One down, 119 to go

So here it is, the path is laid before me for the next 10 years. The process was not easy, straightforward or timely. Even trying to be prepared, It still took about 90 days to transfer my loans into the Pay As You Earn & Public Service Loan Forgiveness program. Until reforms happen in student loan consolidation and private lending, this chapter of the blog is on hold. Look forward to future posts about retirement savings, family finance, and general ways to save and make money work for you.

A Wrinkle in the Process

My original loan provider +Nelnet transferred my #DirectLoans to +MyFedLoan sometime in July as part of the Public Service Loan Forgiveness program #PSLF. During this time I received a letter that my loans were paid off from Nelnet. Knowing that this was part of the transition of my loans, I awaited information about my loans payments and their due dates with MyFedLoan.org. I received a letter from MyFedLoan.org that my account was past due and I owed about $1,100 by August 5th. Remember a few posts ago about how happy I was to have a $144 payment? After a few phone calls over the course of a few days, MyFedLoan finally had my loans transferred AND they corrected my monthly payment to be $144 NOT $1,100. Interestingly enough, I didn't have to make a payment to MyFedLoan on July 5th or August 5th while the loans were transferred to MyFedLoan as part of the Public Service Loan Forgiveness program.

Another important piece of information: the Employment Certification I submitted only cover loan payments through the date of the application; any payments after the application date require a new employment Certification form. I submitted the application April 18th, before any payments were made. MyFedLoan suggests you submit the form annually. Since I hadn't been credited for any payments it doesn't really make sense to resubmit until next year.

I would still suggest that if you are currently making payments, and have worked for a 501c3, education, government, non profit, or other public service type program, you submit the required form. You will receive credit towards the required 120 payments for any employment and payment after October 1, 2007. You may already have up to 6 years and 10 months of credit and not even know it. If you do, congratulations! You're almost there.

I'm looking at August 2024. Although it was nice to have another 2 months off from student loan payments, Future me is going to be upset that he has to make those higher payments for 2 extra months. :/

Ready, Set, Save!

Payment 1 of 120 has been debited.

What would you do with an extra $704 per month?

Standard repayment on my wife and my combined student loan debt of $86k is about $926 per month. Thanks to #IBR and #PAYE our total monthly student loan debt payment is $221.40 for the next 12 months, and then adjusted annually based on adjusted gross income, and loan balances.   Thanks to these programs, we came out $704 ahead for June. Being able to use $704 per month toward living expenses, other debt, and savings instead of student loan debt is great support for why programs like #IBR and #PAYE benefit the middle class in the pursuit of more education.

Public Service Forgiveness is a great reason to go back to school to advance your career in government, education, and non-profit careers, but it is a long forgiveness game. I'll keep a running tally for the next 120 months until my loans are forgiven.

What are your student loan repayment success or horror stories?

Coming soon, strategies to deal with massive private loans, and other money saving tips.

Payment 1 - $221.40 -- Savings $704

You Can Major In Saving The World and Not Go Broke Part II - Pay As You Earn PAYE and Public Service Forgiveness Loan program

I checked my inbox today and received an email from my student loan service provider. It just got real: Your Statement is Now Available

It's been six months since I turned in my last paper, given my last academic presentation, and graduated from my Master's program. My framed diploma (receipt) hangs next to my undergraduate diploma (receipt) in my cubicle and is beginning to collect dust.

The repayment grace period is just about over, and Uncle Sam wants his money back over the next 120 months.

I received an email from my loan provider that my statement was available with a first payment due June 5th.

To get an idea of what I would actually pay, I went to studentloans.gov, logged in with my social security number and department of education pin, and looked at the 'Tools and Calculators.' After entering my debt (63k),  my wife's debt (23k), our AGI, and family size, I had a few options:

Standard Repayment - 120 payments - $720 per month - no thank you.
Graduated Repayment - 120 payments - $414 to $1,243 per month - yikes! why did I go to graduate school again?
Extended Fixed - 300 payments - $430 per month - a mortgage on my future
Extended Graduated - 300 payments - $346 to $622 - like a mortgage but worse
Pay As You Earn - 240 payments* - $144 to $485 - winner winner chicken dinner
Income Based Repayment IBR - 300 months** - $215 to $720 - best of the worst
Income Contingent Repayment - 142 months - $556 to $735 more than my mortgage

* estimated loan forgiveness $77,629
** estimated loan forgiveness $3,766

In an earlier post, I wrote about the benefits of IBR and vaguely addressed public service loan forgiveness, a program where -. To maximize loan forgiveness, I am choosing to payback as little as possible per month ($144 v. & $720) for the next ten years which is why PAYE is best for me and my family. As the months and years go on, I will reevaluate repayment options.

Let's get to the good stuff.

