by Repayable | May 30, 2018 | Getting started
Are you ready to change up your federal student loan repayment plan? If so, today’s post is for you. This three step walk through will help you switch to a student loan repayment plan that works for you.
Estimated read time ~3 minutes.
Step 1 Choose Your Repayment Plan
Before you call anyone, it’s worth your time to figure out what repayment plan works the best for you. Loan servicers can help but it’s better and will speed up the process if you already know what you want. Last week’s post is all about helping you decide so check it out here and come back.
- If you’re considering loan forgiveness or having trouble making your payments one of the income-driven plans is for you.
- If you want to pay debt down quickly the 10 year standard or refinancing to private loans for a lower interest rate are your best options.
- If you want to simplify many individual loans into one loan and haven’t made any eligible payments toward loan forgiveness, consolidation might be right for you.
Step 2 Contact Your Loan Servicer
If you don’t know who your loan servicer is you can log in to the National Student Loan Data System (NSLDS) page and it will show how much you owe and who you owe it to. The information in this system can take up to 120 days to update so keep in mind that it may not show all loans if you’re still borrowing.
When you contact your loan servicer let them know which plan you’re interested in and they will help you switch plans. Remember, your servicer has a responsibility to help you switch repayment plans, it’s part of servicing federal student loans.
Step 3 Submit Any Necessary Paperwork
If you’re looking to switch to an income-driven repayment plan you’ll need to submit an application for income-driven repayment. The application uses your income information to determine your monthly payment. You can find the application here, it takes less than 10 minutes to complete.
If you’re hoping to consolidate your student loans there’s an application for that too. You can find that application here, it takes less than 10 minutes to complete.
A note about fees. There are no fees to change repayment plans or consolidate your loans. Anyone that charges you a fee is a scam, work with your loan servicer directly.
If you’ve changed your student loan repayment plan did it take you as long as you thought? Let me know in the comments below or on the Repayable Facebook Page.
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by Repayable | May 23, 2018 | Getting started
Repayment flexibility is one of the biggest benefits of federal student loans. All that flexibility means there are a ton of student loan repayment plan options to choose from. You want to pick the smartest plan that helps you reach your student loan repayment goals but it can be confusing to choose.
Today’s post compares the federal repayment plans and lays the framework for decision-making. After you’ve read this you will be able to choose the right student loan repayment plan based on your specific financial circumstances and goals.
Estimated read time ~10 minutes.
A Breakdown of Repayment Plans
| Plan |
Qualifies for Loan Forgiveness |
Payments Based on Income |
Interest |
Maximum Duration of Repayment |
| Standard |
No |
No |
You will pay the least interest under this plan |
10 years
10-30 years if consolidation loan |
| Graduated |
No |
No, but payments increase over time to repay total over 10 years |
You will pay more interest than a 10 yr standard |
10 years
10-30 years if consolidation loan |
| Extended |
No |
No, but payments can increase over time to ensure total repaid in 25 years |
You will pay more interest than any plan with a shorter repayment term |
25 years |
| REPAYE |
Yes |
10% of discretionary income |
You will pay more interest than any plan with a shorter repayment term |
20 years until forgiveness if only undergraduate loans, 25 years if graduate loans |
| PAYE |
Yes |
10% of discretionary income but never more than 10 year standard |
You will pay more interest than any plan with a shorter repayment term |
20 years until forgiveness |
| IBR |
Yes |
10 or 15 % of discretionary income but never more than 10 year standard |
You will pay more interest than any plan with a shorter repayment term |
20 or 25 years until forgiveness depending on when you received your loans |
| ICR |
Yes |
20% of discretionary income or a 12 year standard payment adjusted for income, whichever is less |
You will pay more interest than any plan with a shorter repayment term |
25 years until forgiveness |
| Income Sensitive Repayment |
No, plan is only for FFEL loans which aren’t eligible for forgiveness |
Based on monthly income but will repay total in 15 years |
You will pay more interest than any plan with a shorter repayment term |
15 years |
Target Borrowers for Each Plan
Standard: Borrowers with low debt to income ratio are ideal candidates because the required monthly payments won’t eat up all the money needed for monthly cost of living.
Graduated: Borrowers who know their initial income will be low and that it will increase substantially with time.
Extended: Borrowers with > $30,000 in student loan debt and high debt to income ratios who aren’t looking for loan forgiveness.
REPAYE: Borrowers with a high debt to income ratio who are unable to afford payments under other plan types and would benefit from forgiveness of the loan balance after 20-25 years of making payments or those who are seeking PSLF.
PAYE: New borrowers on or after Oct 1st 2007 with a high debt to income ratio looking for loan forgiveness through PSLF or income-driven loan forgiveness after 20 years.
IBR: Borrowers seeking PSLF or income-driven loan forgiveness with a high debt to income ratio who are unable to afford payments under other plan types.
ICR: This plan is eligible for PSLF however the monthly payment is typically higher than other income-driven repayment plans, so this may not be the best choice for most borrowers. ICR is ideal for a a parent who consolidated a Parent PLUS loan into a Direct Consolidation Loan and is looking to obtain PSLF.
Income sensitive Repayment: A borrower with FFEL loans who is seeking more affordable payments than the 10 year standard plan.
Choosing the Right Student Loan Repayment Plan
Deciding if you’re in the right repayment plan is pretty straightforward once you apply a consistent decision-making framework to your own financial situation. You’ll want to use the information in the chart above and read about the target borrower for each plan type to make your decision.
