Hi! I have an Education Award from my years of service through Americorps. This education award has been what I have been using for my monthly student loan payments through Mohela. It’s been nice, but the award is set to expire this August and I have about $3k left to use. It’s a use it or lose it type of scenario.
I’m wondering…does anyone know if making a large sum payment at once will cover the subsequent monthly payments or is it just like throwing money to the wind?
To clarify- my student loan payment is about $200/month under IBR. If I use the rest of my education award in one payment in August…will I still be required to pay $200 for Sept and so on or do they calculate it to cover months ahead?
I’m aware this is taxed- unfortunately been paying hefty taxes on it since I began using it. Just trying to figure out if there’s a benefit to using it all up or if the extra $$ won’t apply to future months.
PSLF and large sum payment?
byu/alleged-potato inStudentLoans
Posted by alleged-potato
3 Comments
Yes. Throwing money to the wind.
But so what, if it’s use it or lose it? The extra $$ will reduce your principal, but won’t reduce the 120 payments you have to make to receive PSLF forgiveness.
If you don’t want to pay the tax, and are sure you are going to eventually receive PSLF forgiveness anyway, you should not accept any amount that will be taxable that won’t count towards PSLF forgiveness, but will only reduce the amount that would otherwise be forgiven tax fee.
Edit — u/XCaboose-1X is correct. You can prepay UP TO 12 months and have the payments count towards PSLF forgiveness. The exact number of payments is tied to when your next IDR recertification is due. Could be as many as 12 payments, or as little as none.
So long as you stay employed at a qualifying employer, you can pay ahead 12 months. You will probably want to call and inform the servicer to make sure it’s applied correctly
> or is it just like throwing money to the wind?
This