I'm one of the SAVE people. I've not had to make a payment since covid but I have been paying monthly and have made a big dent. I still owe around 68k. Like many, trying to figure out my path forward. I only have about 900 in unpaid interest right now from the last two months because I have been making small payments.
I did the payment simulator and most plans are $720-948/mo. I can afford $400 tops if I squeeze the shit out of my grocery budget. My child care is $2500 a month (3 more years of it) and we have a large mortgage for an average house in a HCOL area. These two bills alone with ulitilties averaging 700/mo eats up a lot of our finances. I see it improving greatly after childcare is done.
The problem is that my husband makes a decent salary and we file jointly. On paper it looks like we are rolling in it.
Is there any reason I shouldn't take a extended graduated repayment plan now for the lower up front payments and then switch to a different payment plan in a few years when we aren't paying for daycare? When you switch payment plans does it affect anything? I'm not eligable for PSLF and filing seperately this year would cost us several thousand dollars (I have a significantly large amount of write-offs this year to play against husbands tax burden). Should I just stay on the extended graduated nad then just increase payments to pay down faster than planned?
Tahnsk for any insight. I feel like I have a path forward and just want to make sure that I'm not missing any details that will bite me later.
Payment plan that takes into consideration bills?
byu/Alternative-Rub4137 inStudentLoans
Posted by Alternative-Rub4137
4 Comments
You can do the extended plan. There is no penalties switching amongst plans unless you switch from the IBR plan. You can also remain on Save until they kick you off
I’m in a similar situation. I paid my CPA for a 1 hour consultation to compare the options and she recommended my husband and I file separately. Even though we are paying more in taxes by filing separate, the overall financial burden is ~**$6k per year less** if my income only is used to calculate student loan payments. I also contribute to a traditional 401k and max out my HSA to lower my AGI.
You may need to call up your CPA and make an appointment before you make any decisions.
Edit: fixed typo
Extended Graduated starts low and increases every 2 years, so for *now* it’s lower but in ~6-10 years you’re going to have an unmanageable payment again *and* you’ll have been paying way more in interest overall
Payments on Extended and Graduated don’t count towards IDR plan based forgiveness either, so whatever progress you’ve made towards forgiveness previously will be stalled
I would be incredibly careful of trying to use that plan long term. Like short term while you get your spouse’s tax debt handled and wait for your kid to age up to cheaper daycare/school sure, but long term I don’t think it’s a good plan
You can afford it. Just might have to give up your new lake view vacation home, scale down your week long Rome trip, or hold off on buying that boat.