Starting Loan Repayment Immediately?

[PolarPop]

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At exit counseling financial aid told us to start loan repayment ASAP if we were planning on doing PSLF for student loans.

I graduate next week and am doing a residency (maybe 2?) so will being going on IBR for at least 1-2 years. Since I have an AGI of 15k right now, my payments for the next 7 months would be $0.00 a month for the next 7 months and < $100.00 a month for 12 months after that.

Is it true that these $0.00 "monthly payments" and tiny IBR monthly payments count toward the 120 months for PSLF?

The reason I am asking is because I only have about $60k in student loans so PSLF didn't really make sense. But if 18-30 of the 120 payments are < $200.00 it might end up saving about $10k vs. just paying it all back in a few years to minimize interest.

 

[deleted158872]

Is it true that these $0.00 "monthly payments" and tiny IBR monthly payments count toward the 120 months for PSLF?

Yes. 😉

 

[massmocha]

Yes... but loan forgiveness might not exist in 10 years depending on what congress does. Also, might be capped at $59K (depending on what your loans are that might not make a difference)

 

[deleted158872]

well, it's not something that can't be controlled.
people can elect politicians who align with their ideals into office.

 

[MatCauthon]

If PSLF caps at only 57k forgiveness, I'm curious to see how they will propose people pay off the rest of their balance. Alot of these 300k student loan debt pharmacy graduates (USC) are going to be in for a surprise.

 

[RxStudentatUB]

If PSLF caps at only 57k forgiveness, I'm curious to see how they will propose people pay off the rest of their balance. Alot of these 300k student loan debt pharmacy graduates (USC) are going to be in for a surprise.

What are these USC kids thinking? I'd love to be their stock broker. Sell them stocks with the promise of a 1,000% return.

 

[SClENCE]

300k? Holy **** Plus the interest. And imagine if you want to do a residency. I can see people easily paying half a million over the course of 10-20 years.

You can get into new schools with low standards (ETSU) for half that even if you are OOS.

 

[Dred Pirate]

300k? Holy **** Plus the interest. And imagine if you want to do a residency. I can see people easily paying half a million over the course of 10-20 years.

You can get into new schools with low standards (ETSU) for half that even if you are OOS.

yup - I know a handfull of students that fall in to this category - stupid!!!!

 

[68quebec]

pay it off asap. you don't want that student loan to bother you.

 

[Corytrade]

pay it off asap.

This. 60k should take you a year or less if you manage your money well.

 

[PolarPop]

This. 60k should take you a year or less if you manage your money well.

Why would you live like a student for 1-2 years and pay it off ASAP if you can live however you want for 10 years and still pay $10,000 less overall?

 

[pezdispenser]

The reason I am asking is because I only have about $60k in student loans so PSLF didn't really make sense. But if 18-30 of the 120 payments are < $200.00 it might end up saving about $10k vs. just paying it all back in a few years to minimize interest.

You may not even qualify for IBR/PAYE on a $60k balance once you start earning a full pharmacist salary. To qualify, your monthly payment (15% or 10% of discretionary income) has to be less than the standard 10 year payment, which is $690 for $60k @ 6.8%. Usually you cross this threshold when you loan balance exceeds 1x your annual salary.

https://studentaid.ed.gov/repay-loans/understand/plans/income-driven#eligibility

 

[GodsSon2011]

pay what you owe and get it over with. I had 52 and paid it off in 2 years.

 

[babybull]

What are these USC kids thinking? I'd love to be their stock broker. Sell them stocks with the promise of a 1,000% return.

Hi, I'm currently in my last year at USC and apparently (according to people on this forum) I'm an idiot for having gone to USC... haha...

 

[BMBiology]

Hi, I'm currently in my last year at USC and apparently (according to people on this forum) I'm an idiot for having gone to USC... haha...

Well...are you?

 

[gwarm01]

You might as well apply for the program. I'm on it, but my final forgiveness is only going to be a few grand. Even if it goes away, I'm basically on a 10.5 year repayment plan.

 

[babybull]

Well...are you?

I'll at least say that some of my classmates are among the most respectable and deserving people I've ever met!

 

[BMBiology]

I'll at least say that some of my classmates are among the most respectable and deserving people I've ever met!

That has nothing to do with cost.

 

[babybull]

That has nothing to do with cost.

It really does say something about their character that they were able to look past the cost to enter a profession that allows them to serve others. My story is different, which I don't wish to share lol. Anyways, with a plan the loans are manageable.

