December 31, 2015
Hello Michael and thank you for all you do in your website. I read one of the blog that was dated back in November 2015 about a person that has 300k in loan debt with 120k income. I’m sort of in the same boat, but the difference with me is that I got married in 2014 and had my daughter in the same year. So our household size is 3. I am still enrolled in the IBR plan, but looking to switch to the REPAYE plan. I know these plans now factor in the the spousal income where as before I didn’t need to. We did file our 2014 tax return jointly and will do the same for the 2015 tax year.
My Loan information:
Principal balance 280k
Interest rate 6.75%
Loan plan: IBR
So my payment under IBR is 702.80
I’m due for a renewal by March 2016 but wanted to get the ball rolling as soon as I can.
Our AGI for 2014 was 116k, but that number will be more in 2015(haven’t filed our taxes yet) .
I did the repaye calculator and seems like switching over to the REPAYE plan is a no brainer since both repaye and ibr uses my spouse’s income. But one question is that if I do switch to REPAYE, do I start off back at year 1 of my loan repayment? I’ve been on IBR for 3 years. Or would they take in account that I will be in year 4 of my repayment. Is that how it works or would I need to contact my loan servicer for that information?
Another question I have is while filling out the renewal on my student loan, I notice that they are bumping my INT rate to 7%. Can these rates/loans be re-financed? or in other words lowered some how?
Please do let me know if you need any other information, i would be more than happy to provide.
Thank you and have a Happy New Year!
May 3, 2014
If you don’t plan on filing separately on your taxes, REPAYE should save your family money. That is the whole reason it was created.
That being said, when you do your 2015 taxes it might be worth looking into how much extra it would cost to file separately. The cost difference will come down to the spousal income difference and tax math.
As for the going back to “year one” on your payment, I’m assuming you are talking in reference to student loan forgiveness. If you are talking specifically about public service forgiveness, the answer should be no. More information on this subject is available here: https://studentloansherpa.com/repaye-public-service-student-loan-forgiveness/
If you are talking the standard 25 year forgiveness on IBR, I’m afraid I don’t know.
Regardless of what forgiveness plan you are targeting, my advice would be the same. Ask a very specific question to your loan servicer, and if possible, get the answer in writing. Calling your servicer yearly to verify that you are on the right path is a good practice to get into. Discuss you plan in detail with them and get confirmation that you are on the right track. You loan servicer is the only one with all of the details of your account and the only one who can verify your progress. I know how frustrating dealing with them can be, but it is an unfortunate necessity.
I’m confused about the “bump” in interest rate. Could you elaborate on what this rate change is? Most federal loans are fixed rate, so this comes as a bit of a surprise to me.
As for lowering the rate, there is only one option. Consolidation on the private market. This option takes student loan forgiveness and IBR off the table, so it can be a mistake if you need the IBR plan or are targeting forgiveness.
Happy New Year to you too!
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