Repayment plan Puns

While interest rates are low, most people prefer not to overpay on student loans. People argue that you would expect higher stock market returns over long periods of time, so you should pay into a S&S ISA instead. Not to mention that the loan is written off after 30 years and you don’t have to pay while you take a break from work. It is also better for some people to prioritise saving for a house deposit.

The annual interest rate on student loans is reset in September, using the rate of RPI from the following March, plus up to 3% (depending on income). This is currently 4.5% (1.5% + 3%). With December’s RPI inflation being 7.5% and the BoE predicting even higher inflation over the next few months, I was concerned about potentially incurring >10% interest, if RPI was still as high this March. I owe £42k. At that interest rate, a lot of people would prefer to overpay and guarantee an interest saving of 10% versus uncertain equity returns.

However, what I did not know until this week is that there’s a cap on the Plan 2 interest rate. This is based on the market rate of a comparable commercial loan. They review this each quarter and the cap is 4.4% (0.1% lower than the March 2021 RPI+3%). Therefore, I still wouldn’t worry about a spike in student loan interest, unless of course commercial borrowing rates increased substantially and they revised the cap upwards. It’s possible they will do this and we’ll return to paying >6% interest, but it’s unlikely the cap will exceed 10%.

At what level of interest would you start preferring to overpay on your Plan 2 loan?

How interest is calculated on Plan 2 loans

[EDIT: It seems the current 4.4% cap is being scrapped in March and interest will rise to a max of 4.5%, before being reset again in September. Let’s hope they reintroduce the cap at a sensible level.

An important point to add to this is that hopefully inflation will not persist at such high levels. Once the supply chain issues have abated, one would hope inflation will return close to the 2% target. Even if the student loan interest rate did rise to 10% for a year, it wouldn’t be at that level every year.]

u/usdgrind posted a similar scenario and I have a feeling we are not the only two impacted. Long story short, we are both on the "Extended" payback plan, but our loan terms switched to "Standard" when our loan service provider changed from myfedloan to Mohela. This is ironic because everyone impacted was told:

"The transfer of your loans will not affect your loan's existing terms, conditions, interest rates, loan discharge or forgiveness programs, available repayment plans, COVID-19 emergency payment pause or the 0% interest period...."

I can't speak for u/usdgrind, but this changes my payment from ~$160 monthly to ~$460 (187% increase LOL). Unfortunately for us, Mohela claims they cannot switch us over to "Extended" because our current balance is under $30k. This doesn't make any sense because there is no documentation or communication that states once balances are under $30k, your loan terms change. The fact remains: we were both on the "Extended" plan and we provided no consent to switch over to the "Standard."

If you are impacted, please contact Mohela and ask to speak to a supervisor (I am working with Richard). I also recommend creating a complaint with the Ombudsman Group (https://studentaid.gov/feedback-ombudsman/disputes/prepare).

Don't let Mohela tell you there are other alternatives (refinancing, other payback options, or loan consolidation).

I personally do not want any changes because my loans boost my credit score. My student loans are the oldest accounts on my credit report so they help boost my score by increasing my credit age. If I consolidate, this will hurt me because my credit age will decrease, thus lowering my score (during a time when I am looking to purchase my first home).

So after realising today that the plan 2 student loans are going to be hitting potentially astronomical rates come March due to legislation change. I've ran some numbers because you know, it's Saturday night... what else should I be doing..

In 4 years I've paid roughly £7k and my total balance has gone down by a barely anything to £33.5kish maybe £750 of actual capital repayment. Now assuming a rather likely scenario of me paying around £200 a month towards this for the foreseeable future, after running through a few calculators.. I'm never going to pay this off, but will however pay more than the loan amount I have right now.. and with inflation rates looking bleak and these loans being pegged to RPI +3% MONTHLY it's going to be even more likely that this is fucked.

