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Extended Repayment Plan - Switch to consolidation or IDRP or both?
August 14, 2019
7:49 pm
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August 14, 2019
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Hi. First let me say thank you for creating this amazing website with such great info! Wish I would have found you years ago, but nevertheless, here goes!
I currently have 9 different federal loans under Fedloan (totaling $59K) and 2 more with Nelnet (totaling about $5K). Interests ranging from 3% to about 7%. It’s been almost 2 years or so in payments – and almost ashamed to say I’m in the extended repayment plan. At the time, it was the lowest payment I could handle, but I feel it wasn’t fully explained that I had other better options. I recently realized that my monthly payments are going mostly to interest and so of course, what I owe just keeps getting larger! What would be the best recourse? Should I consolidate all the loans or enter into the income driven repayment plan? Or maybe both? I currently make about $65K, but do have medical bills (for both my mom and myself), some credit card bills and I live in a big city (high commuting costs, etc). But I think I can manage paying a little more than I am now (which is almost $400 a month total). Just pretty upset that my payments are barely hitting the principal balance. Help!
Thanks for any help you can provide!

August 15, 2019
2:40 pm
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Thanks for the kind words!

You are definitely asking the right questions.

Getting started as soon as possible on income-driven repayment can be a smart move because it puts you on the path to student loan forgiveness. Based upon what you have stated so far, it sounds like you don’t know if it will be better to go after forgiveness or to pay the loans off in full. Given that your salary is larger than your total debt, it sounds like you have a good shot at getting them paid in full before needing forgiveness.

Some helpful reading on repayment plan options: https://studentloansherpa.com/repayment-plan-options-strategy/
Student Loan Forgiveness: https://studentloansherpa.com/student-loan-forgiveness-programs/ (pay special attention to the second section)

If you reach the point where it becomes clear that aggressively paying off the debt will cost the least in the long run, this article will help with getting it knocked out as soon as possible: https://studentloansherpa.com/pay-student-loans-quickly/

Best of luck!

August 15, 2019
4:42 pm
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August 14, 2019
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Awesome! Thanks for the great advice – I will read the links provided! Just so that I’m clear – I should do the income drive repayment plan for both the Fedloan and Nelnet loans – and not combined/consolidate first?

Thanks again!

August 19, 2019
9:02 pm
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Indiana
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Consolidation is an separate animal. In some cases it is a necessity, in others it is a mistake. Have you discussed the issue with your servicer? Is there a specific reason you want to consolidate or is there a reason you are avoiding it?

August 20, 2019
2:49 pm
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I figured since I have two separate servicers – Nelnet (2 loans) and Fedloan (9 loans) – that it would make sense to consolidate them all to one servicer first – then apply for the income repayment. But if it would make more sense to do the income repayment with each servicer, then I can do that as well. Just wanted to know what could save me the most on monthly amounts. Hope this makes sense. Thanks again!

August 20, 2019
3:01 pm
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That makes sense.

With income-driven repayment, the number of loans and servicers should not matter. The total payments should be based upon what the formula says you can afford to pay.

August 21, 2019
10:54 am
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Got it! I finally read through all the links you sent, went into the FSA website and did the repayment estimator and realized that my nelnet loans are FFEL Stafford loans and do not qualify for the REPAYE or PAYE (which are 10% of income) unless I consolidate them with my direct loans first. But I do qualify for the regular IBR (15% of Income). I will assess what will work best in the long run and can keep this forum posted if it will help anyone else who’s reading this.

Thanks again for your guidance!!

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