:::: MENU ::::

Increasing Minimum Payments

by

My student loans are on income-based repayment (just entering my 3rd year; the final year where my subsidized loans are still eligible for interest forgiveness).

One of the stipulations of IBR is that I have to re-apply every year. The re-application deadline for me falls in August. Its probably not surprising that, due to my increased income, my minimum payments are going up.

At first when I saw the email which notified me of the increasing minimum payments, I was bummed. “Dang it, that sucks” I thought.

But then it hit me – I’m paying like 10x the minimum payments right now (this is definitely hyperbole, but I still pay WAY over my minimums). So the tiny increase in minimum payments (I think it increased about $40/month) does not even come close to affecting me. After the realization, I laughed a little to myself.

Obviously no one likes when minimum payments increase. Thats what sucks so bad about adjustable rate mortgages! But at this stage in our debt payoff game, we’re focusing on the student loan payments. If we were still paying minimums on them in order to put more money toward a different loan, then this change might affect us. But given the massive sized student loan payments that we make, it literally doesn’t make an iota of difference to me if the payments increased $5 or $50. Who cares?! I pay way over the minimum anyway. I’m ready for them to be GONE!!!

Also, as just a random tidbit, when we first met with our mortgage broker with all our documents, he made a comment along the lines of “wow, I’ve never seen anyone with this much student loan debt!” I kind of chuckled (ummm…have you never done a mortgage for a doctor before??).  But not just because I was genuinely surprised by his inexperience with large student loan debts….I also chuckled because had I visited him 2 years ago, we would have been carting around an additional $50,000+ of miscellaneous debts, too! We’re in much better shape now than we were then! But, yes. I have a disgusting amount of student loan debt. Can’t wait to kick it all to the curb!!!

Just for fun – what are your minimum payments on your student loan debt? My Navient loan minimum payments are about $600/month. A ton of money, for sure. But when I’m paying thousands per month on the loans, a $40 increase doesn’t make a big difference.

 

Ashley

Texan at heart; Arizonan on paper. Lover of running, cheese, camping, and family (fur-family included!). Blogger, motivated to get out of debt YESTERDAY! Follow along with my journey!

Latest posts by Ashley (see all)


28 Comments

  • Reply Joanna |

    I do IBR too and my minimum payment is $455. It just went down, actually, probably because I haven’t had a raise in awhile. But that’s just for my federal loans. I also have private loans that total another $500 or so, a month. (Plus, a ton of other debt). Before law school, I had $0 debt. Nothing. I graduated with roughly $120,000. It’s sickening. However, I’m working towards Public Interest Loan Forgiveness, which will only forgive the remainder of my federal loans, but at least it’s something. It might also give you an idea that I don’t make a huge salary since I’m in a “public interest” field. But I just keep plugging along!

    • Reply Maureen |

      I almost had to laugh at the mortgage broker comments, since most of my friends have well over $150,000 in student loan debt. I know I have read comments in your posts over recent weeks were some people might think that is irresponsible, etc. to have this much student loan debt. Everyone is entitled to their opinion, but I also know that most doctors, lawyers, Ph.D programs would not happen in a reasonable time frame but for student loans and many programs require you to complete the program in a certain number of years. Full-time law students are barred from working more than 20 hours a week. So paying as you go, unless you have a good second income stream, isn’t feasible for the general student pool.

      However, I do think, especially in my profession of law, schools need to do more due diligence in educating students about the real job prospects, what the loan repayment will look like, etc.

      Now, to your question. I am not on IBR. I do not qualify based on our household income (my income is not great, but my spouse has a good job). When I graduated my student loan payments on a 25-year repayment plan, but not IBR, were close to $1300 a month. This was on approximately $190,000 in debt. Yes, folks, you read that figure correctly. That was law school plus half of my grad school loans (approx. $15,000 in grad loans). I survived undergrad with no loans and paid cash for part of grad school and repaid some of my grad loans prior to going to law school. Now, as of tomorrow my student loan balance is approximately $90,000. I have paid off $100,000 in 7 years and the first year they were in deferment as I studied for the bar and looked for a job as the recession hit. However, I intend to pay off the next $90,000 in three years or less. Like Ashley, I WANT THEM GONE.

      My current student loan payment (not IBR) is $817 a month. However, when I pay off my next loan next month, the minimum will be reduced to $565 a month on 4 loans (3 federal one of which is a consolidated loan, one private). I am overpaying my loans by thousands each month, but it is nice to know that my “required” minimum payment will drop below $600 (that is with 18 years left on the loans). Student loan debt BE GONE! It’s funny how dropping under $100K and hitting the 50% paid off mark is almost liberating in some ways, but then an outsider looks in (i.e. mortgage broker) and is like how much student loan debt do you have? Well, if only you knew how far I have come. Ashley, I get what you mean. 🙂

  • Reply Angie |

    I don’t know if I would have been able to bite my tongue. I would have just exclaimed how much I paid off from that total and how long we’ve been working on the debt! Finally excited that I could “brag” to someone.

