Reduce Student Loan Payment after July 1, 2009 YMMV

[gingerCE]

This post is in regards to student loan changes after July 1, 2009 in regards to payments based on income and Public Service Loan Forgiveness Program.

You can be on different payment terms to qualify including standard, ICR, and IBR (there are more).

This is a link to an estimated IBR calculator. It may not be your cheapest payment option and it's possible you can pay more, but it's worth it to check out.

The IBR payment plan will be available after July, 1 2009. I called Direct Loans (my servicer) and they said I could apply over the phone (do not have to do paperwork) and they checked the different payment options to see what would be the cheapest (I qualify for public service loan forgiveness) and IBR was the cheapest for me.

If you are low income or have a large family, this is probably a great payment plan for you (might not have to make any payments). If you are single or married w/ no kids and make a pretty good income, this is probably NOT the best plan for you--but you still might qualify for public service forgiveness.

EDIT: Your interest rates do not change. Also, if married, it does a make a difference if you file jointly or separately what your payment may end up being (so check both ways) and consider the options.

http://www.ibrinfo.org/what.vp.html

[Parafly9]

holy crap my interest rate is 2.5% those are out of control high

[DaBooty1]

Quote from Parafly9 : holy crap my interest rate is 2.5% those are out of control high

joking right? that is the lowest in history.

[Axnjxn]

Based on the information you have provided, you would probably qualify for IBR. Your monthly payment would be around $0. If your income rises in the future, then your payments might too.


So is this telling me I never have to pay my loans? That can't be right.

[gingerCE]

Quote from Parafly9 : holy crap my interest rate is 2.5% those are out of control high

Are you talking about the percentages on the first page? Those are not interest rates--they are % of payment based on income. If you make 40,000, you will pay a maximum 8.9% of your gross monthly income, so your maximum payment would be around $300/month for single person--but probably less depending what you owe in student loans. A couple at 40K maximum payment would be $226/month.

My interest rates are 3.375% and are not changing.

[gingerCE]

Quote from Axnjxn : Based on the information you have provided, you would probably qualify for IBR. Your monthly payment would be around $0. If your income rises in the future, then your payments might too. So is this telling me I never have to pay my loans? That can't be right.

Yes, that is correct. If your income never rises above a certain level so that you payment stays at 0--then after 25 years (or 10 years for public service employees), you could potentially pay NOTHING in student loan payments.

The govt will subsidize the first 3 years interest rates (so at least the lender will receive some interest) but you will pay nothing out of pocket, let's say if had a family of 2 at 20K salary (for example), they would never have to pay back a student loan if you enroll in this plan.

[nocturna5]

Thank you so much for posting this. I had no idea! I definitely qualify for the IBR program, and I think I might eligible for the public service loan forgiveness too. If so, I will save TONS of money.

[gingerCE]

Quote from nocturna5 : Thank you so much for posting this. I had no idea! I definitely qualify for the IBR program, and I think I might eligible for the public service loan forgiveness too. If so, I will save TONS of money.

You're welcome. When I called, my payment was cut by almost $200 month and because I also qualify for public service forgiveness (long list including some part-time jobs listed as qualifying), after ten years I will have over 30K of loans forgiven, that I would've had to pay otherwise.

This is a great plan and I hope lots of other people will qualify too. =)

[snickles78]

Thank you so much for posting this! I have heard a lot about it recently but wasn't sure if I would qualify, looks like I do but my payments would be around the same as they are now.

Will this program be around for awhile - does anyone know if we can apply later if our circumstances change?

[TheyCallMeGeorg]

For those that don't qualify for this and have not yet consolidated, you can still look into consolidating your federal student loans after July 1, 2009 at a lower rate (as low as 2.5%): http://www.fastweb.com/financial-...rop-july-1

[gingerCE]

Quote from snickles78 : Thank you so much for posting this! I have heard a lot about it recently but wasn't sure if I would qualify, looks like I do but my payments would be around the same as they are now. Will this program be around for awhile - does anyone know if we can apply later if our circumstances change?

I talked about this with the rep because of potential layoffs in my state. This is based on the rep but she said if I lost my job and went into deferment/forbearance, I would just be put on pause and when back on my feet, resume the program, so all the previous payments would still count towards my 10 years.

I'm assuming if your income goes down or let's say you have a child, you can call to get your payment recalculated, but I didn't ask the rep this so it might be good to ask.

[devis]

I don't qualify... single, no kids, make too much money. The federal government should just freeze all of the student loan repayments, ALL OF THEM, interest free for 2 years.

Quite frankly I'm not a big fan of that money being used to pay the fat cats with private jets and bold heads!

[tommyson30]

so no change if u already consolidate???

[iceman24sc]

Thanks so much for the info! My GF is kinda going through a financial crisis and this will help tremendously!