I created a startup that helps people pay off their student loans. AMA!

I have about $120,000 in student loan debt (1/5 is federal, the rest is private), and have been making my payments on time since they started in 2012 (which are now at $1,300/month). I have contacted 4 different companies about refinancing, and have been denied by all of them because I don't make enough in regards to what I owe. I have a full-time job (40K), and 3 part-time jobs (approx $500/mo). I have no other debt, but I'm at a loss as far as getting a handle on this. I'm paying the lowest amount possible, but still struggling. I'm living relatively comfortably, but I don't have a car, I live with a roommate, and most of my food comes from the free leftovers that I get from my catering job. I'm looking for a better paying full-time job, but my small college town is very limited. I have $113 in my savings account, and I just feel like I am going to be stuck until 2028 when my biggest loan is paid off. I know I'm not special and that there are people in much worst situations than me, but I still need help. Do you have any advice that you can give? Anything at all?

Hey dino-deb. That sounds like a really tough situation, but it’s awesome to hear how you’re making it work! The truth is that private student loans have far fewer and less appealing options for repayment than federal loans. You don’t get access to income-driven repayment plans, Public Service Loan Forgiveness, lenient delinquency policies, and more. One of the reasons we strongly advise taking full stock of your financial situation before refinancing a federal loan is because you lose all of these options by doing so, even if you do end up with a better interest rate. You unfortunately don’t have any real options with private student loans outside of refinancing them for a better rate, or somehow negotiating a different repayment plan with your private loan servicer. And as you’ve already seen, refinancing is never guaranteed. Right now, I’d suggest that any spare cash should go to paying down those private loans first because if things do take a turn for the worse (for whatever reason), the federal loans have a much softer cushion to land on with regards to delinquency and default. You seem to have a really good handle on your financial situation and options, but situations like your’s drive home the need for serious reform in the way our society handles paying for college.

Hi Andy! Thanks for doing this AMA! I do have a few questions, which I think many of the users over at /r/studentloans would find useful as well...

• Are there any reliable and helpful student loan consolidation services?

-I'm afraid to look into it because of horror stories I've heard about getting dozens of hard pulls on your credit, your information being sold on, unwanted phone calls/solicitation etc etc....

• Is there any benefit to consolidating Federal and Private loans into a single loan from a 3rd party?

-I have Federal loans which I consolidated into a single loan, and Private Loans and a reliable job. All of my interest rates hover between 6-6.5% I'd rather pay them all off ASAP, to hell with quality of life.

• Can I consolidate if I have a negative report from defaulting on a student loan? How will this affect interest rates if I choose to consolidate? Will I be rejected?

-I have a good credit score (~720), but I have a bad mark from defaulting on a loan 3 years ago. I am in good standing with the defaulted loan servicer, and they said they can provide a letter stating I am in good standing, but cannot clear the mark on my credit.

• Is it possible to renegotiate with defaulted loan servicers?

-I defaulted on a loan and it went to a collector who charged 50% of the amount of the loan ON TOP of the value of the loan. I'd like to say, hey, you've made some money off of me so far, but come on, you don't need all that. ^{ya bastahds}

Thanks!!!

I appreciate your questions!

1. There is lots of confusion when it comes to consolidation and refinancing. A consumer can consolidate their student loans for free with the Department of Education, see here. A consolidation simply combines multiple student loans into a single student loan. The main benefits of a federal consolidation is that you still remain eligible for most Income Driven Repayment plans and it can become easier to manage and track your student loans. Buyer beware… In recent years, many companies started offering a service that helps consumers prepare the paperwork for the consolidation, often charging $300-$600. IMO, this is predatory and an exorbitant fee for the services exchanged. Now, there is also refinancing. By refinancing your student loans you can not only consolidate multiple student loans into a single loan, but you can potentially lower the interest rate and modify the term of the loan, thus either lowering monthly payments or helping you lower your total interest costs. Most refinancing partners now offer a soft-credit check to determine your eligibility and obtain an estimated rate. If you decide to proceed with refinancing, the lender will then perform a hard-credit check, which can lower your credit score by a few points, depending on how many other recent inquires are listed on your credit report. Also, MyFico reports consumers can rate shop for student loans with multiple lenders within a 30 day window without causing additional damage to your credit score. Here are some questions to ask yourself before refinancing.

2. In regards to refinancing both federal and private student loans, it really depends on your job security, cash flow situation, and risk tolerance. I recommend borrowers with high Debt-to-Income consider leaving any federal student loans with the federal government so they remain eligible for Income Driven Repayment and potentially Public Service Loan Forgiveness. If a borrower doesn’t plan on using and Income Driven Repayment plan or PSLF, then they might want to consider refinancing. The easiest refinancing targets are Grad Plus Loans, Parent Plus Loans, and Private Student Loans, as these typically have the highest interest rates.