    Regarding minimum payments. We’re down to 577 for minimum payments now (standard 20 year repayments). That’s a far cry from where we started. If you include our car-debt. Within 6 months out of school our minimum payments were $2,650!!! Holy crap! The minimum payment total is what got me to realize that our debt load was not normal or sustainable and we had to act.

  • Reply Leah |

    I am paying $535 a month for now. This is after refinancing and dropping my repayment term from 25 to 15 years. The plan is to kick the payments up a notch once my car is paid off within the next 6 months or so. I am somewhat surprised at the mortgage broker’s comment- having a large amount of student debt is certainly not rare in today’s world and with the rising cost of education will only continue to increase!

  • Reply Angela |

    First, congratulations on all your hard work and success! I also can’t believe that you were the first person this mortgage broker came across with that type of student loan debt. Of course, I went to school in the Northeast and still live here, so it’s the norm around here.

    My current student loan payments total $920 per month. At one point they were above $1200, which is more than my rent! However, over the past 3 years I paid off two of my smaller loans and, beginning in April of this year, I decided to go full ninja mode on the remaining loans. So now I’m paying more than $2000/month towards them. I’ve always been fairly frugal, but I’m almost psycho-frugal now because it feels so great to see the sizable drops in the amount remaining each month. I started out with around $180,000 in loans when all schooling was said and done. And now I’m down to $126,000. It’s still so large, and yet I’ve made great progress. In fact, I’ve paid nearly $20,000 toward them to date and my goal is to reach $25,000 by December. I’m pretty proud of this amount since it’s just me – no spouse or partner.

    To keep myself motivated I’m always establishing mini-goals to reach, especially since my highest interest rate loans are the largest at over $50,000 (consolidated). My mini-goal with those is to get them below $50,000 by the end of this year. My stretch goal is to get them closer to $45,000. Once those are knocked out the real fun will begin! The rest of my loans will fall like dominoes because they’re puny by comparison and will be knocked out every 2-3 months. Can’t wait to reach that point!

    I’m fortunate in that I don’t have any other debt to deal with anymore, but it took me a while to reach this point. Best of luck as you continue your journey!

    • Reply Ashley |

      Wow, great job – it sounds like you’re making incredible progress! I really need to do some new mini-goals. I have my larger 2016 goals for the year, but having even smaller goals helps keep me motivated and accountable. I think the house deal has now monopolized a lot of time, but once it’s behind us (which, we still haven’t even put in an offer, so who knows when that will be), I really want to go full-Ninja on these loans.

      • Reply Angela |

        I completely understand how you’d need to focus on the new house for now. That’s a huge lifestyle change and a lot of financial preparation. It makes perfect sense to ease off the loans until that’s settled. Your ninja costume will be ready and waiting once that’s done! 😉

  • Reply kathryn |

    I believe mine are about $112 a month on regular repayment, I just paid one off a couple months ago so it used to be higher. Thankfully I can usually pay $300 a month, so they’re dropping pretty quickly! It’s so fun to be able to see that principle balance decrease!

  • Reply C@thesingledollar |

    My minimum payment was $183.54 (for two loans with a total of $18697 at 6.5% interest). But I think I only paid that once, in the month that I got hit with a big tax bill. The rest of the time, I paid at least $1000 and up to $2500 in a month!

  • Reply Shanna |

    Holy cow! First of all my husband and I should be sending our parents HUGE thank you notes for our totally funded college educations AND I am planning on showing my kids since I think they don’t really get that the fact we are fully funding their college experience 100% that it is a big deal! I honestly didn’t realize so many people have that level of college debt. I am blown away! And congrats to all y’all for your progress so far!

    • Reply Joanna |

      I don’t know about everyone else but I had my undergraduate degree paid for by my parentsas well. It was relatively inexpensive. My law school tuition and living expenses during that time is what comprises my enormous debt. My advice to anyone planning on graduate school or other professional degree is to live as cheaply as possible and get as many scholarships and grants as possible. And work while in school, if you can.

    • Reply Angela |

      Shanna, that’s wonderful that you and your husband are paying for your kids college educations! As someone who was fortunate to have her parents pay for undergrad, I would encourage you to bring your kids into the conversation about how their education is funded. Because I have realized in the years since accumulating my college debt that, while my parents had the best intentions, I didn’t fully understand this type of debt and wasn’t prepared for the ramifications of it when I went back to school and was informed I had to pay for myself. I’m not trying to throw my parents under the bus here, because I don’t blame them in any way. I think it was a case of the educational landscape changing between the time they went to school (large state university for less than $1,000 a year for everything) and the time I went to school (the era of “you should go anywhere you think you’ll thrive and that gives you an edge, no matter the cost”). And the price tags and student loan process had changed so much that they didn’t even know to counsel me about it, and probably wouldn’t have been able to do so. I definitely wonder if I would have approached my advanced degree differently if I’d had a better idea of the “real cost” of my education.

