haapai
Junior Associate
Character
Joined: Dec 20, 2010 20:40:06 GMT -5
Posts: 5,893
|
Post by haapai on Mar 9, 2019 19:39:03 GMT -5
I think that you should, for your own sake, nail down the reason for the change and attempt to figure out if there will be additional fluctuations.
If the change is not due to a change in repayment periods but is actually income-based, you could be in for a nasty change many months after your disability leave ends.
|
|
Knee Deep in Water Chloe
Senior Associate
Joined: Dec 27, 2010 21:04:44 GMT -5
Posts: 13,822
Mini-Profile Name Color: 1980e6
|
Post by Knee Deep in Water Chloe on Mar 30, 2019 21:29:49 GMT -5
FINAL Chronicle
This all happened on Wednesday, March 27. We left town to see our sons right after this happened, and I'm just getting around to sharing it here. The new payment that was triple what I was paying was due on April 7. I called the loan servicer to determine why it was that much. Kiara was the first one to answer after being on hold for 13 minutes. She stated I went from a graduated plan to an income-based plan. She decided she couldn’t help me and transferred me to someone else.
Pat took my call next. He confirmed that was the reason for the change. I asked about how that was determined and how many qualifying payments I’d made. Pat decided he couldn’t help me and transferred me to Brogan. She explained that the graduated payment does not count toward PSLF. At all. Sigh. She also explained that it’s a bit of an interest-only payment for the first 15 years followed by ten-ish years of super high payments. Which means none of the payments I’ve made toward my student loans count toward the ten years of making payments.
Brogan used the loan payment estimator to look at my current settings. She determined that at the current setting for Income-contingent payments, my loans would be paid off in seven years. Since none of my previous payments are counting toward the PSLF, that means I will have paid off the loans prior to being eligible for forgiveness. Since I’m not necessarily interested in raising my current payment thrice and cannot actually take advantage of the loan forgiveness program, I asked what the other repayment options are. We went with the standard repayment plan which is $100 more per month than I’m currently paying on a 15-year payback. It was an hour-long phone call. I will pay less than if I'd stayed on the graduated plan. That part is good. I'm still perturbed about the PSLF portion.
|
|
Deleted
Joined: May 6, 2024 19:11:52 GMT -5
Posts: 0
|
Post by Deleted on Mar 30, 2019 22:53:40 GMT -5
And that is why only a handful of tens of thousands of applicants have actually received forgiveness. It's way too complicated.
|
|
CCL
Junior Associate
Joined: Jan 4, 2011 19:34:47 GMT -5
Posts: 7,601
|
Post by CCL on Mar 31, 2019 6:19:46 GMT -5
That's crazy.
|
|
haapai
Junior Associate
Character
Joined: Dec 20, 2010 20:40:06 GMT -5
Posts: 5,893
|
Post by haapai on Mar 31, 2019 9:33:15 GMT -5
I'm sorry to hear that prior payments will not count toward PSLF and that IBR payments will result in payoff in seven and a half years if income remains steady. I pretty much agree with your assessment that pursuing PSLF does not make sense for you.
On the other hand, I'm a bit surprised that you've landed up in a repayment plan that has you paying everything off in ten years. With the amount of student loan debt that you currently have ($40K-ish), I'd think that you would be eligible for a longer repayment plan. Am I missing something here? Have I sloppily assumed that the two loans that you mentioned were both yours when one was actually your husband's? It seems a shame to be paying off 2.875% debt any faster than necessary.
|
|
Knee Deep in Water Chloe
Senior Associate
Joined: Dec 27, 2010 21:04:44 GMT -5
Posts: 13,822
Mini-Profile Name Color: 1980e6
|
Post by Knee Deep in Water Chloe on Mar 31, 2019 10:11:56 GMT -5
I'm sorry to hear that prior payments will not count toward PSLF and that IBR payments will result in payoff in seven and a half years if income remains steady. I pretty much agree with your assessment that pursuing PSLF does not make sense for you.
On the other hand, I'm a bit surprised that you've landed up in a repayment plan that has you paying everything off in ten years. With the amount of student loan debt that you currently have ($40K-ish), I'd think that you would be eligible for a longer repayment plan. Am I missing something here? Have I sloppily assumed that the two loans that you mentioned were both yours when one was actually your husband's? It seems a shame to be paying off 2.875% debt any faster than necessary.