3. I personally defaulted on my student loans (4 years ago), and was able to refinance with Earnest last year. My VantageScore (credit score) was around 680 at the time of my refinance application. I am assuming my strong Debt-to-Income and free cash flow helped significantly in getting approved.

4. Again, when I defaulted on 2 federal student loans, there wasn’t any room for negotiation. They set me up on the 9 month federal default rehabilitation plan, and hit me with ~16% default collections penalty. If the defaulted student loan is a private loan, then you might be able to negotiate directly or hire a debt settlement firm to work on your behalf.. But results are not guaranteed here, and be wary of who you work with! It might be smart to hire a lawyer to review any debt settlement agreement reached.

I refinanced with Earnest too. Shaved several points off my various interest rates. My wife did it with SoFi.

Awesome to hear. : ) Do you have estimated savings to share?

I have followed your website for a while now, and I have never seen a suggestion to "stay in school". For example, I had close to $80k in student loans, graduated and found a job, but maintained my status as a part time student in community college classes. The cost is minimal, classes are handled online, and I save thousands on interest. Is there any reason this has never been a suggestion for those looking to minimize their payments or pay down principal faster? Great work by the way, I read your newsletter weekly!

Thanks for the compliments on the newsletter! That’s an interesting strategy, and I can see how that could work for some. However, you’d still need to factor in the cost of the classes vs. the cost of interest. Also, interest would continue to accrue on unsubsidized loans, so this wouldn’t work for all types of loans. Anyway, if you’d like to send us more details on your story and how this works, perhaps we can publish it on our site. Email [email protected] if that interests you. Thanks!

FYI, this might not work for some people. When I was finishing grad school, my student loan payments kicked in 6 months after I finished being a fulltime student, that was written into the loan terms apparently. I had to take 1 more credit over the summer to finish my thesis and it didn't count. Be sure to look up the terms of your loans before you try this strategy!

With federal loans as I have seen, as long as you are a part time student, your student status is honored and your 6 month grace period will move to your new "out of school date" which will be the end of your semester. I am unsure about private loans, but I assume they will act similarly to unsubsidized loans, where interest will accumulate but not capitalize and payments are not "required" because of the in school status

Well, that's not what happened to me. Payments started 6 months from the last semester I was enrolled in 12+ credits. This was with SallieMae, MyFedLoan, and Wells Fargo.

The technical wording on this is that you need to be enrolled at least half time. This definition is different between schools, but generally it is 6 credit hours, with 12 credit hours being full time.

If they started payments early, then the National Student Clearinghouse was not updated properly with your enrollment status, and you'd simply need to fill out an in school deferment form.

https://www.ifap.ed.gov/dpcletters/attachments/G02339eFINALSCH.pdf

and yes, that is ifap.ed.gov

@Dulout - nailed it.

What advantage does your company provide beyond the freely available information and tools provided directly from the Department of Education?

Also, what's your funding model if you're not charging students? Referral fees? Selling contact information to potential lenders?

Over at /r/studentloans most of us advocate avoiding paid document prep services, or signing up for those crowdfunding type repayment companies that sell your info. I haven't read enough about your company and policies to know if it's something worth recommending to people

Great questions... 1) We help borrowers learn about private and federal options.. not just federal. We also allows users to sync all their student loans (federal and private) into one central dashboard instead of logging into multiple servicer accounts.

2) We are a for-profit entity with an advertising based model. We earn revenues if a user decides to use a product or service that we recommend on our property. You can see an example of this in our marketplace here We do not rent or sell any data. We also don't charge for document prep services at this time.

Hope this helps, and happy to answer any other questions!

I'm familiar with this space (I've written a couple of books on scholarships and another on resumes for recent grads) and I'm also familiar with the affiliate marketing space, so I can give you a pretty good idea of the funding model.

Generally speaking, lenders pay very strong referral/affiliate fees for funded loans. $50-100 apiece is safe to assume. So SLH's business model very likely goes something like this:

a) They recognize that there are millions of students out there with more student loans than they can handle;

b) There's no central "go-to" student-loan refinancing hub out there that's well-branded as such for students;

c) They build this site/company to be the household name of student-loan refinancing, and collect thousands of dollars a day in referral fees kicked back to them by the banks they're linking to;

d) cloak the site in a handful of goodwill/free-information articles and a heroic birth-of-the-company narrative to encourage good feelings and trust among their customers.

