Student loans- thoughts?

antt0008

My husband and I have been discussing the best way to attack our student loans, (~$33,000 in federal loans with varying interest rates 4.5-6.5%). We met with a financial counselor specializing in student loans, and she mentioned the public service loan forgiveness program, as both our jobs would qualify as would our previous four years of payments. Currently we are in the standard 10 year payment plan, but we are trying to put more every month as we can. To utilize this program, however, we would have to change our payment plan to being income-based, as this program still requires 120 qualifying payments (10 years), and then the remainder would be forgiven... This could potentially lower my husband's payments from approximately $300 a month to $0 or minimal, and it would also lower my qualifying payment as well. This is appealing as it would free up some money per month, and we could potentially get the remainder forgiven after six more years. I am torn as we want to have these paid off ASAP, but this seems to be a potentially good option for us... Has anyone else looked into this program?

Ducktale

I don't see a downside to this. If you only need to pay on them for 6 more years and then they're gone, and in the meantime you would substatially lower payments, I think that's a win.

Xstatic3333

I have! Personally I'm leaning no for a few reasons specific to my situation:

1) Due to H's income, IBR would only lower my payments a smidge, leaving not much left to forgive. This would change if we have kids, but what kids don't work out for us? H gets regular raises, too, which will affect our eligibility.

2) My job is not especially secure. If I leave and get a job in the private sector, I've wasted time I could have been making big payments.

3) (less weight on this factor) Applying for PSLF transfers your loans automatically to FedLoan servicing, which has awful reviews for processing payments and customer service. I'm currently happy with my servicer, Great Lakes.

Assuming your job is more secure than mine, I'd crunch the numbers and find out if you'd save money on PSLF vs. paying at your current rate. I'd be interested in your experience if you go for it! I still waver on applying all the time.

Wulfgar

I would stay away from FedLoan servicing.  I think that is who my wife has currently and ever now and then they will change who is managing the loans and it causes headaches since you now have to keep track of who you are paying.

I have Sallae Mae managing my student loans and I am very content with them.

What you might want to do is go to the loan forgiveness for your husband while you do accelerated payments towards yours.  That way you pay yours off early in case you need to change fields etc while your husband may get some portion of his forgiven.

jjbmstinco

I am currently doing it with Fedloans, and haven't had any problems (yet).  It was easy to apply. I am a school counselor in a public school.  It is my understanding that you have to make 120 payments after being signed up, so I would make sure that your 4 years count. I figure that if I lose my job, I probably will always be in a school  or some sort of mental health public service field.  So I wasn't worried about my job.  I don't like the waiting 10 years thing... but once they do, it will forgive close to 40,000 for me. That is a large chunk of money, so I am willing to be patient.

My payments went from about $400.00 to $120 on income based.  That was nice.  My H works for a public school in the IT department.  He did not qualify for this loan even though he works for a public school district. 

Which ever decision you decide..I wish you all the luck!

CuriousKiddosMama

I would stay clear of it. It may be appealing in the short run with your payments going down, but what if you switch jobs? Does your 10 years start over, or would you even still qualify? 6 more years can be a long time to be tied to a job just to get your student loans repaid especially if you would have them paid off on your own by then. What happens if at 8 years of this deal you get offered an awesome job (think dream job) are you going to stick where you are because you only have 2 years left, or leave for the dream job and then start your student loan payments again when you would have been almost done.
Just my 2 cents!

Xstatic3333

Though Vikingsfan's logic is what works for my situation, for the record the ten years doesn't start over, as long as the next job also qualifies for the program. It's 120 payments total while at a qualifying job; you can even have a "break" and then pick it up again.

WedinVolterra

I'm enrolled in IBR and given the amount we stand to have forgiven, I can't come up with a downside.  IMHO, the extra money that I could be spending getting the loans gone faster is better off spent on retirement savings. 

If you have questions about the program, there is some great reliable info here:  http://www.ibrinfo.org/

anssett

Depends on your income and tenacity. 33K isn't that much in student loans. Paying it off sooner will feel a lot better than having it hang over your head, and requiring you to stay in a qualifying job. If you do puruse this, make sure your income is low enough to qualify, even after forseeable raises. Make sure the clock started 4 years ago, not now.