Those are both my loans. They are consolidated though. I'm now on a 15-year payment plan. 15 years is definitely longer than the 7.5 that the PSLF program would have me at.
|
|
Deleted
Joined: May 6, 2024 19:11:52 GMT -5
Posts: 0
|
Post by Deleted on Mar 31, 2019 10:13:05 GMT -5
And that is why only a handful of tens of thousands of applicants have actually received forgiveness. It's way too complicated. Actually, no it isn't. If you do the math, you quickly realize that only someone that failed to get their degree or failed in life afterwords will be able to use the forgiveness. Everyone else will take the raises in income over the 10 years and mathematically that will result in you paying off the loan. Everyone forgets about the inflation factor (even at 3%, the last year you pay in 30% more per month). Then realize most people in these professions get a 5%-10% annual raise as they grow their career (I know that is what I did). The only program that actually requires it would be the masters in social work. The government jobs when you graduate, don't have the income increases above inflation and the pay is extremely low to the education requirement. Of course many people don't last 10 years in that profession. I think the reason most people find the rules so complicated is that as they try to play the game to get them forgiven, it doesn't take long to realize they should just pay them off and focus on that larger income. Alternatively, the required payment is larger than the interest only that doesn't qualify, so most people will select the "wrong" payment plan as they need the lower payment.
|
|
haapai
Junior Associate
Character
Joined: Dec 20, 2010 20:40:06 GMT -5
Posts: 5,893
|
Post by haapai on Mar 31, 2019 10:35:45 GMT -5
I'm sorry to hear that prior payments will not count toward PSLF and that IBR payments will result in payoff in seven and a half years if income remains steady. I pretty much agree with your assessment that pursuing PSLF does not make sense for you.
On the other hand, I'm a bit surprised that you've landed up in a repayment plan that has you paying everything off in ten years. With the amount of student loan debt that you currently have ($40K-ish), I'd think that you would be eligible for a longer repayment plan. Am I missing something here? Have I sloppily assumed that the two loans that you mentioned were both yours when one was actually your husband's? It seems a shame to be paying off 2.875% debt any faster than necessary.
Those are both my loans. They are consolidated though. I'm now on a 15-year payment plan. 15 years is definitely longer than the 7.5 that the PSLF program would have me at. So does that mean that you have 180 payments left?
Are you sure that the extended repayment plan that you are currently in is the longest possible? I've tried to figure out the answer for myself but I keep finding either the same vaguely worded boilerplate and suggestions that you either use a calculator or call your servicer. What I wanted to find was a chart that showed what length of repayment period was possible given various levels of total educational debt. Unfortunately, when I did find such charts, they were undated and I feared that they were out of date.
|
|
Knee Deep in Water Chloe
Senior Associate
Joined: Dec 27, 2010 21:04:44 GMT -5
Posts: 13,822
Mini-Profile Name Color: 1980e6
|
Post by Knee Deep in Water Chloe on Mar 31, 2019 10:47:12 GMT -5
And that is why only a handful of tens of thousands of applicants have actually received forgiveness. It's way too complicated. Actually, no it isn't. If you do the math, you quickly realize that only someone that failed to get their degree or failed in life afterwords will be able to use the forgiveness. Everyone else will take the raises in income over the 10 years and mathematically that will result in you paying off the loan. Everyone forgets about the inflation factor (even at 3%, the last year you pay in 30% more per month). Then realize most people in these professions get a 5%-10% annual raise as they grow their career (I know that is what I did). The only program that actually requires it would be the masters in social work. The government jobs when you graduate, don't have the income increases above inflation and the pay is extremely low to the education requirement. Of course many people don't last 10 years in that profession. I think the reason most people find the rules so complicated is that as they try to play the game to get them forgiven, it doesn't take long to realize they should just pay them off and focus on that larger income. Alternatively, the required payment is larger than the interest only that doesn't qualify, so most people will select the "wrong" payment plan as they need the lower payment. While I acknowledge my situation is anecdotal, in my state public school employees simply don't get 5% - 10% in raises each year. I don't recall your profession, and I'm glad you had that level of raise. That's just not the reality of my profession. I thought the goal of PSLF was to encourage people to work in the public sector in human services--teaching, social work, etc. Those don't come with higher incomes. My son has a BS, and works for county mental health as a case manager. He is in year five of employment with the county and year seven-ish of public service, and he makes about $25/hour.
For me, it wasn't "trying to play the game". The PSLF game started two years after I completed my master's degree (which I had to have to keep teaching, though that state rule has changed since). Yes, I definitely selected the lowest payment plan. I also chose not to research the rules. I don't know that I would have done anything differently as our financial philosophy (be it a good one or not) has been to kick the can down the road in order to raise children less frugally than if we'd buckled down and just paid the damn things.
