REPAYE subsidy...?

[Spikebd]

I chose to enroll in REPAYE so that I would be the beneficiary of an interest subsidy from Uncle Sam. I log into MyFedLoan to check out my account details and I've yet to see any type of additional payment towards my loans aside from my REPAYE monthly payments.

I'm planning to go for PSLF, but still don't like seeing my student loan bill trend upwards so quickly. Should I be seeing payments posted to my account from a government source while in REPAYE?

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[TMP-SMX]

It doesn't do additional payments it just reduces the amount of interest that is accruing as far as I know. Unfortunately REPAYE wasn't around in my first 3 years of residency.

 

[RangerBob]

You won’t see any payments made. REPAYE subsidy is nice, and made it worth it for me to change from IBR to REPAYE (any time you change repayment plans, your interest capitalizes, so I had a few years worth of interest capitalize, but the REPAYE subsidy more than made up for it)

If I recall correctly, the subsidy may not get factored in until the end of the month for FedLoan. I check my balance once a month (when my monthly payment is due/made) and that’s how I verify I’m getting the subsidy.

Don’t blindly trust FedLoan (or any servicer). It’s a good idea to make sure you’re getting the subsidy you’re supposed to be getting. It’s pretty easy to calculate.

 

[TMP-SMX]

You won’t see any payments made. REPAYE subsidy is nice, and made it worth it for me to change from IBR to REPAYE (any time you change repayment plans, your interest capitalizes, so I had a few years worth of interest capitalize, but the REPAYE subsidy more than made up for it)

If I recall correctly, the subsidy may not get factored in until the end of the month for FedLoan. I check my balance once a month (when my monthly payment is due/made) and that’s how I verify I’m getting the subsidy.

Don’t blindly trust FedLoan (or any servicer). It’s a good idea to make sure you’re getting the subsidy you’re supposed to be getting. It’s pretty easy to calculate.

Agreed. There's a post on white coat investor arguing whether the subsidy is preset or depends on your additional payments. It may depend on the servicer.

 

[Czech777]

This sounds insane but I went JFK conspiracy deep on this trying to figure it out. No one at my servicer could answer my questions. So I took a screen shot of my interest owed every day for 30 days and learned the following:

1. Interest subsidy is applied on the 1st every month
2a. Interest subsidy is also applied every time you pay toward loan / interest
2b. The sum of 1 and 2a is the full subsidy amount. It appears to “max out” and does not keep applying after it covers ~1/2 my interest payment.
3. My servicer applied the subsidy whether I paid minimum payments or 5k extra.
4. When I calculated the interest I actually paid after subsidy, it appeared that my effective rate is about 1/2 the rate on the loan.

 

[TMP-SMX]

This sounds insane but I went JFK conspiracy deep on this trying to figure it out. No one at my servicer could answer my questions. So I took a screen shot of my interest owed every day for 30 days and learned the following:

1. Interest subsidy is applied on the 1st every month
2a. Interest subsidy is also applied every time you pay toward loan / interest
2b. The sum of 1 and 2a is the full subsidy amount. It appears to “max out” and does not keep applying after it covers ~1/2 my interest payment.
3. My servicer applied the subsidy whether I paid minimum payments or 5k extra.
4. When I calculated the interest I actually paid after subsidy, it appeared that my effective rate is about 1/2 the rate on the loan.

Who is your servicer?

 

[Czech777]

Fedloan