision I’ve made in a long time!
How to Refinance Student Loans w/ Earnest
(Use these links and we both get $200 when you refinance)
Step One: Get an Estimate
You want to make sure that refinancing makes sense for you so go to earnest.com using this link (so we both get $200). And right away on the home screen click the 2 min get your rate box.
When you click the button you’ll have to fill out this form with identifying information (name address), income information, student loan balance, assets, rent/mortgage, college information (name of college, degree, and graduation date). You’ll also have to create an account using your email address and provide your social security number so they can do a soft check of your credit (soft means it won’t show up on a credit report).
After that you click “get your rate”. Soon you’ll have an estimated interest rate. Mine was 3.36% variable and 4.7% fixed.
Step Two: Ask Their Friendly Customer Service Anything
So, you’ve got your rate estimate and have decided that it makes sense for your to refinance. But now you’ve got a million questions… well at least I did. I immediately contacted their customer service via email. Amazingly they responded to me that day! And multiple times. I exchanged at least 10 emails with a variety of questions about early repayment, penalities, transfer fees, how to make extra payments, fixed vs variable interest rates.
Step Three: Fill Out Your Profile
There are four main areas of your profile (aka your loan application). In your profile you will provide information about your education, employment, finances, and personal (DOB, address, etc). I was required to upload a picture of my driver’s license but otherwise it was super easy.
**A quick note for any other pharmacy folks out there. I had to do something non-intuitive when entering my education. I only completed two years of pharmacy pre-requisites in undergrad and never obtained a degree because I got into pharmacy school right away. That meant I had to list the University of Iowa as a bachelor’s degree and then select “transferred” instead of completed. Then select the University of Iowa again and enter my Pharm.D. If you get stuck just open up a chat or send a quick email. The customer service at Earnest helped me figure out why I couldn’t enter my education and solved the problem for me.
Step Four: Submit Your Application and Wait for Approval
Earnest will turn your application around quickly. For me it took just over 24 hours. They gave me final rate estimates for fixed vs variable and then it was time to decide to move forward with refinancing.
Step Five: Choose Your Payment Amount
One of the coolest things about Earnest is it’s flexibility. After you’re approved you can see the effect of changing your monthly payment on interest and duration of repayment. There’s a cool slider that you move to change your monthly payment and it will show you the estimated interest rate along with the time ’til payoff. It’s a super handy real-time way to see the financial impact of increasing or decreasing your monthly payment amount. Not my slider below, though I wish it was… add a zero on the end of the payment amount and that’s what mine looked like 🙂
Step Five: Choose Fixed or Variable Interest Rate
This can be a personal decision and may be based on your personal risk tolerance. There’s a handy FAQ which has a ton of helpful information about the application process. There is a specific FAQ about choosing variable vs fixed rate which I found very helpful. Essentially it tells you that the variable interest rate is determined by the 1-month LIBOR index (see link for historical rates). I’ll walk you through my thought process behind choosing a variable rate but you should make the decision that’s best for you.
I plan to repay my student loans by the end of 2018 (lofty goal I know since I have ~$98K left). The LIBOR index has been <1% since late 2008. It continues to approach 0%. Interest rates like these are based on inflation. Which right now is also very low. So in terms of market stability I think the risk of my variable interest rate shooting up to the capped 9.95% is low.
My variable interest rate is 3.36% vs 4.7% fixed rate. So that means every month on a variable rate I’ll have to pay about $275 in interest and if I choose the fixed rate I would pay about $385. As more time passes I will save more money so if the variable rate increases it would have to increase a lot for me to have made an unwise choice. Another thing I considered was in order for refinancing to have been a bad choice my variable interest rate would have to nearly double…
Final Steps: Link Your Accounts,Upload Statements, Sign
Your last steps will be entering the account and a routing number for the checking account your monthly payments will be made from. Then you enter your existing loan servicers and determine the 10-day payoff amounts for your loans. Then you upload your most recent loan statement, even screenshots are good enough as long as they have current balance, interest rate, account number, and date.
Then if everything looks good to you all that’s left is to review the terms of your loan agreement, electronically sign the document, and submit it.
That’s it! You just halved your student loan interest rates! Way to take control of your financial security 🙂 Tell me what you’re going to do with the thousands of dollars you no longer have to spend on interest in the comments below or in the Millennial Maxims Facebook Group.
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