Also, as the POTUS has recently stated that he wants to get rid of PSLF, I wonder how much impact that would actually have. When I first heard that announcement, I was annoyed. However, if it's not an effective program, then yes, it should be disbanded.
|
|
Knee Deep in Water Chloe
Senior Associate
Joined: Dec 27, 2010 21:04:44 GMT -5
Posts: 13,822
Mini-Profile Name Color: 1980e6
|
Post by Knee Deep in Water Chloe on Mar 31, 2019 10:49:59 GMT -5
Those are both my loans. They are consolidated though. I'm now on a 15-year payment plan. 15 years is definitely longer than the 7.5 that the PSLF program would have me at. So does that mean that you have 180 payments left?
Are you sure that the extended repayment plan that you are currently in is the longest possible? I've tried to figure out the answer for myself but I keep finding either the same vaguely worded boilerplate and suggestions that you either use a calculator or call your servicer. What I wanted to find was a chart that showed what length of repayment period was possible given various levels of total educational debt. Unfortunately, when I did find such charts, they were undated and I feared that they were out of date.
Yes, that's how many payments are left. No, it's not the longest possible repayment plan, but the longest possible would cost me another ~$7,000 in interest. When I was truly trying to make it as a single parent with no child support, the longer plan with the graduated payments was better as it freed up more money to take care of my children. Now, (though the children are still expensive ) I want the standard repayment plan to keep the interest costs low. Having ignored these particular loans, it's definitely time to not have the graduated plan.
|
|
finnime
Junior Associate
Be kind. Everyone you meet is fighting a great battle.
Joined: Dec 23, 2010 7:14:35 GMT -5
Posts: 7,445
|
Post by finnime on Mar 31, 2019 10:54:17 GMT -5
Glad to see your on a track that's comfortable and knowable for you, Knee Deep in Water Chloe. It is crazy that your 10 years of payments didn't count at all.
|
|
haapai
Junior Associate
Character
Joined: Dec 20, 2010 20:40:06 GMT -5
Posts: 5,893
|
Post by haapai on Mar 31, 2019 11:20:00 GMT -5
Yes, that's how many payments are left. No, it's not the longest possible repayment plan, but the longest possible would cost me another ~$7,000 in interest. When I was truly trying to make it as a single parent with no child support, the longer plan with the graduated payments was better as it freed up more money to take care of my children. Now, (though the children are still expensive ) I want the standard repayment plan to keep the interest costs low. Having ignored these particular loans, it's definitely time to not have the graduated plan. Those bureaucrats are required to emphasize the additional interest that you'd pay by extending the repayment period. I'm not sure that sends good signals when the interest rates are below 4%.
FWIW, I consolidated my old-school (i.e. variable-rate) Staffords in the early aughts at 3.25% and simultaneously switched from standard (10-year) to extended (in my case, 15-year) repayment. At the time that I made the switch, I was carrying automotive debt at 6% and a personal loan at 11.9%. It's probably a good thing that I never had a bureaucrat tell me how much extra interest extending would cost me. I would have had an extremely colorful response.
I funneled the amount that I no longer had to pay on my student loans toward paying off those two other debts and a couple of years later, I was getting exactly 3.25% on the CDs that formed my EF.
|
|
Rukh O'Rorke
Senior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 10,062
|
Post by Rukh O'Rorke on Mar 31, 2019 15:02:50 GMT -5
Actually, no it isn't. If you do the math, you quickly realize that only someone that failed to get their degree or failed in life afterwords will be able to use the forgiveness. Everyone else will take the raises in income over the 10 years and mathematically that will result in you paying off the loan. Everyone forgets about the inflation factor (even at 3%, the last year you pay in 30% more per month). Then realize most people in these professions get a 5%-10% annual raise as they grow their career (I know that is what I did). The only program that actually requires it would be the masters in social work. The government jobs when you graduate, don't have the income increases above inflation and the pay is extremely low to the education requirement. Of course many people don't last 10 years in that profession. I think the reason most people find the rules so complicated is that as they try to play the game to get them forgiven, it doesn't take long to realize they should just pay them off and focus on that larger income. Alternatively, the required payment is larger than the interest only that doesn't qualify, so most people will select the "wrong" payment plan as they need the lower payment. While I acknowledge my situation is anecdotal, in my state public school employees simply don't get 5% - 10% in raises each year. I don't recall your profession, and I'm glad you had that level of raise. That's just not the reality of my profession. I thought the goal of PSLF was to encourage people to work in the public sector in human services--teaching, social work, etc. Those don't come with higher incomes. My son has a BS, and works for county mental health as a case manager. He is in year five of employment with the county and year seven-ish of public service, and he makes about $25/hour.
For me, it wasn't "trying to play the game". The PSLF game started two years after I completed my master's degree (which I had to have to keep teaching, though that state rule has changed since). Yes, I definitely selected the lowest payment plan. I also chose not to research the rules. I don't know that I would have done anything differently as our financial philosophy (be it a good one or not) has been to kick the can down the road in order to raise children less frugally than if we'd buckled down and just paid the damn things.
