Student Loan refinance/career change opinions.

[TXScout2]

Hi, this is my first post here.  I hopefully have most of the relevant facts below, let me know if I missed something.

So here is my situation.  Owe $150K in a consolidated student loan at 7.1% interest.  Currently in Income-Based Repayment where I pay $1180 per month. 
I can consolidate in a 10-year variable rate starting at 3.5%
Could also do a 10 year fixed rate for 5.5%
If I consolidate I lose federal benefits, namely, IBR and loan forgiveness.

Here’s the thing, I hate my job.  I work late all the time, I travel too much, and I honestly think what I do is unethical.  It’s become mentally and physically unhealthy.  Also, I foresee it ending in as soon as 6 months.  I’ve been working here for 3 years, looking all along for other attorney jobs, but I don’t see a lot of opportunities other than $22/hour document review jobs. 

So, I’ve been considering changing professions.  And I’m sort of trying to figure out what the most financially feasible plan is. 
I have $75k in the bank, and $15k in a 401(k). 

I could:
(1) go back to school with cash, pay $0 per month in IBR, watch my loan principal amount approach 200k, and basically accept that I will never pay it off and pay IBR for 25 years until loan forgiveness.
(2) I could refinance the loan immediately, drop my interest rate some, go into forbearance, go back to school on new loans, and perhaps finish with around $100k in debt.
(3) Something in between? Maybe save some of the money, pay some into the loan, and refinance it? 
(4) Sacrifice my health to keep working my job until the place tanks.  I’m able to save around $2000/month.  And change careers in 3 months.  or 6... or who knows?  I've been playing this one months at a time game for a while now.
Just looking for ideas. 

Sometimes I get to feeling pretty helpless.  Thanks in advance.

[lazysundays]

Really?  They started allowing refinances on SLs?! Please give more info. We have >$150 to could use a refi.

[MDM]

...looking all along for other attorney jobs...
Just looking for ideas. 

I'm not familiar with the attorney employment landscape, so take this for whatever it's worth: have you been looking country-wide or only locally?  Internationally?  Across multiple areas of legal specialization?

What would you study if you go back to school? 

What are the total payment amounts if you do 25 years of IBR vs. paying it off in 10 years at 3.5% (yes, I know the 3.5% is a variable rate but for range finding...)?

Best wishes and good luck.

[TXScout2]

Here's some refi options if you are interested.

https://studentloanhero.com/featured/5-banks-to-refinance-your-student-loans/

Re: the job search, I have looked mostly in just a few states, where I happen to have family. 

If I went back to school I am considering physician's assistant. 

25 years IBR at my current salary is much larger than 10 years at 3.5%.  $1,180 x 22 years x 12 months = $311,520.

10 years at 5.5% (assuming I paid 75k in now, and then $812/month for 10 years) would be $172,000.  So definitely paying it off sooner is worth it. 

I suppose I am sort of afraid that I pay it down substantially, and then hit a rough patch, and it goes back up.  The loan forgiveness + IBR creates and incentive to either pay it off really fast, or REALLY slow.  And I think the lack of job certainty makes it hard for me to decide which I'm supposed to do.   

[former player]

Sorry to hear about your job problems.  First thing you need to do is protect yourself against something worse than just losing your job.  You say you think it is unethical: are there any legal professional obligations or other regulatory requirements that you have which are potentially in issue here?  Otherwise, cut down on your expenses (particularly any on-going obligations) and work on an exit strategy.  I understand the market for lawyers in the US is difficult, so look outside private practice (in-house or government legal jobs), also look at non-legal jobs where your skills and knowledge are useful (admin or government non-legal jobs, charity sector, etc.).  If you are going back to school, something like an MBA or other professional office-based qualification might help you to use what you already have rather than starting from scratch in a completely different field.

Regarding the student loans, I agree it's going to be difficult to make a decision to consolidate while things are so uncertain.  That suggests to me that you don't make the decision for the time being - I assume that there is no immediate hurry to decide?  Personally, my view would be that IBR and loan forgiveness are worth it if you will be in low-paid and/or unstable employment for the whole of your career.  Is that you?

You need to keep your retirement fund and a decent emergency fund (an amount you feel comfortable with in your current circumstances).  Apart from that, you won't be getting enough of a return from cash in the bank to make holding it a better bet than paying down loans at 7.1%, and the smaller your student loans, the wider your future options.

[lazysundays]

Thanks for the link scout!  My rates are lower at around 4-6% but 3.25 is awesome. 