    • Reply Isabela |

      Whew! The amount of some of this student loan debt is mind boggling! We did put our four kids through college, and they were fortunate to have almost no debt. One had zero, and the other three had about $5,000 each that they quickly paid off within a year of graduation. Then, they all earned their master’s degrees on their own dime, paying cash. Do they appreciate what their parents did for them? You bet. Our two daughters now have children and have already begun to save for their educations. I don’t think, though, that I could really sit back and allow my child to accumulate that kind of debt if we were not able to help them. At least, not with a clear conscience! The burden would just be too great. There would have to be another way.

      And a disclaimer: This was in the recent past, so it was not in the days of relatively inexpensive education. However, Hubby and I did it on our own, but in our day, it cost much less.

  • Reply Emily N. |

    You’re making great progress on your loans!

    My loans are on a regular 10-year payment plan (after a bunch of years of deferment and temporary lowering) and husband’s are on graduated repayment. We each owe about $450 a month right now. We’re in economy mode right now as husband works partly in education and doesn’t get paid as much over the summer, but I’m looking forward to increased income in September so we can start paying extra again!

  • Reply Jill |

    Most of mine loans are from grad school, but on IBR I am paying $425 a month. I have a private loan for $220 a month but I am working on paying that off quickly. Right now even with interest forgiveness my fed loans are increasing and I am crossing my fingers that the forgiveness plan for non profits sticks around for another 7.5 years.

  • Reply Emilie Burke |

    My only official student loan is an 8K subsidized loan. My minimum payment is $93. I’m focusing so hard to pay off credit card debt that I incurred when moving last year and I feel like I’ve been working so hard and not making a ton of progress. How do you deal with hitting walls?

  • Reply Marie |

    Today we sent in the last payment for my husband’s student loans – $5400.

    Neither of us had any assistance from our parents. We graduated 8 years ago and last year we sent the final payment to my loans and rolled that amount over into paying off his. We are officially debt free but the house. It is awesome! That is 5 degrees between us, 1 AS, 2 BS, 2 Masters degrees all paid for. We are upping our retirement savings to 15%. BTW we are a single income family with kids, it can be done!

    • Reply Ashley |

      OMG, that is cause for serious celebration!!!!! YAYYYYYYY for your very last student loan payment everrrrrrr!!!!!!! Do you have plans to try to tackle the mortgage debt, or just kicking back and enjoying life for a bit? Great job!

      • Reply Marie |

        That was the original plan. However, our federal tax burden has gotten much higher over the years and I realized that we can get significant tax savings by maxing out our HSA account and investing more within our 401(k). Our home is on a 15 year so I feel like it is getting paid off early anyway.

        PS. Tax credits have increased in AZ this year. The Charitable Arizona tax credit just went up to $800 per married filing joint. Foster care Arizona tax credit just went to $1000. They are no longer grouped together, so if you have a high state tax burden you can do $400 Military Relief Fund, $400 to a school, $800 to the Foodbank, and another $1000 to AVIVA Children’s Services or Casa de los Ninos in Tucson. That is if your state burden goes up that high.

  • Reply Shauna |

    Right now my minimum just dropped from 550 to 500 since I moved one to a 0% interest card. Which really means I’ll be paying them off faster, but I’ve still got $55,000 in student loan debt mostly for an MBA that has proven to be useless in my region of the country. I did get the chance to learn quite a bit in the program though, maybe some day I’ll use those skills.
    I am hoping to convince my daughter not to take on any student loans, but as of right now she wants to be a college math professor, which means smaller pay and lots of schooling to get through.

  • Reply Susan Melvin |

    This may be a silly question, but when all of you are making the extra payments on your loans, do you have the option to make payments just to the principle? I would assume so, but I am not sure if the loans work that way or not.

    I have some other things to work on before we tackle the remainder of the student loans and I got to thinking that perhaps a $2,000 payment to the principle when we get our tax refund might be a smart thing to do.

    SCM

    • Reply Angela |

      From what I’ve been able to learn over the years, the federal government requires the student loan holder to apply your payment in the following way:

      1. To any outstanding fees.
      2. To interest that has accumulated since the last payment. (Most student loans, the interest in calculated daily.)
      3. Remaining amount to the principal.