More power to them and all, it's a good idea and may work very well, but I'd be more inclined to believe the true origin story is more like, "we could make millions in referral fees if we could get all the student-loan refinancers to go through us first" rather than "I started this thing because I wanted to HELP PEOPLE!"

But that's cool, whatever.

This is basically true... Although our goal is to monetize through various products and services, not simply student loan refinancing. I don't think refinancing is the right tool for all student loan borrowers, so we're focused on creating/promoting products/services that can help people earn additional income, improve education, and optimize their finances.

We created Student Loan Hero out of my own need. I graduated with $74,000 in student loans and I didn’t really know what this meant. I heard so many buzzwords like consolidating, refinancing, IBR...it made my head spin and ultimately caused me to default. We wanted to make the process of tracking, consolidating, and refinancing student loans a lot easier (happy to say it’s worked well so far, btw, we’re helping 80,000+ users pay of $1 bn in student loans). With our funding model, we try to be extremely transparent about our “partner disclosure” and the compensation we receive, which you can find on any page of our website. Our model works well for both us and the students: students refinance and save on their loans and we get compensation from our partners, which allows us to help even more students.

Are you working with any politicians or the Consumer Financial Protection Bureau to figure out how to relieve the student debt burden on graduates? Is there any focus on better informing current and potential college students of the true impact of taking on such staggering amounts of debt before they have real income?

Great question.. We have chatted several times with the CFPB, Department of Education, a few senators, and some policy groups. To date, we haven't helped draft any bills, but I would love to have our company to have a greater presence proposing policy changes.

I feel strongly around the following topics: 1) Allowing Pre-tax Student Loan Repayment Contributions (similar to a 401k) 2) Adjusting Student Loan Interest Deduction (mimicking mortgage interest deductions) 3) Federally sponsored Student Loan Refinancing 4) Revisiting Student Loan Bankruptcy Protection

Keep in mind, most of the above suggestions are for existing student loan borrowers. For folks about to enroll in college there is a whole other conversation to be had on reeling in college affordability.

What other policy issues should we tackle?

The Pre-tax repayment idea is a great one! Why should we pay taxes on money I'm going to give to the Govt anyway.

Couldn't agree more..

I make too much money to qualify for the government programs, are there other options? It's assumed that because you make a decent salary that you can afford $600+ payments a month, but that's not always the case, life throws a lot of curve-balls at you.

@Hamm3rH3ad - 1) All federal student loan borrowers qualify for REPAYE, but possibly if your income is much higher than your federal student loan debt, you might not be able to reduce your monthly payments.

2) You can also look into refinancing as an alternative strategy to lower your interest rate, and push out your term to 20 years. You can check out some of our calculators here.

3) Have you estimated payments on the extended repayment plan?

Here's a doozy: Currently have $588k in student loans, here's the breakdown how I got there 15k undergraduate 300k for dental school (pretty typical) 100k for living expenses in San Francisco for 3 years 40k in private loans my ex-wife convinced me we needed

The rest in interest that just keeps growing.

I've only been in regular repayment for maybe 1 of the past 5 years since graduating. I'm living near (within an hour of) my kids to be dad which REALLY limits job prospects, etc and it took a couple years to build a full time schedule, then bought my own practice and am working to make it profitable. A min payment on 25yr plan for all this would be around $4700/mo or about $56k/yr (Plus the taxes I have to pay on the income I have to make just to pay this, so it's like 80k of income to pay the 50-60 in loans)

I am making regular payments on about $100k of these loans at about 1000/mo. I recently tried to refinance these through SoFi and several other lenders, denied by all of them because my debt-to-income is poor (currently making 110k/yr). Credit score is 720. Being able to refinance these would only IMPROVE my financial situation.

Do you have any advice for my situation or the classmates I have who I know are in a similar situation (pretty much anyone that was married and had kids and no parents to help them through dental school)??

That’s a really tough situation you’re in. One of our success stories comes from an orthodontist who had over $380,000 in debt. We totally understand the frustration of not being able to refinance. Unfortunately, there might not be a lot you can do there until your DTI improves.

We have put together a post with some advice specifically for dentists. See our “Ultimate Student Loan Repayment Guide for Dentists” here.

Best of luck!

My wife and I both graduated law school in 2011. I have 135k in student loan debt (all fed loans) and my wife has 200k (also all fed loans - includes undergrad and law school).

Our combined salaries are about 60% of our student loan debt total. Given our huge debt-to-income ratio, I am currently enrolled in PAYE, and my wife is in IBR (unfortunately, she took out loans before 2008 and does not qualify for PAYE, and to enroll in REPAYE, she would need to consolidate and, therefore, restart the 25 year clock). I have 15 years of payments left, my wife has 20.