I have considered a potential plan to pay this off in a way that might be feasible but wanted to run it by here as it may help others in a similar situation / get some nice criticism:

1. Take out a Money Transfer Credit Card for numbers sake a healthy £10k, 2.9% balance fee will apply.
2. Take the £10k to my bank and make a one-off payment towards the student loan.
3. Then just make the minimum payments to the 0% card of around £250 (what I would usually be paying anyway)

Then after 18 months of 0%:

• I've paid £4500 of the £10k in minimum payments
• For a total charge of £290 from the balance fee.
• Then I can just use a 0% Credit Card Balance Transfer card to move over the remaining £5500 to continue the minimum repayments.
• Rinse and repeat until everything's gone.

Now I know there's a few immediate alarm bells here mainly:

1. Credit Score Implications
2. Not getting the high amounts of credit I need

But even if I apply for multiple cards and do get the credit and the 0% length of time, surely this is a no brainer for people in my situation? 2.9% vs 3% + RPI

I suppose the other major question seeing as we are on a FIRE board too is this is assuming you are working for the full 30 years from your graduation date. EDIT: I've just ran the numbers and with £7000 already paid, if I work for another 10-11 years from now...(likely) that's another £33.5kish paid and any year of work after that.. means I'm paying more than I could have.

Anyway, feel free to tear this apart and shoot me down in flames please!

I’ve had enough of sticking my head in the sand. I want to get my life straight and debt is causing me anxiety. Reading this thread has really opened my eyes.

Had to support myself during uni, made stupid mistakes with ex-gfs and trying to live a life I couldn’t afford as a student in London… pandemic put me out of work as well…

I’m 23 currently earn 26k (which I’m really grateful for) and live in London but am really struggling to clear my debt and also pay for essentials

Here’s a breakdown of my finances any help would be hugely appreciated!!

Monthly pay after tax: 1690

Rent: 850 Wifi: 15 Council Tax: 75 Electric: 25 Water: 30 Phone: 10 Food: 200 Travel: 30

Total 1235

455 left not sure how to budget??

Debt Paypal: 453 Monzo: 960 HSBC: 250 HSBC 588

Total: 2251

FYI I also have picked up shifts with Just Eat and Zapp to top me up at the end of the month

I work full time and it’s a bit of a push working evenings as well but am considering working 8hrs a week (at 10 per hr) to bring in an extra 320 but It does affect my day job sometimes and it’s quite easy to move up the ladder ((colleague got 12k pay rise after first year - I got 3k rise after 4mnths))

Love the sub thanks for supporting others even just reading other posts helps

Hey Everyone,

I had an interesting call with a PSLF representative at Fedloan yesterday.

I’ve worked for a 501(c)3 nonprofit for about 5 years and I’ve been on the 25 year standard repayment plan for my direct consolidation loan for about 10 years (ineligible for PSLF until the limited waiver).

The 1st thing the rep said was that my current (ineligible) repayment plan would continue to count towards PLSF under the limited waiver until 10/31/2022. It had seemed ambiguous to me, but I though that the limited waiver only fixed payments on the “wrong” plan prior to 10/21. I didn’t think the ineligible repayment plan would continue to be accepted all the way through 10/31/22. Has anyone else gotten the same information from Fedloan?

The 2nd thing the rep told me was about changing my repayment plan after 10/22. Assuming no changes in the program, at that point we need to be on an eligible plan to continue to work towards PSLF. I’ve been hoping to avoid an income based plan because they would all increase my monthly payment. The only other eligible plan is the standard 10 year plan, which I thought I wasn’t eligible for. The rep thought I could just switch to the 10 year standard plan. I had previously though that wasn’t an option since the term was dependent on the loan balance. Has anyone gotten similar guidance on that?

I know sometimes the reps don’t always get everything right, so I just wanted to put that out there and see if anyone else has gotten similar (or different) information.

Thanks everyone! I have learned so much from this group!

