Like many of you here, I’ve been in SAVE forbearance for a long time living my best life. My husband and I have been putting what would be my SAVE payment into other financial avenues like our retirement but also fun trips. Anyways, I suppose it’s time to get back to reality 😅
I’m a teacher and qualify for PSLF (married filing separately for my husband’s loans). My yearly salary is 85K but my AGI is around 65K given that we use my health insurance and do our investments into a Roth/403b from my paycheck. However, my income is expected to increase significantly over the next 5 years. I expect to be making 6 figures in the next 3 years per my teacher’s contract. This is awesome (go New England!) but it presents a challenge because I know it means my payments on an income driven repayment plan will increase.
I have about 25K in undergrad loans that I’ve made 58 qualifying payments on and about 25K in grad school loans that I’ve made 21 qualifying payments on. Right now, my payment through PAYE is estimated to be $400/month and my payment through IBR is estimated to be $580/month. On PAYE, my total amount forgiven is substantial at 28K but it’s only 14K on IBR. Yes- I very sadly know PAYE is gone in 2028.
My questions are:
– Can I go onto PAYE now and then switch to IBR in 2028 when PAYE is gone? PAYE would ideally give me 2 years of cheaper qualifying payments and maybe buy time until an election.
– Should I just go onto a fixed extended repayment? My fixed repayment amount is $300/month. If I pay this but then allocate additional money to the loans with the highest interest, I could ideally pay off my loans faster. I wouldn’t qualify for forgiveness, but I wouldn’t be stuck with payments in the $700/$800 month range once my salary starts to hit over 100K.
I guess it’s ultimately a cost/benefit analysis for both. Weirdly enough, I’m leaning towards locking into a fixed extended repayment because the number paid isn’t based on a salary that will increase significantly and I can allocate additional income to higher interest loans. Additionally, I like the safety net of $300/month. Again, losing the 14K forgiveness is something to consider, but is it enough to make a high monthly payment for the next few years worth it? I’m not sure, but would love feedback.
Posted by Southern-Heron-3204
2 Comments
You need to figure out whether you want to pay the smallest amount possible and go for PSLF, which could take another 6-8 years (unless you have a few years of SAVE forbearance you could buyback), or buckle down and pay this off ASAP to put it behind you. Your balance is currently low enough relative to income that you might be better off paying it and not pursuing PSLF.
Appreciate your honesty about spending frivolously instead of paying debt. Hope commenters are kind because sure this is the case for many.