[SDREMNGR]

Remember, the 3.5% is temporary, not sure how long it's fixed for but the treasury rates are slated to rise probably at the end of this year.

That ducks sick (new phrase I've invented) about your work.  But have you looked at another attorney job or a different area of law?  I know lawyer friends that are struggling and I know some that are making bank.  I know the ones that work in immigration law that are pretty happy and don't work too crazy hours.   I know a corporate workers comp defense guy who does well.  I know a personal injury lawyer who used to work for corporate defense as an associate at $50k then went into business for himself on the plaintiff side and is making $1mil plus doing mostly settlements.  I know a lawyer who does debt collections.  Buys them from credit card companies for pennies and then goes after collections.  I know a lawyer who works for the city on civil cases. So there are lots of different legal jobs out there.  You don't have to look just for jobs that someone else is hiring for.  You can work for yourself.  So that's an option.

I know a PA and he has been one for over 20 years and he makes well into 6 figures. But the hours are long too.  All hospital jobs have bad hours.  A lot of my friends are docs and surgeons and while they are making $200-300k now, I don't envy their hours.  So think about that.  All jobs have their pros and cons.

I'm not sure more schooling is the answer.  It's the path that got you where you are now.  Look far and wide in your job search and considerations.  There are jobs out there.  And the fact of the matter is, if the pay is decent and the people you work with are nice, and the job is moderately interesting, then most people are happy doing it, no matter what the job is.  You can go Office Space on us and go into a skilled construction trade.  Electricians and plumbers make pretty darn good hourly pay.  You can get close to 6 figures doing that. And you can work regular hours (if not 24 hr plumber) and your work is done when you clock out.  I've always envied jobs like that, ones that are done and you don't take any work home.

As for your student loans, I would just start going into major pay down mode.  I'm more risk tolerant than 99.9% so I would pay down $60k, leave $15k for emergency, refinance the rest to 3.5% floating.  You say you can save $2000/month so I am assuming that is in addition to your current $1100 payment.  If that's the case, you can pay off the remaining $90k in only 2.5 years at $3137 in payments.  You can end your student loan misery in only 2.5 years.

I think a big part of your misery and getting physically sick is the emotional disdain you have for the job.  I totally had the same thing when I was working in investment banking.  You get paid for selling off bits of your soul.  But having this target of 2.5 years ahead of you might give you exactly what you need as motivation to excel in your job, make money to pay off the loan, get leads on new jobs in mean time, and feel like you are on a mission with purpose.   I find that feeling like you have a purpose really matters and improves job satisfaction greatly.  Good luck.

[TXScout2]

Thanks for the replies. 

Faellie:  You're right, I don't have to make the decision right now.  Just every month I don't refinance is extra money paid to interest instead of to principal.  I have thought about an MBA.  One good thing about PA programs in Texas (where I live) is that they are REALLY cheap.  I haven't priced that many MBA programs though.  I think just after years of sitting in a chair staring at computers, while my vision gets worse and my back starts to hurt, I just want a job I could stand up a little more.  And I'm hoping I would derive more meaning from it.

SDREMNGR:  I think you are right, most of my misery comes from the job.  I could possibly pay off the loan entirely with my salary in 2.5 years, as you said, which isn't that bad.  But I have no job security.

I was just reading this post: http://www.mrmoneymustache.com/2011/10/22/what-is-hedonic-adaptation-and-how-can-it-turn-you-into-a-sukka/

And this quote in particular "In no particular order, the biggest factors influencing human happiness include meaningful work (with lots of autonomy, low stress, and low fear of losing your job)..."

I guess I have a high stress job with no meaning and fear of losing it.  I am pretty certain if I got a new job where I knew it would last at least 1 year, I would go into payoff mode as SDREMNGR suggests.  I am sort of stalling though for fear I will lose my job and not have a new one at all.  I suppose I can sort of combine both pieces of advice and not refinance immediately until I have more certainty about the future.  But once I have a little more certainty to go into payoff mode. 

I will definitely continue to try to think of employment options that I already have the skillset for though.  I'm not that keen on having 2 years of no income while interest capitalizes on me.  I have considered other areas of law, and applied for jobs in them.  I think it's just really competitive right now.  I read something like 50% of law graduates aren't getting jobs as attorneys right now.  I've had 2 interviews since I started at this place.  One of them told me that they received 80 resumes the first day they posted the job.  Thanks again for the advice.

[SDREMNGR]

It's stressful because you financially need the job but hate it so you are dependent upon it.  I think once you settle your debt issue, your stress will really mostly go away.  Because at that point you can walk away if you wanted.

