:::: MENU ::::

Browsing posts in: Student Loans

Increasing Student Loan Payments

by

Nothing like being kicked when you’re down, right?

Well, I’ve had a good run. After 3 years of Income Based Repayment where our student loan payments were only a couple hundred a month (it varied, but was never over $300/month in total), I knew there would be some changes in store after updating our income info using last year’s tax information (this update is required annually). What I did not know or expect, was that the change would be SOOOOOO extreme.

Overnight, we went from a minimum payment of $300….to a minimum payment of over $1,000. THAT’S MORE THAN OUR MORTGAGE!!!! My take-home pay is under $5,000/month, so we’re talking over 20% of our income!!! AHHH!!!!!

After my update, I was notified that we no longer qualified for IBR based on last year’s income. Unfortunately, this occurred during summer when all our finances just went straight to hell so I didn’t give it much thought like I should have.  No thought, that is, until the payment was auto-drafted and my account ended up being overdrawn.

To say I “freaked out” would be an understatement. It was my own fault for not paying closer attention, but I felt totally blind-sighted!

So I did something that maybe (probably?) messes up my credit. But I felt I had no option. I called and asked for my student loans to go into forbearance status for a few months. It was approved the same day. I’ve continued making smaller-sized payments (in the $200-$300 range), but no payment is actually due until January. I’m trying to reapply for IBR with our current income (since the update was based on our tax information from last year, it showed a much higher salary than what we have this year given that hubs no longer works and I dumped my part-time job, too).

Re-doing our current income paperwork is a whole process, as you can imagine.  I haven’t completed it yet but my hope is that this voluntary forbearance gives us the time to get all the paperwork submitted and processed and – fingers crossed – maybe we can get approved for a more reasonable-sized payment. It will still likely be larger than in the past. But we just cannot afford $1,000/month right now as a minimum payment. We’d be much more comfortable in the $300-ish range. I did talk to a representative who said there are other programs available, too (e.g., I was told we could apply for the “standard extended payment”). I’d love to get back on IBR if we can qualify but, if not, I’m glad other options exist. The one problem is the TIME it takes for all that stuff to be processed. I felt backed into a corner with the forbearance because I needed a lower payment NOW and didn’t have time to wait a month (or however long) for a new application to be processed and approved (or potentially rejected).

So that’s where we’re at with my student loans. Another piece of the messy financial puzzle.


Student Loan Forgiveness Program To Be Cut???

by

Has anyone seen this news story floating around the interwebs?

The headline reads: “Trump to Propose Scrapping Beleaguered Student Loan Forgiveness Program.” It’s got a big picture of Betsy DeVos face floating around with the headline.

In the story, reporter Jillian Berman discusses how a leaked education budget shows plans to eventually chop the Public Service Loan Forgiveness program (PSLF). Its not a sure thing. The budget plans are not yet finalized and, even if they were, it would require Congress’ approval.

I’ve seen lots of panic and political drama surrounding it on Facebook. My mom tagged me in one such post to get my thoughts on the issue.

And here I am, sitting on the sidelines. I graduated with nearly $100,000 in student loan debt (now sitting right at $65,000 – latest debt update here). I’m taking the position that I’ve never wanted to depend on any of the government loan forgiveness programs. For many years – long before Trump took the presidency and appointed Betsy DeVos as Secretary of Education –  I’ve been saying that I didn’t trust these government programs. I’ve always maintained the position that I don’t want to depend on the government and that the PSLF program (or any of the loan forgiveness programs) could ultimately just disappear one day. I don’t want to make major career decisions on the basis that I need to go into this field or work for that sector in order to qualify for PSLF because WHAT IF the program ends up discontinued?? Then what? Where would that leave me? Up shit creek with no paddle, that’s where!!!

Instead, I personally have always taken the view that I just want to PAY OFF my loans as quickly as possible. Don’t get me wrong – I have nothing against the loan forgiveness programs. If I were already on a career-trajectory where I intended to be in public service I would certainly be looking into it – I just don’t want to force myself down that road simply for the hope of possible loan forgiveness at the end of it. Actually, I’m on an income-based payment plan where any unpaid interest on my subsidized loans has been forgiveness. It’s not loan forgiveness (it’s only interest forgiveness…and only on some of my loans), but it’s a related student loan program and I’m taking 100% advantage of it while I can. But in terms of the major government-backed loan forgiveness programs (like PSLF), they have never sounded like appealing options for me.

What are your thoughts on the controversy? Is anyone signed up for the PSLF program that would be directly impacted if it were to be discontinued? How scary!


Pages:12345678...37