Advice requested on how to tackle an upcoming student loan.

Hi YNABers,

                          Just to give some background. I am a student in grad school, close to finishing up and luckily, I do not have any student debt. I do have some CC debt, that YNAB is helping me pay off and I should be able to do so completely this year, if everything goes well. I also have some outstanding money that I borrowed for my wedding, that will be paid off as soon as I get a job. As you can see, doing all that with just 2K USD per month is hard (the max I can earn since I am constrained by visa regulations on how much I can work).

Now coming to the important part. My wife is slated to start grad school in August and since both of us do not have that kind of money to pay for it, we are looking at a large student loan, in the ballpark of around 70K USD.

Since I am not working yet (outside of being a graduate research assistant with a limited stipend) and she does not have any income, at least for a year, till she finishes and finds a job, what would you folks advise in terms of handling this student loan? Any tips, advice, personal experiences would really help.

It is my hope that I will be in a job soon and I can start working on paying it off and when she gets a job, we can buckle down and use one salary completely to pay it off as soon as we can, but outside of that, would love some inputs and perspective.

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    • Khaki Storm
    • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
    • Khaki_Storm.1
    • 6 mths ago
    • Reported - view

    Have you looked at any employers that would pay for her degree, maybe she works with them and then get the degree. That's how I got my Master's.

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      • LoaferDude
      • Coral_Cornet.9
      • 6 mths ago
      • Reported - view

      Ben Khaki Storm That is unfortunately not going to happen because she is an international student and is not authorized to work in the US unless she gets her work permit, which is not likely to happen without a degree from here. 

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      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 6 mths ago
      • Reported - view

      LoaferDude I'd not put it out just yet. Two of my coworkers do not have US degrees. I do work for an international firm, but the two I mentioned were hired in the US. I'm of the mindset to let others tell me no, rather than assuming the answer is no. I get told no plenty of times, but at least I asked. This includes all kinds of people: all my elected officials, non-elected ones too (EPA, IRS), work place, schools, software companies, companies I do business with, etc. So far, it's never hurt to ask. 

      PS. Of course, this is based on not knowing the degree and career field, YMMV. 

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      • LoaferDude
      • Coral_Cornet.9
      • 6 mths ago
      • Reported - view

      Ben Khaki Storm She tried for the past 5-6 months. The problem is legal. She is not authorized to work in the U.S right now. And that will not be possible unless she has a temporary work authorization (courtesy a STEM degree from here) or a H1-B. Now, the problem is that a H1-B is never guaranteed, since it is a lottery system, so no prospective employer is even going to talk to someone, let alone interview them without a guarantee that they can work. Getting a degree from here gives her the cushion of that temporary work authorization, and that is how most internationals students transition to the H1-B. They apply and get approved during the time they have said temporary authorization. Without that, an employer is not going to sit around waiting for her H1-B to get approved. And even if it does get approved, there is the 6-month gap between approval and activation. Another reason for a prospective employer not to care.

      The situations you are talking about probably fall into the above category, where they had temporary authorization to work and the company filed for their H1Bs. This is from my knowledge of being in the US for more than ten years now and being in the situation. Thank you for the input though. :) 

      FWIW, the degree is a Masters in Applied Stats from Cornell and her career is in Economics and Data Science.

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      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 6 mths ago
      • Reported - view

      LoaferDude I believe one of my coworkers came thru lottery system and the other sponsored thru his past employer, but I don't know all the details. 

      I'm not familiar with that career field. My children looked into some others that require a graduate degree before doing 'real' work in the field (aka not just the under study like or lab assistant). I want sure if this was similar. 

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  • (If you will have private loans, they are handled differently by each servicer)

    If it's a federal loan, check if payments during the first five months of disbursement still count as a cancellation payment, which will reduce the amount of the loan that will generate interest (and cancel any that accrued on that portion during those months).

    Get into the habit of paying something towards the loans each month while she's in school, if at all possible. Even 25/mth as a cancellation payment or to cover interest helps a lot.

    Borrow as little as possible. If you can earn enough to pay your living expenses without taking out a larger loan or putting your life on a credit card, that will help keep the total down. YNAB will become your favorite app very quickly (if it isn't already 😃)

    With loans that high, esp for grad school, some of the loans may be PLUS loans which do not have a 6 months grace period.

    Pay off as much of the interest during the 6 months grace period after she finishes school as possible. After that point the interest will capitalize & you will be accruing interest on the unpaid interest.

