If you could save up to $1000 a month – would you make a phone call? I was on the Income Based Repayment Program (IBR) – and made a phone call that resulted in me saving $700 a month!!
Income and Debt
As an educator, I was on the income repayment program and also working on Public Student Loan Forgiveness so I did not want to make any mistakes. Essentially, as a school administrator, I have to work 10 years in education or public service and my loans are forgiven- obviously on time payment -120 of them. All of schooling except for the Ph.D. Was paid in full (thanks Mom and Dad) but the Ph.D was expensive and my loans were more expensive than my house (no, I am not kidding)
Depending on your debt to income – there are additional options that happened a few years ago beyond Income Based Repayment:
1. PAYE: Pay as You Earn
2. REPAYE: Revised Pay as You Earn
These plans allow for you to pay 10% of your discretionary income instead of the 15% of the Income Based Repayment and for me – that equates to $700 that I did not have to pay per month.
To be eligible for PAYE: you have to have loans taken out after October 2011 and no loans before 2007.
To be eligible for REPAYE: you have to have Direct Loans (this can be anytime period: most people are eligible for REPAYE).
Based on when I finished school 2010.. and repayment started in 2011- I was eligible for REPAYE. (Repayment was earlier than October 2011)
When you finish school, you should consolidate the loans to Direct Loans. This can make you eligible for student loan forgiveness, PAYE, IBR, and REPAYE.
Benefits to Consolidating
Consolidation allows you to have everything in one location. it also allows you to see your interest/ payments/ progress easily. If you did not have a direct loan, you would not be eligible for Public Loan Forgiveness or federal benefits or repayment options – until the new loan takes place. You do lose some credit on paying when you consolidate but this should really be discussed prior to starting repayment.
September 2021 is when we restart payments – why mention this now?
It is important to get everything in order now – as this time can count toward repayment even if you are not paying. According to Student Loan Forgiveness – since March 2020- Sept 2021: this time counts toward payments without an extension.
Make the call today to check if REPAYE or PAYE is right for you!
Here is an online calculator to take a look before making the call