We would like to get out from under our loans earlier, but I have talked with several advisors who said in order to make a dent in our loans, we would have to pay $4,000 a month on our current plans to make any sort of dent (we pay $1,100 combined on the repayment plans). Average interest rate on our loans is 6.8%.

Do you have any advice as to alternative programs or refinancing options that we may not have considered? Also, if we are currently on the best possible plan, do you have confidence that remaining loan forgiveness will still be available to us at the end of the 15 and 20 year periods?

Thanks!

That’s a tough question! It may be worth looking into refinancing, but I’m not sure you’d be able to get payments down to the $1,100/month you’re paying currently. However, you can find this out relatively easily with a quick soft pull rate check from one of our lending partners found here. All but Citizens bank offer this.

Of course, you’d still need to weigh the tradeoffs of converting federal student loans to private as you’d lose access to income-driven repayment, forbearance/deferment, and forgiveness. In your case, these tradeoffs might not be worth it.

In terms of loan forgiveness still being available, I don’t have any reason to believe it won’t be right now. The only proposed changes I’ve heard of are on capping Public Service Loan Forgiveness, and even those proposals would grandfather in anyone who currently has student loans.

Best of luck!

I feel like you could make close to the same amount at a non-profit. Then everything just disappears after ten years.

just disappears after ten years.

Ten years can be a long, painful time with debt.

Wow, I have to say that I am impressed and we all have something in common. Currently, I have 91k in student loans debt and I am deaf myself. It is really hard for me to find a job in this job market. Especially, when I am deaf...honestly how many employers are willing to invest/gamble on hire a disability person. I am curious do you have any suggestion of how can I able to get 91k off my back? Other than Total and Permanent Disability (TPD)...I am so unsure if I will able to paying my debt off with 35k as first job...

Hey @irishsurfer619, I’m sorry to hear you got stuck with $91k in debt and are having trouble in the job search. There are a couple options that might work for you though.

If your student loans are federal, getting on to an income-driven repayment plan might be your best option right now and even in the long term. They’d set your repayment amount in line with your income, so if you’re unemployed and aren’t making anything, then you’ll have $0 payments! You aren’t locked into these plans and you can change at any time… which might make sense if you do land that killer job.

Even if you’re just using one of these plans in the short term, they’re better than a general forbearance because they provide interest savings that you won’t get elsewhere (particularly the new REPAYE plan). Furthermore, they all offer the possibility of loan forgiveness after 20 or 25 years (depending on the plan). So you’ll pay a reasonable amount for 20 or 25 years and then get the rest forgiven. Not a bad deal, and it’ll even leave you with plenty of spare cash if you’re working that $35k job. There are 4 income-driven plans, and we’ve got a detailed breakdown here: https://studentloanhero.com/featured/complete-guide-income-driven-repayment-plans-federal-student-loans/

You mentioned a TPD student loan discharge. These are extremely hard to qualify for unfortunately, but it might be worth a shot as a last resort.

I wish you the best of luck, and let me know if you have any other questions!

You're a startup and that means you are a business? How do you make money?

We earn revenue from our partners, specifically when borrowers refinance using partners on our site. To be transparent with our users, we post this all over our site. The good news is this strategy benefits both us and our users. We give borrowers the chance to lower their student loan payments and get out of debt quicker, and we generate money so we can do this full-time and reach more borrowers who need help.

How was the transition to the tech world? Did you have friends helping with technology or did you hire people? Website, app, etc?

Great question.. I graduated in 2009 at the bottom of the recession, and I couldn't find a job. For work experience, I quickly decided to apply for a microfinance internship in Ghana after graduation. When I returned to the states I still couldn't get a job, so I became a waiter at a restaurant. While I was working in the service industry, I decided to start building websites for friends and family who has small businesses. After getting my feet wet, I moved to Asia and started bootstrapping my first company, which provided website development and marketing services to small businesses in the US and Canada.

Fast forward to 2012, I was still growing the website development company, but applied to Start-Up Chile... an incubator that provides $40k equity free to start your company. My business partners and I moved to Chile and started Student Loan Hero! : )

(tl;dr version) started building websites with no experience, was accepted into a business incubator, and kept learning - have been learning tech for 7 years now

As for the technical side of things... In the beginning I was responsible for user interface and user experience design (self-taught), our ex-COO was responsible for front-end dev (self-taught), and out CTO is a full stack developer (masters degree in computer programming)

Serious question and advice.

One of my life goals is to get rid of pay day loan companies and I want to do this through the free market as opposed to legislation.