      If you have multiple loans, unless you tell them otherwise, they’ll spread your remaining amount across all the loans rather than apply it to one loan. You have to specifically tell them to apply it to one loan.

      Here’s how all this works in real life for me:

      1. My loans are all held by Navient and I have an automatic payment plan (to save that 0.25% in interest rate – every little bit helps, right?).
      2. I throw every extra penny at my loans whenever possible.
      3. When I go online to make an extra payment, the form I fill out asks if I want to push my monthly payments ahead by the number of equivalent months paid, or if I want this to be an extra payment. I always select extra payment. So I know that my regularly scheduled monthly payment will still be automatically deducted from my checking account.
      4. When the payment has processed, I can see that a portion of it was applied to the interest that had accrued since the last payment and the rest has gone to the principal. I also can see that “technically” the date of my next payment has moved forward a few months (right now I’m more than a year ahead). But this doesn’t matter because I’m still sticking to the original schedule of automatic payments.

      Depending on who your loan holder is and what their procedures are, you may have to call them after you submit an extra payment, or make extra payments by mail and include a note indicating it’s an extra payment that should be applied to the principal of a particular loan after fulfilling the minimum requirements. (I actually have a credit card rewards program that is applied to another set of Navient loans, and I have to call them every month when I see it’s been distributed, because they apply it across all my loans, which doesn’t do anything, and I want it applied toward one particular loan. So I have to go through that extra step every month. But if you do, they will apply it as requested.)

      The bottom line is that you’re the only person you can rely on to look after your student loan payments and you have to be willing to do the extra work required. It’s tedious, but it’s worth it! As I mentioned in an earlier comment, I’ve seen one particular loan drop from $71,000 to $55,000 this year and expect it to end up below $50,000 before the new year. That’s using the method outlined above.

  • Reply Teresa |

    I borrowed around 80k(? – I used the “Ignore it and it’s not real” method for a long time, so I’d have too look back to give you an exact number) for a Ph.D in Psychology. I’m on the standard plan, and have been for all except the first year when I was on Income Contingent. My servicer (ACS at that time) didn’t notify me (or notify me well enough, I don’t remember) that I needed to renew and I didn’t, so I was automatically switched to the standard plan. It wasn’t a whole lot more and I had landed my first job with a real salary, so I just adjusted and began paying the standard plan. I pay $978.89/month, which is roughly 25% of my take home pay from my main University job (I have two other side gigs). It sucks, but I am finally seeing it really go down with each payment, and that’s nice.

    “But wait, what about undergrad?” you may ask. I borrowed 11k for that…and 30 DAYS AGO THE LAST OF THOSE NAVIENT LOANS WERE MOVED “PAID IN FULL” STATUS. So long, Navient! Don’t let the door hit ya! 😉 That payment was $135 a month at the start. It decreased as I ticked off each one, but I don’t remember when the decreases were and how much because I was throwing everything at them so it didn’t matter.

    I’m now moving the debt snowball on to my credit card debt, and then I’ll work on the graduate loans. 🙂

    Last thought – I struggled to get a mortgage too, so know that you are not alone! Thankfully here in the Midwest homes aren’t that expensive, so I was eventually able to. I had to sell my car, which is fine because I wasn’t using it much anyway, and the aforementioned extra jobs helped. Just keep at it and stay strong!

  • Reply Ryan Marie |

    Ashley,

    Maybe you can help me. I am in the 3rd year of IBR as well. I reapplied in June as my deadline is in August. I’ve spoken to and have received several emails stating my IBR was approved. I had to ask for forbearance last week because I found out i need extensive surgery and will be out of work. They granted it. Now it says I owe $22. I also recieved an email on Friday once again stating my IBR was approved. I received an email this morning saying I will be in full repayment soon! Can they do this? Do you think it was just an automated email as it is Sunday? I obv plan on calling them Tuesday, but I just wanted some input.

    Thanks!

    • Reply Ashley |

      Hi Ryan,
      I’m definitely no pro, but my guess would be that it was just an automated email. It might be worth an additional call though, just to check it all out. Also, if you’re in the process of IBR I don’t know how it would be affected by going on forbearance. Like, I don’t know if the IBR just “pauses” while you’re on forbearance status or if the time keeps ticking (which impacts the interest accumulation, etc.) Definitely worth asking about.

      • Reply Ryan Marie Lafferty |

        Thank you!! I will be calking first thing tomorrow I a m just stressed bc of my upcoming surgery. When I spike to Navirnt they said forbearance will not affect my IBR. I looked it up as well. I am hoping it was just automated.

        I will keep you updated. Thank you!

  • Reply Ryan Marie Lafferty |

    Ok they fixed the forbearance. They said they just cannot give me my new IBR amount until 30 days before my repayment begins so November. She said the email was just automated. Does that sound accurate?

So, what do you think ?