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Thread: JJ- Loan question!

  1. In vino veritas
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    #1

    JJ- Loan question!

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    Do you know much about professional school loan forgiveness programs? Just wondering if I could ask you some questions about it (if you know stuff about it) or if I need to stalk someone else down to answer my questions.
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    #2
    I'm familiar with them and if I don't know the answer, I'll tell you that too! Feel free to post or message me!
    J.J. Montanaro is a CERTIFIED FINANCIAL PLANNER practicioner with USAA Financial Planning Services one of the USAA family of companies.
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    Ok, So I am in a professional school program. That means we get IBR (income based repayment) on our federal loans, but not private loans (I have unsubsidized loans, subsidized loans and Grad PLUS loans, coming out to around $200,000 when vet school is over).

    Do you think IBR actually works, or do you think its in such disarray that I should not trust it, and try to pay it off ASAP. Here is teh breakdown- each year we get subsidized loans. $8,000 worth. This is going away next year. Something like $30,000 are unsub, and the rest are GRADPLUS (which I believe are private).

    My goal with my guy was that we would live only off his money for 5 years while I saved 10-12% of my paycheck (in mutual funds to start a retirement plan. Best to start young!), and put the rest towards private, and then towards unsubsidized loans (the ones with the highest interest rates) and trying to pay them off.

    However, unsub loans are still federal and, in theory, will be forgiven after 20 years. Should I just make the minimum payment on those and ONLY pay off the private loans, in hopes that loan forgiveness programs are still happening, or at least I am grandfathered in? Or should I just go ahead and pay back my boatload of loans?
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    JJ is awesome, he will help if he can!!
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    Thanks gunsgirl! VinoVet, where are you going to work when you graduate (a winery )? How will the $200K be broken down private vs. federal when you're done?
    J.J. Montanaro is a CERTIFIED FINANCIAL PLANNER practicioner with USAA Financial Planning Services one of the USAA family of companies.
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    I am not sure exactly where I will work. Hopefully a small animal practice. Near, but not in a metro area (either NYC, DC, Boston- if I am truly unlucky, or even worse Philly).

    Here are the descriptions of the loans I have taken out:

    GradPLUS- The Graduate PLUS Loan is a fixed-rate loan with a 7.9% interest rate. Interest begins accruing from the time of disbursement. A 4% origination fee will be deducted from each disbursement. Repayment begins within 60 days after the date of the final disbursement. In-school deferment is available provided you remain enrolled at least half time in an eligible program. Repayment begins immediately if at any point you are not enrolled at least half time. For more information on repayment, visit the Direct Loan website at studentloans.gov.

    Federal Subsidized
    - The interest rate for Federal Direct Subsidized Loans for graduate and professional students and all Unsubsidized Loans is fixed at 6.8% for loans first disbursed on or after July 1, 2006. Borrowers will be charged an origination fee of 1.5%, minus a rebate of approximately 1.0%, which will be deducted from the loan before disbursement is made.

    For Unsubsidized Loans (Unsub), interest must be paid while the student is in school at least half-time. If the student chooses not to pay the interest, it will accrue and be capitalized (added on to the principal at the time of repayment).

    Repayment of the principal balance begins six months after graduation, withdrawal, or less-than-half-time enrollment. Students may be allowed up to thirty years for repayment in certain circumstances, however, repayment is usually based upon a ten-year plan.

    Fed. Unsubsidized- Same as the subsidized.

    Here is the website I got all this info from - Loans - Student Financial Aid - The Ohio State University


    I *believe*, the GradPLUS are sold to SallyMae, so private, but I am not exactly sure. So far I have these loans out:

    Federal Sub- $17,000
    Federal Unsub- $64,000
    GradPLUS- $22,162

    They are eliminating subsidized loans after this year, so my estimate is that by the end of my 4th year (I graduate May 2014), I will have the following:

    Fed Sub- $17,000
    Federal Unsub- $120,000
    GradPLUS- $35,000

    (This amount of debt makes me want to weep). The average starting salary of a vet who goes right into practice, for an OSU grad, is around $68,000 a year before taxes, with no benefits. If I do in internship, payment can be deferred another year (while interest accumulates), but I will probs get paid around $28,000 for that one year. Not sure if I will do that or not.

    Tell me your opinions.
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    I'm working on this between meetings and will post a comprehensive answer by the end of the day!
    One more question: are you married or planning on getting married to "your guy" soon? If so, what is his gross income (or grade and I can figure it out!). As I evaluate IBR, his income will make a difference (if you're married).
    J.J. Montanaro is a CERTIFIED FINANCIAL PLANNER practicioner with USAA Financial Planning Services one of the USAA family of companies.
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    Quote Originally Posted by USAA_JJ View Post
    I'm working on this between meetings and will post a comprehensive answer by the end of the day!
    One more question: are you married or planning on getting married to "your guy" soon? If so, what is his gross income (or grade and I can figure it out!). As I evaluate IBR, his income will make a difference (if you're married).
    We are not married. Possibly in June before a deployment, but more likely in the fall of 2013. He makes a second Lt salary (soon to be a first Lt) in te marines. I don't know what that is. He will be getting out of the miliary two months after I graduate.
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    I hear you on the “weeping” front! But the only way to eat an elephant is one bite at a time, so here goes…

    I asked where you anticipated working with the thought that public service student loan forgiveness program (10-year) might work—but it won’t be an option for you. I don’t think the Income Based Repayment (IBR) option makes sense either. My thought is to consolidate all of your loans, set up an extended repayment plan for 25 years and then allocate additional to principal as you’re able while still meeting your other goals (retirement, kids’ college, etc.). This approach will give you the lowest initial payment (given assumption of marriage and joint income of at least $120K), no requirement of annual recertification, a level payment you can plan around, and I don’t think you’d actually be giving up anything in the form of “forgiveness.” By adding just $100/month towards principal in this scenario you’d knock about 5 years off the loan and if you were to pay an additional $270/month you’d be finished in about 16 years.

    So, let’s talk Income-Based Repayment (IBR). Using your assumptions, all of the loans would be eligible for IBR. The Graduate PLUS loan is a federal loan. With $70K of income as single filer your payment would likely be around $700/month. However, since you’ll be married and likely file jointly, the IBR payment calculation will be based on your combined income. I’ll assume, your LT will have the same income as you and both of you will experience annual pay raises of 2%. In this scenario your initial payment would be roughly $1,500/month (I used the calculator at Student Aid on the Web ). When I play it out, you actually would actually not experience any “foregiveness”… the loan would be paid off well before the 25 years required for foregiveness elapsed…actually under 15 years. I think this program would be more suitable for someone with a lower income (and potential income) than you’ll have.

    The federal student aid website linked above is a great resource! Does that help?
    J.J. Montanaro is a CERTIFIED FINANCIAL PLANNER practicioner with USAA Financial Planning Services one of the USAA family of companies.
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    #10
    Quote Originally Posted by AaronSliny View Post
    I wanted to know what a unsecured loan is? Does it mean that if you dont pay it back insurance covers it? I dont wanto sound dumb, I just am starting to learn about credit and I am interested in learning from you.

    Logan
    Every single one of your comments have been on posts that are at least 5 years old. If you have a question you should start a post of your own. Nobody is going to respond on these and most of these members aren't even active anymore. Check the dates before you comment.

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