    Set up direct debit payments once you enter repayment as that typically saves 0.25%. There are many repayment plans available for student loans, so calling your servicer to talk about options is a good idea. Different servicers for federal loans will have different options & policies about early repayment & paying more to principal.

    Reply Like 2
      • LoaferDude
      • Coral_Cornet.9
      • 6 mths ago
      • Reported - view

      adriana01 Thanks for the input. Unfortunately, as international students, we are not eligible for federal loans. We can only take private loans out with an eligible co-signer who is either a citizen or a permanent resident. I do intend to pay something towards the loan once I start working soon (hopefully I will transition into a job this summer, after graduating). The 70K was split up as 60K as tuition and 10K as living expenses for the one year. I guess 900 USD per month as living expenses is pretty low key, including rent and food etc. She is going to look at getting an on-campus job to subset her living expenses and hopefully she will find one.

      Also, I am pretty adamant about not putting anything on a credit card. I have worked hard not to have too much debt on a CC, unless it is absolutely necessary. My current situation with <5K in CC debt is the most I have ever had on my CCs. I should have that paid off in 6 months or less, so I would like to maintain that no debt scenario. I did not know about the direct debit scenario to save interest. I will look into that. Thank you so much for the information. :) 

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      • adriana01
      • adriana01
      • 6 mths ago
      • Reported - view

      LoaferDude the school should have a financial aid office that can help you figure out how your private loans work. Pretty much everything I said only applies to federal loans, so far as I know. Just like any other loan, you should be able to find out the exact terms before you sign up.

      I'm guessing that if she is doing a 1yr program at 70k, her future earnings potential is similarly high. Once she's done with school & has a job, if you keep your living costs down close to what they are now you should be able to to pay it off quickly (esp since you will probably be done with school & working too). Since it's a private loan you probably won't get any of the tax benefits for paying interest or the flexible payment plans, so paying it off quickly is in your best interest.

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      • LoaferDude
      • Coral_Cornet.9
      • 6 mths ago
      • Reported - view

      adriana01 Ah, I was not aware of not receiving any tax benefits on a private loan. Something that I learnt today. I am already budgeting (or I should say planning) on how to pay that loan off soon. The sad part is requiring a co-signer even though I have been here for more than ten years and have excellent credit. Apparently that does not count for anything. 🤔 Of course, it is understandable that anyone would be hesitant to co-sign a 70K loan on behalf of someone. Ah, the joys of being in the US. 😛

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      • adriana01
      • adriana01
      • 6 mths ago
      • Reported - view

      LoaferDude everything I can find just says interest for a qualified student loan that was used for a qualified higher education program may be eligible depending on a few other criteria, but never explains exactly what qualified loans are. There are multiple private loan providers, some of whom may not require a co-signer and some of whom offer an auto-pay deduction (and many other terms vary, like possible repayment plans) so if you're not already locked in, shop around some more & talk to the school's financial aid office to get help deciphering the terms. I'm pretty sure they make these things difficult on purpose :)

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  • I always paid for books and such out of pocket.  Also, whenever I got a disbursement, whatever didn't go to the school I put right back to the loan to cut it down as much as possible as I went.

    Reply Like 3
  • Hi LoaferDude !

    Do you and your wife have a time frame for her getting her degree? A number of my friends have stretched out their education in order to prevent taking on student loans - so they'll pay for a semester, then save up for the next semester. If they could only afford one class for the following semester, then they'd take the one class and continue to save. It's taken them a bit longer to get their degrees, but they're graduating debt free which was a huge priority for them.

    Reply Like 1
      • LoaferDude
      • Coral_Cornet.9
      • 6 mths ago
      • Reported - view

      Faness She is joining this August. It is a one-year program and the more you delay, the more expensive it gets. Unfortunately, the grad school financial setup is not as conducive for international students as it is for domestic ones (when it comes to doing it without financial aid). A regular Masters may provide the option of taking a semester off, but if you do it with a one year program, it just gets more and more expensive. 

      Even if what you suggest were possible, it is hard to see how a single salary could save up to 35K per semester with that approach, especially with supporting two people. Thanks for the input though. 

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    • LoaferDude Sorry that wasn't much help - I should've asked about her program first! I can imagine it would be much harder to stretch out a one year program than a two or three year program. I was thinking $70k over 4 years would be more doable (but even then, that's still a large amount).

      I didn't realize how many obstacles are added for international students. Good luck to you and your wife!

      Reply Like 1
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