Edit: I got some more info from another PSLF rep who consulted with a supervisor. Current payments on all repayment plans will continue to count until the end of the Covid forbearance. At that time, after 5/22 we need to be on a qualifying plan (for a loan which has already been consolidated). She thought I would be able to switch to the 10 year standard plan to continue qualifying going forward. I went ahead and applied for that. Let’s see what happens!

Should we file ‘married filing separate’ for the 2021 tax year so that I don’t get hit with giant payments since his income is no longer a factor in my income for 2022? I just don’t want to pay more in taxes for 2021, but I also don’t want giant payments I cannot afford.

I just got an email that I was accepted into the PSLF program and my loans are being transferred over. I have been trying to google repayment calculators to see what my monthly payments will be. But my question is, why do all of these show 5 different repayment types with different amounts? If I plan to make the 120 qualifying payments, then why wouldn't I just choose the cheapest plan? What am I missing?

Most PI jobs start 55-65k/ year (god i hope you know that if you're already applying...)

View Poll

I applied to consolidate my loans last month and today I received a the letter saying the consolidation process is almost complete. It also says if I am consolidating for Public Service Loan Forgiveness purposes I should select IDR. Is this correct or just boilerplate language from before? Those who have gotten forgiveness, were you on an income driven repayment plan? Thanks!

I'm almost certain the question in the title has been asked before on this sub, but I would like to hear your opinion on what my student loan plan should be as a it pertains to my particular situation:

I graduated from college last year and currently have a little over $30K in student debt, and am enrolled in Standard Repayment. All of my loans, thankfully, are federal loans, not private ones. I currently work as a permanent substitute teacher and am anxiously waiting to get certified so I can hopefully start making loan payments towards PSLF and increase my salary.

I recently got into a bit of an argument with my parents over how I would intend to pay off my student loans (the only reason I haven't moved out of the home yet is due to economic hardship). They think I'm not making a good decision by staying on Standard Repayment, since it means I'll be paying more towards my loan in the short run--money that could be better spent or saved on other things (emergency funds, food, rent, etc). They also think I would be better off switching to IBR because it's cheaper/more economical in the short run.

While I appreciate my parents' advice, I've tried to tell them that by staying on Standard, I'll be able pay off all my loans twice as fast compared to IBR (Standard Repayment plan lasts 10 years. IBR stretches that to 20) while also averting a nightmare scenario of accumulated interest over time (i.e. if I go through with IBR, I'll end up paying way more in loans than I initially started out with in the long run--something that has always struck me as absurd). I want to pay off my loans as quickly as possible to avoid having to deal with them later, but my loved ones don't seem to understand this and insist on having me do IBR, even though it will likely only hurt me in the long run.

Further complicating things is the fact I recently enrolled in auto-debit, which has made me think I could potentially lower my payments by a considerable margin due to the .25% interest rate reduction combined with the much lower monthly payments of IBR. Is this allowed or not?

What are your thoughts on this? Are there any instances in which, barring economic hardship, IBR would be a more optimal student loan payment strategy than standard? While Standard Repayment has some pretty hefty monthly payments, they are manageable relative to my income, which makes me more hesitant to enter IBR.

So as part of Negotiated Rulemaking they are indeed proposing a new plan (i'll make another post later with what's being discussed so please don't ask here - too early yet to really set the stage for this) and they are calling it EICR. As someone who works with consumers daily on student loans i cringe at the thought of another plan with a similar name to an existing plan. So - reddit - seriously - what should the new plan be called?

If we get some good ones I'll suggest them. Seems like a little thing - but the clearer we can make these things the less folks will get confused when trying to navigate their options.

My wife has almost 300k in student loans and we're working towards PSLF. The goal is to minimize payments until they're forgiven.

I sold property I own in 2021 and will sell more in 2022. We'll have gains of maybe 300k each year from these sales. I have no other property to sell.

She's currently on the REPAYE plan but I think that can change soon. In prior years she's uploaded her tax returns to verify her income, but it looks like she could upload pay stubs instead. If we upload pay stubs, will we get "caught" later with those capital gains and have some sort of big penalty payment? Are tax returns required eventually?