The plan work by opening a pay day loan shop that charges a fraction of what the competitors in the market place charge. For the second pay day loan the consumer must agree to sit through a 1 hour course about financial literacy but the payday loan is without fee.

For every payday loan after the second one the educational requirements are the same, I don't want consumers to get to the point where they are willing to pay with money instead of their time.

Basically go in, set up nonprofit payday loan shop, steal all customers from competing for profit shops, drive them under while teaching financial literacy to those who might not have had the opportunity, rinse and repeat in different markets.

I understand that I might incur (acceptable) financial loss but I would like to get your thoughts on this.

What am I forgetting?

Do you see problems, concerns, or challenges?

This is been a pet project for 5 years for me and I'm looking for any and all feedback.

First off, I love your passion and mission! Payday loans paralyze millions of Americans annually and can send consumers into a debt spiral. In recent news, Google has taken a strong stance against advertising payday loans online. This biggest change is that companies aren’t allowed to advertise payday or personal loan products with an APR above 36%.

I would encourage you to check out a few new companies that are building out interesting solutions with alternative business models:

• https://activehours.com/
• https://www.lendup.com/
• https://getlenny.com/
• https://www.avant.com/

An alternative approach is pursuing a community driven model, like microfinance, which can might help keep customers accountable.

Hope this helps! Let me know if you have any other questions...

How soon do you see interest rates rising, and how quickly? That is, if I'm refinancing Grad PLUS loans to variable-rate loans, how long until the variable rates exceed the ~7% rates of the federal loans?

Great question @pkeros... While I wish I had a crystal ball, I do not.

The best I can do is point to the recent Federal Reserve testimony recap from Janet Yellen here on NYTimes, where there wasn't a rate hike.

Also, PIMCO reports the following: "...interest rates should remain historically low in the years ahead." Here is the interest rate outlook from PIMCO.

tl;dr - Market sentiment is pointing toward a very gradual rate increase over the next 3-5 years

As a senior in highschool what should I look for when taking out loans for school?

E: Thanks for all the responses they all are really helpful

Great question! Definitely start by filling out your Free Application for Federal Student Aid (FAFSA) form - every year millions of people fail to fill this out! From the FAFSA form, you’ll find out how much federal funds you qualify for (federal loans come with federal protections). As a last resort, if your federal funds don’t cover your entire tuition bill, you can explore getting a private student loan. All of this comes with the caveat that you should do your homework on the ROI of your education, and make sure that you’ll be in a position to pay off your loans upon graduation!

You're assuming the expected family contribution will be covered. I got grants and scholarships totaling the amount that my parents couldn't cover. Surprise! The goal posts were moved. I no longer "needed" the need-based aid I had received, and so there was a newly created gap left in funding that I still needed to cover.

You're right... Expected Family Contribution is a silent killer.. no one wants to talk about this from a policy standpoint.

what would you recommend to someone who is in a situation where the school claims that a person never attended their school, yet the loan companies are hounding that person for money, even going so far as to take that persons federal tax returns? these events were over 10 years ago, and the school is now tied up in a large legal battle for predatory loans. and yes i am talking about ITT Tech.

im personally of the mindset where 'well, if the school claims a student did not attend and has no record of attendance, then there must be some confusion about the true owner of said loan, but if the school suddenly claims the student attended, where is the diploma they earned?'

If the student didn’t actually attend the school, then one could argue they were fraudulent student loans.

What was your degree in?

Hi @Shahzadquraishi - I studied Managerial Economics.

Hey, dunno if I'm too late to the party to get this answered, but:

This obviously isn't the only problem, but it seems like a big problem is this scenario I've seen many friends go through, where they spend ~$200k on a degree from a private college and major in something that really has very few employment opportunities related to it (dance, art history, <obscure language> studies, etc). After graduation, they have a lot of debt and usually not a great paying job.

Now I'm not saying that everyone has to do STEM or die by any means. But it seems like there's this messed system where incoming college students are told "study what you love, and the rest will come together!", Which is certainly well meaning and romantic, but kind of naive and maybe even harmful. My question is, do you think it'd be reasonable for there to be more oversight/education with regards to employment possibilities for various majors?

It’s a really interesting point. I think better education about job opportunities for college students needs to be a bigger deal, yes. I’m sure I’m not alone when I really had no idea the full implications of choosing a major at 18. The good news is a lot of really smart people are starting to pay attention to this space. For example, I love what LinkedIn is doing with their “LinkedIn for Students” app. It’s a great way to educate college students about potential job opportunities after graduation. I see the key as finding a way to support students to find and follow their passions while also giving them an opportunity to make a healthy financial living, whatever that means to them.