 

[Monsterdaddy]

Here is some factual information.

Loans have a six month grace period after graduation before you can make a payment. Therefore your counselor is correct that if you do PSLF and start repayment sooner, you will be done sooner. The only way around the grace period is to consolidate which erases the grace period (although they may have changed the rules so you can only consolidate after grace ends too).

The counselor may be right on timing he is wrong on total payments. Repaying early does not decrease your total payments. This is why:

IBR/PAYE approvals are good for 12 month increments. It is based on last year's tax return. It is NOT A CALENDAR YEAR schedule, just rolling 12 months. Therefore wait six months or consolidate to repay early (like I did) actually saves you nothing in terms of dollars. Also do not apply for IBR/PSLF until you are in repayment. If you apply early (and get $0 payments) but did not restart repayment, those extra months are LOST (I lost 2 months this way).

Lastly, as other posters mentioned $60K is really not worthwhile using PSLF. I would still apply for IBR/PAYE but make extra payments to pay off early. So why bother? Cause s$!t happens and you may be unemployed etc. Nothing stops you from applying but paying extra.

PSLF is grandfathered into your Promissory Note (read it under Borrower's Rights).

Hope this helps, financial aid officers around the nation are not very well educated at all.

 

[Sugoi Travis]

It really does say something about their character that they were able to look past the cost to enter a profession that allows them to serve others. My story is different, which I don't wish to share lol. Anyways, with a plan the loans are manageable.

Yes it does. It is a noble cause. But that's not a get-out-of-jail card for dealing with a 200k loan principle. Factor in interest and you've got a hefty sum of money that you're going to have to pay each month unless if you get yourself into IBR/PAYE. Just because you have a plan to make your loans "manageable" does not justify the outrageously high cost of USC's tuition...and you're going to need more than just a plan to get yourself out of the debt that USC entrenches you in.

 

[sosoo]

Yes it does. It is a noble cause. But that's not a get-out-of-jail card for dealing with a 200k loan principle. Factor in interest and you've got a hefty sum of money....

he's saying those kids come from respectable background.. and 300k is a drop in a bucket. 3 million is when it gets to eyebrow raising, and smack talking. some ppl are so rich its hard for most ppl to fathom.

 

[Sugoi Travis]

he's saying those kids come from respectable background.. and 300k is a drop in a bucket. 3 million is when it gets to eyebrow raising, and smack talking. some ppl are so rich its hard for most ppl to fathom.

It's a drop in the bucket for a very small minority. Not everyone has parents who are loaded with cash. For the rest of us, taking out 200k in loans just for tuition alone is a very risky financial move to make given the circumstances of the job market and how loan forgiveness could possibly be capped at a specific amount.

 

[radio frequency]

It really does say something about their character that they were able to look past the cost to enter a profession that allows them to serve others. My story is different, which I don't wish to share lol. Anyways, with a plan the loans are manageable.

It says they don't think about the future. $300k in loans? Good luck ever retiring.

 

[babybull]

It says they don't think about the future. $300k in loans? Good luck ever retiring.

With PAYE, $600-$800 in monthly payments for 20 years would still make a USC grad well off (even considering the final tax). That still equates to a $100k+ "gross" salary which is still way better off than the median or average American salary. If they enjoy what they're doing even betterrrr.

 

[trailerpark]

With PAYE, $600-$800 in monthly payments for 20 years would still make a USC grad well off (even considering the final tax). That still equates to a $100k+ "gross" salary which is still way better off than the median or average American salary. If they enjoy what they're doing even betterrrr.

800 a month for 20 years, he/she only pays back $192,000 so how could that be right with 300k debt...

 

[babybull]

800 a month for 20 years, he/she only pays back $192,000 so how could that be right with 300k debt...

PAYE/REPAYE bases monthly payments off of discretionary income, not debt amount. Not everyone qualifies for it and it seems the biggest barrier is the requirement that no federal loans could have been disbursed before Oct 2007. REPAYE is an extension of PAYE that will eliminate that requirement and is set to be available at the end of this year or next year, if not some time after that. We'll see what happens.

 

[radio frequency]

With PAYE, $600-$800 in monthly payments for 20 years would still make a USC grad well off (even considering the final tax). That still equates to a $100k+ "gross" salary which is still way better off than the median or average American salary. If they enjoy what they're doing even betterrrr.

LOL. Good luck with that.