Jumping back into this thread nearly 2 years after I came up with my plan. Graduation is around the corner and I'm looking ahead to the debt service payments I'll be making later this year. Thought this might be helpful to people making decisions about financing school both before and after attending.
I took out about $100k from
Sallie Mae at 2% (variable) with half amortized over 7 years and half over 10. I have no clue why I took out a 7 year loan, but that's in the past. Monthly Payment for the 2 loans is about $1,200.
Also took out $40k at 6.8% (Stafford) and $10k at 7.9% (PLUS) all amortized over 10 years. Payment due is about $600.
So, I'm looking at nearly $1,800 a month. Probably more than I realized 2 years ago, but I was also in a different place in life. Like nearly all other second year students, my wife and I are expecting a child soon and can't count on her income as a sure thing to help service the debt. Plus, BSchool is way more expensive than the Estimated Cost of Attendance figures schools provide and we tapped more savings than expected. Most of the expenses, for us at least, seem to come from the social nature of school. Dinners out with other couples, rounds of golf, travel... Part of it is probably that it's difficult to go back into "college mode" when you are 30 years old and have become accustomed to a certain lifestyle (cars, apartments, Whole Foods).
I'm looking to refinance the loans to lower my monthly payments until cash flow improves:
The federal loans are somewhat straightforward. I plan to lengthen the term to the maximum of 25 years. There is no prepayment penalty, so once my salary increases and a few bonuses come I'll make a bullet payment. Some friends would prefer to pay this down as quickly as possible because of the high interest, but I value the improved cash flow at this time. In hindsight, I wish I had taken all (certainly more) out in federal loans because it is so much easier to adjust monthly payments through longer terms, IBR (which I don't think many MBAs would qualify for) and graduated payments. Amortized over 25 years, public loans will run closer to $350 a month.
Private Loans are a bit trickier because fewer options exist.
Sallie Mae will not consolidate or refinance the loans. Best I can tell is Wells Fargo at about 3.25% (tied to PRIME somehow) with a 15 or 20 year term. Can't tell from the web, I'd have to actually apply. Consolidating with Wells at the current rate over 15 years gets me down closer to $750 a month.
Total monthly payments after consolidation will run about $1,100 a month. Nearly $700 per month less.
I hope this helps everyone put the cost of BSchool into some perspective with real numbers. If you have any thoughts about my plans, especially if you think this is a bad idea, please let me know.