I understand I need to consolidate my Parent Plus loans with my own Direct loans to take advantage of the temporary waiver, but it is difficult for me to figure out which repayment plan to choose upon consolidation without knowing the extent of my forgiveness. The estimate I see for my repayment (on studentloan.gov when I start the consolidation process) for the income contingent plan seems a lot more than I can afford, given other bills I owe, but if I only have a few payments left, I could do it to take advantage of forgiveness, as I remain in public service. If I understand correctly from the FAQs on the TISLA website, the more affordable plans (for me) may only lead to forgiveness under an uncertain TEPSLF. If I choose one of those repayment plans with the lower amounts now when I consolidate (since I might actually be able to pay it), will I be able to change my selection to what is clearly the most beneficial after I eventually get my count and see how many payments I have left?

By tax season I will now the IRS roughly $11k in taxes from what I’ve made in 2021 because I am a private contractor. Now I already know that my best solution moving forward will be to set up an LLC to not have to owe quite so much for next year.

I have enough saved to pay back the taxes in full but I was wondering if it’s wiser to hold on to that money and repay the IRS over time granted I will be paying more in the long term.

I’m pretty new to having to actually pay this much in taxes as I’ve only been contracting for roughly one year.

Hey everyone,

Based on the recent news I wanted to finally solidify the best repayment plan that I should move forward with. My current salary is 105k and my total loans is 55k (ranging from undergrad and grad loans). I've used the loan simulator and I was leaning towards doing standard repayment plan (516) payed of by 3/2032 and over paying by like 1k a month.

Other Offered Plans:

REPAYE: 710-982 a month payed off by 5/2028

ICR: 562 -612 a month payed off by 5/2031

Extended Fixed Payment: 279 a month payed off by 3/2047

Additional Information:

I plan on buying a house with FHA in Florida some time next year (Spring - Summer 2022) additionally I'm still in Grad school(no more taking out loans) until Summer 2022 so some of my loans might still be under deferment(I think?). I sold my Tesla recently and bought a beater so I'm saving 1k a month on that end. Ultimately I'm trying to make the best financial decision moving forward.

I appreciate any advice!

Best!

I have withdrawn funds from my RRSP (Home Buyer Plan) in late Oct 2019 but when I visit the CRA website the information they provide about the schedule for repayment confused me.

Please hear me out how I understood this. I expect the repayment starts in 2 years, that is 2021 tax year that I need to repay for that.

https://imgur.com/a/42hTIkl

1. The First image shows that in 2022 due.
2. When I look into the detailed page on the second image.
3. It said 2021 required payment.
4. Then you have another last line that said 2022 required payment.
5. Is that payment I will make this year tax is for 2021 or 2022?
6. Another thought, did I miss a 2021 payment?

When I apply for my recertification it only applied with Aidvatange not Navient. I still have a loan with Navient under IDR. It is a FFELP loan about more than $4,000. When I check on that loan on studentaid.gov the REPAYMENT PLAN is N/A and the IDR ANNIVERSARY DATE is N/A. What do you think?

I believe I am eligible for forgiveness under the new waiver program. I have been on an extended repayment plan since 2005. As part of my recent PSLF application, my loans were transferred to fed loan.

My loan values have finally populated on Fedloan’s website. However my payment history is not there. I just got an email from Fedloan saying I need to switch payment plans in order for payments to qualify under PSLF. My understanding is that under the new waiver, any payment plans count so I should ignore the letter. Anyone have a similar situation?

