Hi,
As I weigh plan options (175K, age 52, only 2 years clocked, high earner right now but that could plummet) I am curious if you can help me understand a few things. (If you only answer 1 of these, please let it be #1. Am weighing approaching my boss soon). Thank you everyone…
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If I choose a standard 10 year repayment plan, is the monthly amount locked in for the whole time? If I were to put in a big lump sum, would they then recalculate? (think this is called "recasting"). I ask because I might take a loan from my job to lower the balance and pay it off with a salary reduction. Should that lump sum amount go in BEFORE July because then the monthly plan is locked in for 10 years? If it's locked, can I switch to a different standard repayment plan to force it to recalculate? Goal is the lowest monthly I believe I could afford no matter what might happen in the years to come. So I want to know- should I lower the balance as much as possible right away (loan from boss) or could he give it after or in chunks?
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If I choose IBR or RAP what do I say or do to make sure that paying extra on top some months won't just push my payments ahead? I would want the payment to lower the principal. Do they have to listen to my instructions? or is this a danger zone? Please share Anything you know about hidden pitfalls with this!
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Let's say I switch plans a lot, first of all can I even do that? Start on standard, move to IBR or RAP if i lose my job or something, then move back? (Moving back would be because God willing am making so much, I no longer want the recertification to balloon my monthly payments, because ironically that seems to be the math! RAP could be worse than 10 year. Crazy.) And if I can switch plans a lot, what pitfalls should I keep in mind? I know interest can recapitalize leaving… which one? RAP and IBR both? Or just RAP? Could I make sure the interest was paid before switching and then it's ok?
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if RAP has no interest accrue and rhe subsidy etc… why isnt this best for all of us? Assuming (like #2 above) we can indeed make higher payments anytime we want and have it apply to the balance. Yes 30 years sucks. But if forgiveness isnt the goal… and I plan/hope to repay, then… should I consider RAP? For me personally I don't like the higher payment potential. No cap right? Or higher cap than IBR?
Thank you to this community.
Posted by thewalkingcure