Are you hiring?

Yep! Currently in need of personal finance writers, product manager, and a few others. We don’t have several roles listed on our careers page. What are you good at? : )

I went to school out of state and got a Mechanical Engineering degree and finished with 153,000 dollars in student loan debt. I have no clue where to start. I currently live at home and I've been deferring payments so I can move out before school loans hit. The reason being if they see that I am netting almost 2000 after expenses a month they will take 90% of that. I have a car payment of 450 and I pay rent of about 400 to my folks. I don't want to live at home forever, and once the school loans start taking I'll never be able to move. Additionally, my folks will be moving soon so and they will be too far from my work so I will have to move eventually. I make less than 50k a year so I'm a little nervous as to what my future holds at the moment. I owe 450 a month to Navient, 225 to sallie mae, and 227 to great lakes. 902 a month would be crazy to try and pay and live on my own. What do I do? How do I manage this? Will they work with me if I make them? I know many people who live out on there own and you tell them what you have and basically they can't take what you don't have so they only take what you do have. I'm afraid to make a big step and move if they are going to cripple me immediately. I should be getting a raise soon, but I can't bet on that. The cost of living in atlanta is crazy. Around 950-1200 a month in my area. 950 being pretty sketch, and 1200 being semi nice. Where do I start? I've almost paid off all of my credit card debt. After that I will be power saving to move out. January is when the school loans will be after me. Shedding light on the current situation would be great.

Hi -- for federal student loans, you may want to start with looking into income-driven repayment options. This will allow you to keep making payments but cap the amounts at 10-15% of your discretionary income (you can always pay more). Just keep in mind that this likely won’t help your balance decrease immmediately. For private student loans (or federal student loans, if you’d like to include them), you can apply for student loan refinancing. Other than that, there isn’t much flexibility with private lenders as they’re not required to do anything to help you.

Aside from adjusting your loan repayment, you might want to take a hard look at your expenses and see what, if anything, you can trim. A $450/month car payment seems to be eating up a pretty large chunk of your income. Are you able to downsize to a cheaper car or give it up entirely for a bit? I know these may seem like hard sacrifices, but just remember that it’s only temporary while you work to get out from under this mountain of debt. Best of luck!

Can you create a startup that helps people rack up student loans? Im sitting here without a degree xD xD xD

Haha.. Sadly, this is a million dollar idea. There are several start-ups and companies that help student find and compare private student loans. We also include a few private student loan companies in our marketplace here. For example, Student Loan Hero earns a small commission from advertisers in our marketplace, when a customer signs up for the product or service.

Quick question.. If interested in a degree, have you considered a coding bootcamp or data school? I really like these alternative paths of education. Here is a blog post on our blog about some bootcamps.

Hi Andy,

I am finishing pediatric residency and going into a subspecialty where the end-attending salary is not much different compared to a general pediatrician salary (let's say $70-75k/year during 3 years of fellowship, then $150k/year thereafter as an attending for ballpark estimates). I have about $300k in student loan debt with federal loan interest rates between 6.5-7.5%. I'm currently making payments through IBR and had been planning to do PSLF, but I'm having second thoughts and considering more aggressively paying off my loans and refinancing them, which would take me out of PSLF eligibility. Do you think it would be wiser to 1) refinance as a fellow and start paying more aggressively now or 2) wait until I am a new attending to get a better interest rate quote when refinancing? Or should I just sit tight, see how PSLF works for its first beneficiaries next year, and decide then? I plan to do some moonlighting during fellowship to make some extra cash to throw at the debt, but probably won't earn more than $15-20k doing so.

This is a conundrum that we’ve found a lot of doctors face: is PSLF or refinancing the way to go? To answer your first question, I’d suggest that refinancing as a fellow would not be easy. Even as a fellow making $75k, you may have difficulty finding a lender who would refinance $300k of debt on that salary. Even as an attending at $150k a year, it’s certainly not a done deal. Considering that you’ve already started paying on IBR and are moving towards those 120 requisite payments for PSLF, sticking with that path sounds like it may be more rewarding. You’ll also be able to live more comfortably. Even if you managed to refinance those loans down to 4%, you’re still looking at payments of ~$3000/month on a 10-year term.

My brother owes around 36k in delinquent student loans (only been deliquent about 2 months). How can we go about this?

It keeps asking up to pay a min on like each individual loans, tallying up to close to $1400! He usually just pays around $100 dollars a month. is there anyways around this? would paying it make it not delinquent? thanks!