Here are the questions to ask yourself:
- Are you considering loan forgiveness? If yes, Standard, Graduated, Extended, and Income Sensitive aren’t for you. ICR also isn’t for you unless you’re a parent with a Direct Consolidation Loan.
- How quickly are you trying to get out of debt? If you want to be out of debt quickly, want to minimize interest, and aren’t looking for loan forgiveness the 10 year standard plan is the best federal repayment plan. However, if you have high income and excellent credit you could consider refinancing your student loans. Read about refinancing here.
- Are you seeking maximum affordability of your monthly payment? If you’re considering loan forgiveness or are just looking to pay the least amount of money each month REPAYE, PAYE, and IBR are your best repayment plan options. You will pay the most interest under these plans. If you obtain income-driven loan forgiveness after 20-25 years you will have to pay taxes on the amount of student loan debt forgiven.
Your next steps.
Alright what do you think of your repayment plan? Are you in the right one or do you need to make a change? Next week’s post will be all about how to change your repayment plan if you’re not in the right one. In the meantime, do yo have questions? Hit me up in the DM’s of the Repayable Facebook Page, Insta or Twitter (@therepayable), or send me an email jeni@repayable.org I’m happy to help!
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by Repayable | May 22, 2018 | Ask Jeni
Ask Jeni is brought to you in partnership with tuition.io, a company dedicated to helping the best companies free their employees from student loan debt.
I’ve been looking at debt reduction companies and wondered about pursuing someone to fight for my loans. I did some research and was not confident to invest in them and not sure if it works. What are your thoughts?
I get a lot of questions about hiring a debt reduction company (or a lawyer for that matter) to attempt to negotiate a reduced payment on student loans.
In general private companies offering to reduce the amount of student loan debt you owe are either:
1. A total scam.
or
2. Not technically a scam but charge you legal fees for unsuccessful attempts to reduce your debt.
Student loan debt is not a particularly negotiable debt, especially federal student loans. For the most part borrowers can’t discharge student loan debt in bankruptcy so there is no incentive for anyone to negotiate. The government can garnish your wages and seize your tax returns to collect their money so there’s nothing driving them to reduce your debt.
I would advise extreme caution in hiring anyone to do any student loan debt reduction work for you.
Here’s an article from the Consumer Finance Protection Bureau about best practices for debt reduction organizations. It’s not specific to negotiating student loan debt but it has a lot of helpful cautions in it. I recommend taking a look at it.
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by Repayable | May 15, 2018 | Ask Jeni
Ask Jeni is brought to you in partnership with tuition.io, a company dedicated to helping the best companies free their employees from student loan debt.
My parents took out a separate loan under their name for my school. How do I add that amount to my current loan? It seems to be easier if it remains under their name, but I still would like to figure out how to consolidate.
Unfortunately a Parent PLUS loan can’t be consolidated with your federal student loans. The loan is owned by your parents and the Department of Education views your parents as responsible for repaying it.
If you want to be responsible for payments there are two options:
1. You can log in to your parent’s loan account and make the monthly payments on this loan. This option doesn’t make you legally responsible for the loan and the loan will remain under your parents name. However, it does allow you to make the loan payments so your parents don’t have to.
2. You can consider refinancing their Parent PLUS loan with a private refinancing company. This option will require that you have a fairly high credit score, a high income, and steady income. It also comes at the expense of losing the option for loan forgiveness and federal student loan benefits. However, this option will transfer ownership of their loan to you. Your name will be on the loan and your parents won’t have any further obligations to repay the loan.
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by Repayable | May 14, 2018 | Getting started
You did it! You’ve graduated college and now you’re making a ton of life transitions. Maybe you’re moving to a new city, starting a new job, moving into a new place. There’s so much exciting change going on, and then there are your student loans. Ugh student loans. What are you going to do with your student loans? Where do you even start?
Today’s post is here to share four things you need to know about your student loans after you graduate. You’re smart, you just graduated college. After reading this and applying it to your student loans, you’ll easily know more than your fellow grads. Estimated read time ~5 minutes.
Figure out what type of student loans you have.
You’ll want to know if you have private student loans, federal student loans, or a mix of both. Federal student loans are loans funded by the U.S. government that have fixed interest rates and come with a standard set of borrower benefits. Private student loans are made by banks and other private lending institutions and often don’t carry the same benefits as federal loans.
One way to find out if you have federal or private loans is by looking at the name of your loans. William D. Ford Direct, FFEL, Stafford, PLUS, Perkins are all the names of Federal student loans. For more ways to find out if your student loan is federal or private you can read How to Figure Out if You Have Federal or Private Student Loans.
Figure out who owns your student loans.
To find out who owns your federal student loans you can log into the National Student Loan Data System (NSLDS) using your PIN. If you’re having trouble navigating this, your financial aid office at the college you just graduated from can help. You can send them an email to get started.
Find out how much student loan debt you owe.
If you want to take charge of your student loan debt you need to know exactly how much money you owe. When you log in to the NSLDS your federal loan amount will be listed. If you have private loans you will need to log in to your private loan servicers website to see your total loan amount, this also works for your federal loans.
For even more ways to find out how much you owe you can read How to Figure out How Much Student Loan Debt You Have
Find out which repayment plan you’re in.
Once you’ve figured out how much you owe and who you’re repaying your student loans through you’ll want to know how you’re set up to repay your student loan. There are many federal student loan repayment plans that could work for you. Next week we’ll talk about how you can decide if your repayment plan is the right one.
Next week we’ll start getting into what you can actually do with your student loan debt by deciding if your repayment plan is right for you. Cheers to starting your student loan repayment journey from a place of informed repayment rather than fear!
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