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Is it worth consolidating now?
August 16, 2020
6:27 pm
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Lin
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Hello,
So, I’ve made about 5-6 years of repayment towards the IBR forgiveness plan with still over 100k left on direct loans. I am switching tracks and hope to go into non profit/federal work thereby qualify for pslf. I am wondering if I should I consolidate my loans so I might be able to qualify for the Paye/repaye as I work towards Pslf, esp if I don’t know what next year will bring (job wise). I’d like to know what your thoughts are on this. Thanks in advance.

August 16, 2020
7:32 pm
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Indiana
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Forum Posts: 368
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May 3, 2014
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Hi Lin,

That is a really tough question.

If you consolidate, you lose the 5-6 years of IBR payments towards forgiveness. Right now you are 14-15 years away from IBR forgiveness. It might not sound like much, but that it a lot of work to throw away.

On the other hand, if you are DEFINITELY going to be in a PSLF eligible job for the next 10 years, the consolidation to become eligible for REPAYE could make sense. (Consolidation won’t help you become eligible for PAYE if your loans are too old… I had that very same issue)

I can’t tell you which way is best. That is a tough judgment call. You should run the numbers both ways and carefully consider how the next decade plus might play out for you.

One other thing that you might also want to consider is the fact that Joe Biden wants to create new repayment plan based upon 5% of discretionary income. Obviously such a plan is far from a sure thing. However, it is possible a new plan is created by this time next year. We have no idea if it will happen or how exactly it will work, but it could change your strategy.

Hope that all helps,

Michael

August 18, 2020
9:49 pm
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Lin
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Decisions, decisions…

I would think any new plans would only be available for new borrowers similar to how Repaye works. Is this not true?

Thanks for your thoughts on this,
Lin

August 19, 2020
12:51 pm
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Indiana
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Forum Posts: 368
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May 3, 2014
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Hi Lin,

New plans may or may not be available to existing borrowers with older loans.

When Pay As You Earn (PAYE) was released it only helped a small portion of borrowers (specifically those with newer loans).

However, when Revised Pay As You Earn (REPAYE) came out, it was created in part to help the older borrowers who were not eligible for PAYE. (I’m someone who wasn’t able to sign up for PAYE but I’m currently enrolled in REPAYE).

We don’t know for certain that there will be a new plan, and we don’t who the new plan would apply to if it became reality. However, it is possible that in the next year there is a new plan with much better terms for most borrowers… we just don’t know at this point in time.

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