If you, your partner, your friends, family, basically anybody you care about since October 1, 2007 has student loans and works (or has worked) for a:

Government Organization (including a Federal, State, local or Tribal organization, agency or entity; a public child or family service agency; or a Tribal college or university)

Non-profit, tax-exempt organization (under Section 501(c)(3) of the Internal Revenue Code)

or Private, non-profit organization (that is not a labor union or a partisan political organization) that provides at least one of the following public services

• Emergency Management
• Military service, 
• Public safety, 
• Law enforcement, 
• Public interest law services, 
• Early childhood education (including licensed or regulated child care, Head Start, and State-funded pre-kindergarten), 
• Public service for individuals with disabilities and the elderly, 
• Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care 
• Practitioner occupations and health support occupations, as such terms are defined by the Bureau of Labor Statistics), 
• Public education, 
• Public library services, 
• School library services, or 
• Other school-based services

KEEP READING!!!

You are eligible for credit towards Public Service Loan Forgiveness!

Here's what you need to do:

Fill out the first page of the Employment Certification for Public Service Loan Forgiveness (PSLF) and send it to each organization meeting the criteria you have worked for since October 1, 2007 to fill out the second page verifying your employment and have them return it to you.

Follow the remaining instructions and send it in. Hopefully you will benefit from this program like I will!

I filled mine out today and sent it to my employer to fill and return. My wife will need to fill out an IBR application to lower her payment in early June to lower her payment as my loan. To learn how to streamline IBR through @SallieMae, read my earlier post.

Have an IBR, ICR, PAYE, PSLF story or question? Please comment and let's figure out how to save money and live our life in loan repayment! Remember to share the post and spread the word!

The Power of The Internet - Sallie Mae's Mea Culpa Phone Call - How to expedite your IBR application

On March 10th, I wrote a post about how Sallie Mae failed through an IBR application by increasing our monthly payment $53 without telling us and what it took for us to correct it. I shared my post on Google+, Facebook, and even tweeted +Sallie Mae with the hashtags #IBR and #Fail. In less than 48 hours, we received a call from Jennifer Margary Operator ID# E58941 from Sallie Mae to apologize, right the situation, and explain what happened.

Jennifer was an absolute delight, and an optimal customer service / account representative who was courteous, prompt, and pleasant to talk to. When she called, she explained the call could/would be recorded for customer service and training purposes. It turns out that she was calling because Sallie Mae found my post ( #poweroftheinternet ) and wanted to follow up with the account.

So here's what happened:

Jennifer explained that the payment processing department is overwhelmed with IBR applications which might be why it took more than two months to process. Considering all submission was done electronically, and having had 3 years working in a HR transaction processing service center, I have a hard time believing it would take 2 months. Jennifer then explained that the IBR application should NEVER HAVE BEEN PROCESSED because it resulted in a higher monthly payment and that it was totally Sallie Mae's fault.

Here is the interesting thing and for what all of you who have or will have student loans as well as your spouse need to know: you must wait until both of your loans are in repayment to get the benefit of an IBR plan. Which in our case will be in June.

Now, Jennifer could have ended the conversation there and moved on with her day, but here is what really made her stand out as my best experience with Sallie Mae to date; she took the time to look up our IBR application and calculated that my wife's loan payment would be approximately $70-75 per month when my loans go into repayment. Then, even though my loans are not serviced by Sallie Mae, she calculated that my loan payments would be about $190 per month through IBR based on the information she had! This information was helpful, but considering the two month lag between IBR application and processing, I wanted to know how to expedite the process. Jennifer came through like a champ and delivered. When my loans go into repayment, she told me us to

1) go the the nslds.ed.gov website to give Sallie Mae loan holder access to my account information
2) Submit another IBR application
3) To call the secret Sallie Mae number 1-888-545-4199 and that one of the six operators could help get the applications routed priority to the processing department and that it should be processed within two business days.*

* If the application is processed at least 2 days before your next payment is due, the lower IBR payment will be what is due for that month.

Jennifer also confirmed that our account was being erroneously charged an extra 0.25% and cancelled the additional accrued interest and restored our interest rate to 5.125%

I gave Jennifer other feedback about the lack of transparency on Sallie Mae's website regarding IBR and the lack of calculators; as well as making sure that this error could be a training opportunity. She respectfully noted down my suggestions and we ended the call.

Most customer service experiences we hear about are negative, especially when dealing with creditors. I hope when +Sallie Mae finds this post, Jennifer is recognized for how excellent she was.

Student Loan IBR Fail - Sallie Mae Edition

Here's how signing up for and cancelling an IBR application through Sallie Mae cost $5, but saves $2.84 per month:

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.

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!

Tax Time: Who's Earning Interest -- Uncle Sam or You?

It's  the worst part of the year if you are disorganized and another day in paradise for the anal retentive -- tax time. Do you file your own taxes or over pay a data entry clerk to do it for you? Do you like getting a big return or having more money in your paychecks throughout the year?

These are questions of preference, but if you like a big return Uncle Sam is earning interest on your money instead of you.

Here's the logic: let's say your allowances on your W4 are 1 for federal and 1 for state. You will notice you pay alot in taxes per check. If you increase your allowances, you will keep more of your check, but owe more on your taxes when you file.

 At the end of the day, it's a question of preference, would you rather get a check from the government after you file and the government earns money on the interest, or write one when you file and you keep the interest earned from that money.

For us, our tax situation doesn't change much year to year so we know what we will know; so we choose to keep as much of it as we can and get a small return or write a small check.

How do you like to file - expect a big return or keep most of it throughout the year and maybe write a small check?