IBR? Loan advice?

[sunshine802]

I’ve scanned through and haven’t found a post that seems to fully answer my question. I have about $150,00 in student loans left, all of which are federal. When I first graduated I picked the 25 year extended payment plan. I decided not to do IBR because the payments were about the same and I assumed my income would increase. Since this will now be year 3 without a raise or bonus, does it make sense to backtrack and sign up for IBR? I picked the plan I did with the intent to pay extra and target my higher loans first. My financial advisor keeps encouraging me to refinance my loans for a better interest rate, but I’m nervous to lose the protections with federal loans. I feel somewhat “safe” from corporate cuts since I’m on the low end of the pay scale, however recent graduates are being offered $10/hr less than us 2016 graduates so I’m not naive enough to really feel “safe”. Would it make sense to refinance chunks of it? I already am maxing out my 401k, HSA & have my emergency fund. I guess I’m just looking for some general advice or thoughts on how to proceed.

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[EggplantPharm]

I would recommend IBR. Especially with the changes that might happen with the new proposed plans having 30 year forgiveness. Lock in now.

 

[rxkrafted]

what other financial obligations do you have? mortgage, kids, car, etc.? If you are young, I would recommend just sacrificing like 4-5 years and just paying it off aggressively and just get it out of the way. I personally did this and am relieved that i don't have to think about loans sitting on my shoulder for what could have been the next 21 years...

 

[TerryTerry]

Do not refinance and fire your financial advisor.

 

[rxkrafted]

Just remember that whatever gets forgiven after the 20 years is taxable income so the total amount you would pay including the tax would be >230K.
This is assuming you are single and make ~120K a year(before taxes). Obviously these numbers change depending on your income growth and family size... and also things can change if certain policies and laws get passed. If you want to refinance and able to lock in a rate < 4%, you can save yourself about ~50-60K in the life of the loan depending on if you choose to payoff within 5 or 10 years. I did all the math for you but empirically put in family size, income, etc. because I don't have that info.
There are a lot of calculators online so you just have to put in the numbers and compare scenarios.

 

[sunshine802]

I am married but financial obligations aside from student loans are relatively low. I guess my “reasoning” for the loan payment choice was so that I could target my larger loans first, vs picking a shorter plan with a higher monthly payment. It’s frustrating with the federal student loans how interest accrues daily. My thought process was to secure the lowest monthly payment but still pay as much as I can. I feel like I’m not making any progress since anywhere from $750-$800 in interest accrues on a monthly basis. I appreciate all of your advice on this subject!

 

[mentos]

I would refinance and pay them off in 2-3 years, that's what I did.

 

[sakigt]

I had the whole shebang of life financial obligations with a working spouse. Daycare, mortgage and everything else. 10 year plan, on year 6 of 9. Theres a light at the end of the tunnel. Just refi to 10 years or less and be done with this forgiveness lie

 

[sunshine802]

I had the whole shebang of life financial obligations with a working spouse. Daycare, mortgage and everything else. 10 year plan, on year 6 of 9. Theres a light at the end of the tunnel. Just refi to 10 years or less and be done with this forgiveness lie

Oh I had no hopes of loan forgiveness! Just have been debating going the IBR route to potentially lower my “monthly payment” so I can target the higher loans more aggressively. The interest is just absolutely brutal. My only reason against refinancing is if my position was eliminated or if my hours become greatly reduced. I’d be nervous to refinance the whole thing to then find out my company decided to cut 500+jobs. At least with the federal loans , in that case, you can defer without destroying your credit. I still plan on paying aggressively.

 

[mentos]

Oh I had no hopes of loan forgiveness! Just have been debating going the IBR route to potentially lower my “monthly payment” so I can target the higher loans more aggressively. The interest is just absolutely brutal. My only reason against refinancing is if my position was eliminated or if my hours become greatly reduced. I’d be nervous to refinance the whole thing to then find out my company decided to cut 500+jobs. At least with the federal loans , in that case, you can defer without destroying your credit. I still plan on paying aggressively.

If you refinanced in the first place and paid off aggressively they'd be gone by now.

 

[EggplantPharm]

I would get on REPAYE before it is too late. And the government picks up half of your interest, so it is better than refinancing.

 

[Transformer]

Oh I had no hopes of loan forgiveness! Just have been debating going the IBR route to potentially lower my “monthly payment” so I can target the higher loans more aggressively. The interest is just absolutely brutal. My only reason against refinancing is if my position was eliminated or if my hours become greatly reduced. I’d be nervous to refinance the whole thing to then find out my company decided to cut 500+jobs. At least with the federal loans , in that case, you can defer without destroying your credit. I still plan on paying aggressively.

If you think your job is not stable, do NOT refinance right away. Call your student loan servicing company and ask how you can be placed on the "lowest monthly payment plan" They can do the calculation for you and tell you if it's IBR or REPAYE, etc and send you the form you need to fill out for submission. Every time you get paid biweekly from work, make an extra payment on the next business day, targeting the student loan with the highest interest rate (debt avalanche approach).

Also sign up for direct debit to lower your interest rate. Make a strict budget, and work hard. Good luck!

 

[altern8]

For most people, PAYE > REPAYE >>> IBR. Make sure you look into the details of the programs before you make a decision.