Nebby wrote:Calvin Murphy wrote:Nebby wrote:Anonymous User wrote:Maybe some numbers will help my question make more sense. When I begin my new position this coming fall, my school's LRAP will require me to pay $990 per month. If I was under REPAYE, my monthly payment would only be only $464. The upside is that monthly out-of-pocket savings of $500 per month over 10 years.
That is helpful.
Yes, if I were you, I would convert to PAYE and ride out into the PSLF sunset. I am currently on PAYE+PSLF w/ my school's LRAP. My school's LRAP is pretty generous, but I have undergrad debt so it made more sense financially to do similar to what you're suggesting. So long as you are comfortable hunkering down into PI/Gov't for the next 10 years, then it makes great financial sense to reduce your monthly payment.
As an aside, I recommend submitting your PSLF certification (at least) annually so there's a constant record of your participation in the program. If it is ever repealed, you'll need proof of your detrimental reliance.
I'm anal and plan on doing it every 6 to 8 months so I can be sure that FedLoans doesn't skip any qualifying payments.
Maybe I misunderstand PSLF, but I would think that the two main drawbacks of switching course at this point would be 1) your previous payments count toward the 10 year payoff timeline that you're on, but the PSLF timer starts at zero (meaning you have ten MORE years, as opposed to ten years minus however many payments you've already made). This is clearly less of a concern if you're only a year into repayment...but something to thing about. Also, 2) if for some reason you decide to change into a private sector job, you will have racked up interest while on PSLF and end up paying a lot more in the end. This isn't a concern for most people who go PSLF, as they're confident that they will remain govt, but it's something to think about.
(1) You misunderstand PSLF. You have to make 120 qualifying payments. Payments qualify if you're in nonprofit/govt when you make them. OP has made QPs since they started payment. PSLF is something you qualify for at 120, it's not a program you enroll in and then make progress towards. It's purely an If A, then B type of forgiveness.
The OP is fine because they are on the 10 year standard repayment. However, not ALL loan payments are qualifying payments for pslf as your post implies. Extended/graduated repayment plan payments do not count unless they are equal to or exceed the standard 10 year repayment. So anything greater than 10 years doesn't work (or else all the schools would have programs that set up their pslf students on 25 year repayment plans and got that forgiveness in 10 years.)
And re 2) you can do REPAYE to mitigate some of that interest accrual.