Hi! This really depends if the student loans are federal and private. Federal student loans come with many alternative repayment options, such as deferment, forbearance, and Income-Driven Repayment options. You can call your servicer to enroll in these programs. For private student loans, there are fewer options. You might be eligible for an economic hardship deferment or administrative forbearance. Last resort would be to ask for interest only payments, to help lower your private monthly student loan payments. Keep in mind, all these programs are really short term solutions and will cause your brother to accrue additional interest over the lifetime of the loan. I strongly advise him to try and increase his income and advance his career/education... I know this isn’t always the easiest thing to do, but need to be realistic about the situation.

I will be a senior in college this coming fall. After graduation I will have about 30k in federal student. My parents had taken out an even higher amount of loans (Parent Plus Loans) that I plan to pay for myself after graduation. What is your advice for me if I plan to get rid of these loans as quickly as possible after graduation? Is there anything I should consider now?

So happy you are asking this question now instead of in four years. : ) You can definitely take certain actions to minimize the damage.

1. Consider programs to help you lower your bills or cost of education.. For example, I pursued several work study jobs while in school, generating thousands in income and helping me avoid taking on unnecessary debt for living expenses. Also, I was a Resident Assistant for 2.5 years, which helped me reduce my education expenses by ~$20k. Lastly, I studied abroad and saved $5k with a lower tuition bill for that semester.

2. Make sure you think long and hard about your degree type and major. Do some research to make sure your entry level salary will be enough to cover your student loan payments upon graduation. Also, what is the job and wage growth outlook for your desired employment industry? Does it ensure growth potential and career advancement? If not, you might want to reconsider your major. I also think hard/tangible skills and experience is more relevant for fresh graduates rather than a broad-based education.

Hope this helps!

Is there anyway to transfer my wife's student loans transferred to my name and then qualify for loan forgiveness? We both work at nonprofits but she doesn't work full time and therefore doesn't qualify for any loan forgiveness.

Unfortunately, there's no way to transfer student loans from one borrower to another and keep them eligible for federal forgiveness programs (like the Public Service Loan Forgiveness program, which you might be referring to). However, if YOU are already moving towards loan forgiveness, and feel confident that you will receive it, it might be wise for to focus on your wife's loans which definitely won't be forgiven as long as she isn't working full time.

Question one: I'm two years out of law school with six figures in debt. Married and spouse has no debt and will be a student for two more years (therefore minimal income). I am earning 75k now but will be having a baby in a few weeks and that may change. My plan is to stay in IBR/PAYE while saving money to pay the tax bomb. Is that a good plan? How do I check whether i am on IBR/PAYE right now and which one is better? Question 2: My mom took out a parent PLUS loan that is 50k+ now that I want to pay off. What's my best strategy on that? FYI, she kept forbearing it and therefore the interest kept building.

1) It may be a good plan, but it really depends on how much forgiveness you’ll get and how that compares to how much interest you’ll pay over the long run. This tool can help you find out and compare IBR and PAYE: https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action You servicer will be able to tell you which plan you’re currently on.

2) One option is to transfer the Parent PLUS into your name while refinancing. You can learn more about that here: https://studentloanhero.com/featured/refinance-parent-plus-loan-childs-name/

Are you happy with your university education for $107k + 4 years of life, or did you feel pushed through after having your money taken?

: Great question… I like to consider both the qualitative and quantitative ROI of my education.

Qualitative: I grew up in a small rural town in Pennsylvania. Attending a private school in Boston helped me understand the world a bit better. I was exposed to wildly different cultures through studying abroad, and created important relationships which I still have in life. Even the simple things, like reading the WSJ everyday at lunch made a big impression on my goals and dreams.

Quantitative: I graduated with roughly ~$74k in debt. The career office didn’t help me much with interviews, internships, etc. The job market in 2009 was terrible, and I couldn’t find a job. My debt ballooned to $107k in 3 quick years while bootstrapping my first company. So the question is.. how else could I have spent $107k? Started a different company? Made some other investments?

Tl;dr - I don’t regret my decision to spend this much money on college. Just keep in mind, a college degree doesn’t guarantee you a job or success. Hard work, determination, and pigheaded discipline is the only thing you should rely on to guarantee future opportunity.

What is the best website (or other resource) to find all the loans I currently owe money on and consolidate them into one monthly payment?

If you have federal student loans, the best place to find them is the National Student Loan Data System NSLDS. For private loans, it’s a bit more complicated as they’re not included in the NSLDS. See here for some tips on find those loans.

So I am strapped with $25000+ with private student loans and I can't consolidate or refinance since I don't make enough money. What's your advice for me?