So I currently have to pay $44,526 in loans undergrad and graduate school combined. I started a new job right after graduation but quickly realized my bipolar disorder is more severe than I thought and now am doing instacart and art to survive. With instacart and art I make a combined $2100 a month if I am lucky. Because my parents died I have around 50k in savings and 40k in investing. My rent is $1300 right now and I plan on moving in 2 months in hopes that it will drop to $800 or $900. I spend about $300 in healthcare at the moment because Medicaid does not cover the type of mental health services that I need. I am trying to choose between a IBR and a PAYE. A standard plan would mean paying $470 per month. I am really not trying to dip into savings as my mental health is really really bad and I cannot hold a consistent job. I have listed the amounts below. I really don’t understand consolidation either and am not sure if taking out a consolidation loan is right for me. Someone please help. Also I borrowed from 2013-2021

PAYE: $33,982 over 240 months IBR: 78,727 over 300 months

Direct Loan subsidized: $4761.01 Direct Loan Subsidized: $1,821.47 Direct Loan Unsubsidized: $20,733.21 Direct Loan Unsubsidized: 16,950

I am not sure of the interest because the forbearance is still in effect.

So I have direct loans and have been working for the same PSLF approved company since 2010. I was in a graduated repayment plan from 2007-2017 then switched to a 20 Year standard plan in late 2017 when I figured out that was an ineligible repayment plan. Long story short from 2013-2017 all my payments are saying they are ineligible due to being in the wrong repayment plan. Should all of those payments get fixed with the waiver? I submitted with the help tool an additional ecf form right after the announcement of the waiver. How long will it take for anything to change on the counts on the fedloan website?

Hi everyone!

Just wanted some input on which repayment plan to use. I graduated in 2012 for undergrad and 2015 for grad School. I am currently with fedloan servicing and have 100k that has been consolidated. Originally I was doing the 10yr plan but wanted to switch payment plans. I am single and I make about 100k annually. Not looking to pay it off as I want to use my Money for better investments and return. I wanted to know which would be a better choice between REPAYE or PAYE .

Thank you in advance!

I'm so frustrated trying to sort things out on vast Lakes' website. Firstly, there are several different parts of the website that show different dates for my loan payments starting (different date on the homepage, an earlier date when I click on an account, another date in the letter I received on Nov. 10th saying I was approved for an IDR with payments of $0.00 and that I would receive a repayment schedule 35 days before the first payment is due). It's two weeks until the date‏‏‎‏‏‎‏‏‎‏‏‎­listed in that letter and have not received a repayment schedule since then, and on the website, IDR plans no longer show up as a box to check when I attempt to "choose a repayment plan before your forbearance ends." It also invites me to apply for IDR to see if I'm eligible, but I've already done that. Has anyone else experienced this?

Hi everyone - looking to get some ideas from smarter individuals about ETF investment options for a lump sum of cash (less than $10K). Originally I was planning to use it to pay off my school loans after the pause was lifted but now I am looking to grow this fund in the meantime before the pause is lifted in May.

Thanks for your thoughts and time.

$83,000 in Federal student loan debt.

Consolidated bundle breakdown:

• $10k in subsidized student loans
• $73k in unsubsidized student loans

Standard minimum monthly PMT ~ $914 per month for 10 yrs

Question is: “If I directly payoff the $10k subsidized student loan portion anytime during the repayment schedule, does that LOWER My standard minimum monthly PMT of $914 ?

Or is that $914 “stuck” with me for 10 years no matter how many loans I payoff directly?”

Hi all, I owe about $61k in federal loans and $86k in private loans. I have refinanced my private loans and am now in the process of consolidating my federal loans. I have 9 federal loans that I would like to consolidate into one. Are there any downsides to consolidating? I won't lose any benefits, will I? I am also confused between the different repayment plans (Income based repayment - new borrower vs PAYE). I also work full-time for a non-profit school and would like to apply for Loan Forgiveness as well.

Any insight is appreciated, thank you so much in advance.

I can find plenty of student loan calculators that work if you have either a Plan 1 or a Plan 2 loan, but none that allow you to work out how long repayment would take if you have Plan 1 and Plan 2 loans.

Is anyone aware of a website or spreadsheet that someone has made that allows you to specify your outstanding balance for both balances, than can then work out the repayment term?