Hi all,
Seeking advice on my situation.
I have $64.5k loan on 5.25% interest rate with Nelnet. I live overseas and have no US income so moved onto the SAVE IDR plan in 2023 to reduce interest rate to 0% to match the monthly payments I was required to make ($0). My long term plan was to apply for PSLF and then pay the tax bill on the loans in approx. 2042.
This was all going to plan but I’m currently on Save Plan Pause Forbearance accruing approx. $300 per month in interest.
Given it appears that SAVE is dead in the water in the long term, what plans would best suit my situation? Is it still possible to have a plan which allows the interest rate to be 0% to match the monthly payments that I’m required to make (also $0 given I earn nothing in the US) plus allowing forgiveness?
Many thanks
No US income yet still accruing interest
byu/FreeChildcareLover inStudentLoans
Posted by FreeChildcareLover
2 Comments
No, there are no plans that would get rid of your interest just because you don’t have US earned income. The only thing that using something like the foreign earned income exclusion would do is change your payments on an income based repayment plan to zero (unless you start making more than FEIE allows for – off the top of my head I think it’s around 125k/yr)… but interest would still accumulate. Eventually you would be able to apply for forgiveness, but you’ll still owe the tax bomb on the full amount including the interest that has accumulated. 0% on save pause was a one-off, a fluke.
Also, you may want to check whether you even qualify for a public service loan forgiveness… unless you fall into a few narrow exceptions, you generally won’t.
https://studentaid.gov/help-center/answers/article/foreign-govt-or-intl-org-employment-qualify-pslf
The interest subsidy was ended quite a while ago, so no, there aren’t any plans that would prevent your loan from growing if you’re not paying the accrued interest each month.
That said, you seem to be a little confused on PSLF–I think you may mean IDR forgiveness. Do you work for a US-based 501c3 organization (while being paid under the US arm) in the country you live in? Or for a US gov or UN organization? If not, you’re not going to qualify for PSLF. PSLF also does not come with a tax bomb unless you live in Mississippi.
You’ll eventually want to look at the RAP plan, when it’s finalized. It is supposed to have something resembling SAVE’s interest subsidy, though the forgiveness terms are a bit different.