Hi -- unfortunately there just aren’t a ton of options for dealing with private loans. Lenders aren’t under any obligation to help out, so they typically don’t. In any case, what’s your goal? If it’s to pay them off faster, I’d suggest using to pay them off. If you can, we recommend trying to earn extra on the side of a job with a side hustle as well. Best of luck!

Thank you for doing this AMA! I have a probably pretty easy question :) If all my student loans are federal (I went through Sally Mae for all of them, now at Fedloan) is there any way to refinance? Or am I stuck with the interest rate they gave me a year ago when I consolidated? Thank you again for taking questions!

Yes, all of the lenders we partner with will allow you to refinance federal loans. However, there are several tradeoffs to consider as the federal loans will be converted to private loans. For example, borrowers lose access to income-driven repayment options, federal deferment/forbearance, and forgiveness. You can read more about this here. Some borrowers are okay with these tradeoffs, but it’s important all borrowers consider them before refinancing federal student loans.

Do you believe in ghosts, aliens or bigfoot?

Aliens are inevitable. Bigfoot is plausible. Ghosts are questionable.

Is there a way to consolidate just one loan? I have about $70,000 in loan debt overall, but there is a chase private loan that is raping me on the interest rate. It's variable and has been as high as 12%. I owe about $8,500 on it and want to change it to a low fixed rate. Thanks!

In this case, you would want to look into refinancing. Essentially, you take out a new loan with a new private lender, which pays off the old loan. The goal of refinancing is usually to get a new, lower interest rate and/or change the repayment term. You can refinance just one loan or multiple loans into one. Keep in mind, though, that if you do end up refinancing any federal student loans, you’ll give up your government protections like income-driven repayment options, forbearance, deferment, etc. However, if it’s just this one private loan you’re worried about, there’s not really anything to lose. Also note that you will need to have pretty good credit and employment history in order to qualify for refinancing/a lower rate.

What's the deal with this public service loan forgiveness thing I keep hearing about?

Hi there!

There are several different federal loan forgiveness programs, but the most widely available is Public Service Loan Forgiveness (PSLF). PSLF is available to federal Direct loans, but in order to qualify you must meet the following criteria:

• Completed 120 monthly payments(10 years) on an income-driven repayment plan. There are currently 4 of these, IBR, PAYE, REPAYE, and ICR.
• Worked in qualifying public service employment for at least 30 hours/week while making those 120 payments.
• Completed the PSLF employer certification form for each employer during that 10 year period.

Public Service Loan Forgiveness be a great option for public teachers, government workers, or non-profit employees who are struggling to repay their federal student loans. Doctors working in public hospitals can often take advantage of this program as well. You can learn more here.

Let me know if you have any further questions!

The standard 10 year plan payments also qualify, not only the IDRs.

Yes, that’s correct. However, borrowers must switch off the 10-year plan or there will not be any debt to forgive. That’s why the Dept. of Ed. States: “Even though the 10-year Standard Repayment Plan is a qualifying repayment plan for PSLF, you will not receive PSLF unless you make the majority of your 120 qualifying monthly payments under an income-driven repayment plan.” Additionally, if borrowers start making payments on the 10-year plan and then choose to consolidate later, they’re payment count will reset.

Do you think that, if loan forgiveness ever becomes a thing, maybe earning potential and the amount of debt taken out should be considered? For instance, Student A gets an engineering degree and because of scholarships and financial aid they leave with $25-$45k of student loan debt, but Student B gets a generic liberal arts or business degree with zero financial help and leaves with $85k+ in student loans. Student B ends up in a much worse situation with lower earning potential and a heavier loan burden - they're more likely to qualify for loan forgiveness, PAYE programs, etc., while Student A has the financial means to pay their loans, albeit with some struggle, but no loan forgiveness. I think there should be better education ABOUT higher education - knowledge of earning potentials, true cost of higher education, estimated loan payment info, cost of living in various parts of the country, projected job growth of various professions, etc., which would help people make better decisions about where to go, what to go for, and if they should go to college at all. Do you agree?

First off, loan forgiveness is a thing… in the sense that there is Public Service Loan Forgiveness (10 years of payments) and time-based Federal Student Loan Forgiveness (20-25 years of payments). 2017 is the first year that borrowers will be eligible to get their loans forgiven via PSLF.

Second, I agree that you have a valid point. Potentially the system is rewarding “bad actors” in the market. (i.e. borrowers who didn’t do their homework with scholarships or pursue a less marketable degree, and thus have greater difficulty repaying) Another potential inefficiency in the system is Expected Family Contribution as part of the FAFSA process. The challenge is that we have a diverse and dynamic job market, and student loan cohorts vary wildly, so when attempting to create policy some cohorts will inevitably feel slighted.