Have you read "think and grow rich?"  You may find it helpful in your situation.  One of the great books imho.

[duck-duck]

As a recently graduated PA, just make sure that you know what you're getting into in terms of getting into school. I'm willing to bet that you have a significant number of pre requite courses to complete if you were not a science major, which may take a year or more. Also, the profession has been all over the top 10 best job lists for at least 5 years now. The result being, that statistically it may be harder to get into many PA schools than med-school. I recently helped with my alma mater's interviews and there were around 3,000 applicants for 35 spots. To be competitive you need at least 2000 hours of healthcare experience, but will still be competing with nurses and medics with 10,000 plus hours. And if it all works out you will add at least $80,000 in additional loans.

With that said, it is a great career with lots of flexibility depending on the field that you choose. I love my first job and am very happy with my decision as this was a second career for me as well. With in 5 years I'm hoping to cut back to 4 days per week as the described 40 hour week is more like 50 and I'm spending at least another 5-8 hours reading at home since I'm new to the field. Hopefully this will all improve with experience. If you have any questions, let me know.

Good luck with what ever you decide.

[Nancy]

#1) Are you actually able to reconsolidate a consolidated loan?
#2) If your loans are federal, I would strongly advise against turning them into private loans for a low variable interest rate.
#3) Can you switch careers without going back to school? To rephrase is the degree you'd be going back for a barrier to entry for the career you'd be switching into (say medicine)? Or are you just trying to take a break from working?

[TXScout2]

I agree, once I settle the debt issue I will feel a lot better.  Hopefully I find another job before this place goes under.

Yeah I have looked into PA school quite a bit.  I actually was a science undergrad, but I still have a few pre-reqs to take.  Still though, it would take me 2 semesters, so I couldn't apply until May next year, and then I'd have to wait 6 months after applying to enroll.  I have also looked into cost of PA school and I think I would probably apply to only the cheaper ones.  Some cost $40K per year, some cost $10K, depending.   

You definitely can refinance a consolidated loan, I have gotten pretty far into it, I just haven't signed on the dotted line.  I can lock in 5% fixed-rate (or 3.5% variable) on a 10-year plan.  But still lose IBR and loan forgiveness, so it may not be the best option if I end up losing my attorney job and can't pay. 

The degree I'd be going back for is a barrier to entry to medicine for sure.  I actually think I'm qualified to do various jobs besides being an attorney that I wouldn't need to go back to school for.  Like I could probably work in HR, or do any job someone with a bachelors degree in communication, etc. could do.  I suppose those jobs don't pay as much as an attorney though.  And I don't really even know where to start.   I don't like being an attorney but ideally I'd like to get a more secure attorney job and it work it for around 2 more years.  Then I'd pretty much be out of debt and I could make my next move. 

I really hope some student loan legislation comes down the pike.  Refinancing without losing federal benefits would be nice. 

[Mr. Boots]

Personally I would go crazy at the thought of going back to school for yet another degree. With a law degree and your experience you're right, you have the skills to do a variety of professional jobs. Have you applied for any "nontraditional" jobs for an attorney like HR or communications? If you have law firm experience you have to be marketable somewhere I would think.
I can definitely relate with the loan situation. Are you interested in working in government or public service? If you're eligible, the Public Service Loan Forgiveness program is nice in that it cuts the forgiveness period down to 10 years. That's what I'm banking on. On the plus side too is the fact that these jobs tend to be less stressful and are definitely more rewarding.
Good luck, and feel free to message me if you want to talk more about law school debt crushing - a favorite topic of mine!

[cpa cat]

It seems obvious, but given your background and education, it seems worth mentioning...

Isn't there another branch of law that you might be interested in? I'm just thinking of all the lawyers I know, and they all do vastly different things.

One guy is an immigration attorney. He basically just smoothes the process for people.
One guy is a tax attorney. Sometimes tax court can be fun. Mostly it's a little boring. But it's all pretty low key.
Another guy is also a tax attorney part time, but he moonlights as a state-appointed attorney and as a juvenile advocate in the court system.
The next guy mostly just does contracts. It seems to be the most boring/least fulfilling of the bunch.
Another guy fixes traffic tickets and does DUI cases. This isn't world-changing stuff, but he's self-employed and sets his own schedule.
I know a couple of people who went to big accounting firms with their JD to become international tax consultants or sales/local tax specialists.

Now I'm starting to wonder why I know so many attorneys... But it does seem like you have a lot of options in law.