My spouse has student loans that we have been paying been since 2005 (only $23,000 to go!). Shortly after getting married, I decided to go back to school to get my Master's which I just completed back in October. We got to put off repaying my loans six months from graduation in December to this June 2014. As we started to receive information about repaying my loans, I got a little bit excited and did a little research on some repayment options and we like the Income Based Repayment (IBR) plan. The calculators are very exciting and they illustrate how much you can save on your monthly payments. So I input the balance my wife has on her loans, and my balance ($63,000), and our dependent information, and it seemed like a manageable amount; my wife's payment would go down from $208.41 to about $80 according to this calculator and my payment would be $220, for a total of about $300 per month.
What are your IBR experiences? I'd love to hear about them. Happy Saving!
Keep in mind the standard repayment for my loans alone would be about $725 as calculated here.
Knowing that I will be in public service for at least the next 10 years, I feel pretty good about under paying the loan because the balance will be forgiven as part of the William D Ford Public Service Loan Forgiveness plan after 120 consecutive payments; so keeping my payments as low as possible is of the utmost importance.
Back in December, my wife and I filled out an IBR application through StudentLoans.gov which grabbed our information from the IRS and sent it to my wife's loan provider Sallie Mae. Maybe I needed to wait until we started repaying my loans in June before sending in an IBR application because here is what happened:
Sallie Mae finished processing our IBR application in February (almost two months after submitting the application). Sallie Mae did not offer a chance to approve or disapprove the terms of the IBR, but changed our payment from $208.41 to $263 and upped the interest rate 0.25%. Paying more for something that gives you zero extra utility is not the best financial practice.
So we called Sallie Mae so ask what's going on. After less than helpful information, they offered to postpone payments until May while they processed an income sensitive application which they emailed to us. That also would not work because postponing payments would eliminate the years of consecutive payments we had been making toward the balance.
We called today to restore payments on the account without the two month postponement and asked to have the payment amount reverted to $208.41. After the representatives first attempt, our $261 payments would be reinstated for this month. After explaining that was not what we wanted, the representative said that they could cancel the IBR application for $5. So I asked what the new payment amount would be and what our interest rate would be. The representative said our new payment would be $205.57 and our interest rate would be restored to the original interest rate. So it cost $5 to save $2.84 per month? Deal.
We'll have to wait and see what IBR will actually make our payments in June, but we will be laughing and taking our $3.52 net all the way to the bank.
What are your IBR experiences? I'd love to hear about them. Happy Saving!
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