Also, as the POTUS has recently stated that he wants to get rid of PSLF, I wonder how much impact that would actually have. When I first heard that announcement, I was annoyed. However, if it's not an effective program, then yes, it should be disbanded. 5-10% was common when mortgage rates were 16% and for similar reasons. It is not that common for anywhere I have ever been nor for anyone else I know about.
|
|
Deleted
Joined: May 6, 2024 19:11:52 GMT -5
Posts: 0
|
Post by Deleted on Mar 31, 2019 17:01:57 GMT -5
Actually, no it isn't. If you do the math, you quickly realize that only someone that failed to get their degree or failed in life afterwords will be able to use the forgiveness. Everyone else will take the raises in income over the 10 years and mathematically that will result in you paying off the loan. Everyone forgets about the inflation factor (even at 3%, the last year you pay in 30% more per month). Then realize most people in these professions get a 5%-10% annual raise as they grow their career (I know that is what I did). The only program that actually requires it would be the masters in social work. The government jobs when you graduate, don't have the income increases above inflation and the pay is extremely low to the education requirement. Of course many people don't last 10 years in that profession. I think the reason most people find the rules so complicated is that as they try to play the game to get them forgiven, it doesn't take long to realize they should just pay them off and focus on that larger income. Alternatively, the required payment is larger than the interest only that doesn't qualify, so most people will select the "wrong" payment plan as they need the lower payment. While I acknowledge my situation is anecdotal, in my state public school employees simply don't get 5% - 10% in raises each year. I don't recall your profession, and I'm glad you had that level of raise. That's just not the reality of my profession. I thought the goal of PSLF was to encourage people to work in the public sector in human services--teaching, social work, etc. Those don't come with higher incomes. My son has a BS, and works for county mental health as a case manager. He is in year five of employment with the county and year seven-ish of public service, and he makes about $25/hour.
For me, it wasn't "trying to play the game". The PSLF game started two years after I completed my master's degree (which I had to have to keep teaching, though that state rule has changed since). Yes, I definitely selected the lowest payment plan. I also chose not to research the rules. I don't know that I would have done anything differently as our financial philosophy (be it a good one or not) has been to kick the can down the road in order to raise children less frugally than if we'd buckled down and just paid the damn things.
Also, as the POTUS has recently stated that he wants to get rid of PSLF, I wonder how much impact that would actually have. When I first heard that announcement, I was annoyed. However, if it's not an effective program, then yes, it should be disbanded. Well, for new graduates where I live the union contract does allow up to 5% increases each year. Here is the salary schedule: www.madisonteachers.org/wp-content/uploads/2018/09/Salary-Schedule-Teacher-Unit-2018-2019-Current.pdfNote each year a new schedule is published that normally has all rates increased by inflation (so 2-3% is covered by the schedule) if you don't move boxes. Young teacher can perform well and increase their earnings in that 5% range and normally do by moving to boxes higher up the schedule. Second, even at $25/hr = $50K/yr, ok teachers only work 75% of the year so $37K, he would be able to pay $204/mo (https://www.nerdwallet.com/blog/loans/student-loans/discretionary-income-calculator/), so a $20K loan over the ten years with ZERO wage increases. No much less then the average (https://www.insidehighered.com/quicktakes/2018/09/20/average-loan-debt-graduates-four-year-colleges-28650) of $28K. At $45K/yr he would easily pay off the $28K loan. Going from $37K/yr to $45K/yr over 5 years is only 4%/yr and over 10 years 1.98%. So again, with the complex program most will only save minimal dollars and even in most school systems, you get a "bump" at the 5 year mark.
|
|
Deleted
Joined: May 6, 2024 19:11:52 GMT -5
Posts: 0
|
Post by Deleted on Mar 31, 2019 17:08:12 GMT -5
Also, as the POTUS has recently stated that he wants to get rid of PSLF, I wonder how much impact that would actually have. When I first heard that announcement, I was annoyed. However, if it's not an effective program, then yes, it should be disbanded. Well it will harm profit at colleges, that is all. Right now students overpay for these degrees, when if they were based on market values, the professions and administration would have to take a pay cut. Once they can't promise a false hope to the students, those consumers will be more critical of the costs. Also, those same professors and administrators don't teach the math behind the program to the students. As I have shown, it is a false program as inflation and normal salaries will pay off the majority of the loan. Even worse, if you go back to the 90s when you could get an interest free loan (subsidized based on family income), you pay the full loan off. So the government isn't losing anything with this program.
|
|