I filled out a new IDR application a few days before the end of December. The one I had on file that had been “pending” since September of 2024, they said was no good. I had talked to numerous reps over the summer asking them if they thought my monthly payments would drastically increase from what they were before the SAVE act. All of the reps I had spoken had said they shouldn’t & if they do it wouldn’t be by that much, since my salary hadn’t drastically increased over the years, my interest rates on my loans had obviously stayed the same & I had paid off a good chunk off my loans during Covid, when they were in a federal forbearance with no interest being charged. I was making double, sometimes triple monthly payments on my loans. I had knocked about $20,000 off the balance in a matter of about 2 years max. So please explain to me why when I logged into my account today, after getting notified I had new correspondence to view in my account, did I log into my account to see that my payments had jumped by $134 a month. I about had a heart attack. It made no sense, when I called to get an explanation the rep really couldn’t give me a reason as to why my monthly payments had increased that much. Has anyone else ran into this issue?? I was talking to my Dad about it & he said maybe the Department of Education & the Trump Education changed something behind the scenes- changed the structure of the IDR plans, so they can more money coming in. It just sucks the rep could not provide with a reason as to why my payments went up by $134 a month. If anything they should’ve just stayed the same as what they were always at since I owe far less than what I did back in 2020/2021. I’m on PSLF, and I’ve already lost out on a year or so from the federal forbearance from the Trump administration, then I missed out on a few months under the Biden administration. In total I think I missed out in about 13 additional payments that couldn’t towards my PSLF forgiveness. This all just sucks I now have to fill out yet another application to see if I can get the 2 big loans that qualify for the PSLF to have that portion of the payment lowered by $82, so then my payments only goes up about $50 or so dollars. And the economy sucks right now. 😞😑
The new IDR plans make me want to scream!
byu/Southernbrit1985 inStudentLoans
Posted by Southernbrit1985
11 Comments
Your payments changed because you changed plans. Each IDR plan uses different calculations. The amount is non negotiable. It’s based on your AGI and family size. None are as generous as SAVE was. Paying off some of your loans didn’t affect your payment because IDR plans are based on your income, not your loan balance.
IDR payments are based on your AGI and family size. Your balance has little to do with how they calculate your monthly payment.
The difference in payment amount is in which IDR you signed up for.
IBR is either 10% (first loan after July 2014) or 15% (first loan before July 2014) of discretionary income.
PAYE (if eligible) is 10%
ICR is 20% of discretionary income based on a 12 year payment plan – weirdest calculation of them all.
SAVE’s payment was 5% if all undergraduate loans, 10% if all graduate loans, and somewhere in the middle if you had both.
Finally – even if you get some loans discharged by PSLF, it still won’t change the calculation for IDR payment plans. It’s still based on income and family size.
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$134 isn’t much in comparison to the increase some people are seeing.
Do you have one, or possibly two, dependent(s) listed on your IDR application (e.g. a spouse or a child)?
The difference is due to the federal poverty level offset. It’s a holdback amount to cover bare necessities like housing and food.
* SAVE Offset: 225% of the FPL.
* IBR Offset: 150% of the FPL.
* The FPL increases slightly each year:
* The FPL for the first person is currently $15,650.
* The FPL for each dependent is currently $5,500.
* Both were using a 10% income levy through June 2024.
* This works out $8.33/MO-$1K of FPL ($8.33 per month per one thousand of income)
Here’s what the math looks like:
1. First person offset difference;
1. 225% – 150% = 75%, as a decimal it’s 0.75.
2. $15,650 x 0.75 = $11,2988, which is $11.288K in units of thousands of dollars ($ K).
3. $11.288K x $8.33/MO-$1K = $94/MO.
2. Second person offset difference
1. 0.75 (see above);
2. $5,500 x 0.75 = $4,125 which is $4.125K;
3. $4.125K x $8.33/MO = $34/MO
Takeaways:
* If it was just you then your bill would have gone up $94/MO.
* If it’s you and a dependent then it’d be $128/MO ($94/MO + $34/MO).
* Add another $34 to your monthly bill for each additional dependent.
* Your actual amount will be slightly more than this (because the FPL increases each year). If certified your income in 2023 the additional difference is right around $6/MO.
Unfortunately many of the reps are highly misinformed or underinformed, so it can be difficult to trust their info. Also, your balance will never affect your payment amount on an IDR plan as those amounts are 100% driven by your income. However, a standard or graduated or extended plan could decrease if you owed less. Have you compared those plans? I’m at a place now that my payment is actually lower if I choose one of the extended plans as compared to choosing IDR.
Mine will increase from 160 to 450. And i dont even know how it end up to 450… at this point, who really knows what’s going on. Ughhh
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The very same thing happened to me! Mine went up about $200! I used my tax forms from last year so it should’ve been the same. I freaked out when I got the notice. It’s so frustrating, not to mention how emotionally and financially taxing it is.
My payments went from $206 to $741!
The whole 15% of discretionary income is BS as it says this is what you can pay based on your gross pay. They dont tale i to account the fact that taxes, insurance etc comes out of that 1st and leaves you with a much lower net. Then they also dint take into account that you have monthly exspenses like rent, utilities and food.
I was told that b/c I am make more than 150% of the federal poverty level then I dont qualify for relief. The federal poverty guideline is based on the federal minimum wage of $7.25 and doesnt tale into account that I live in Oregon where the minimum wage is $16.35 and the cost of living is some 5x that of states with a $7.25 minimum wage.
My rent alone is $2000 for a 1 bedroom apartment and I take care of my disabled husband who is on SSI. We dont qualify for government assistance b/c our combined income is like $13/year to much. I was literally told by social services to ask for a pay decrease or cut my hours.
The whole system is BS. Tax us on our money we make, charge us taxes on the things we buy and then make us pay taxes on the things we own tahtbwe already paid taxes on with our taxed money. Then the on top of everything the government wants their money 1st amd could care less if we are homless or not!
Yeah this just happened to me too. After being stuck in a processing forbearance for literally a year, payment jumped by $250 :’( on PAYE