FedLoan Is Kicking People Off IBR | Student Loan Planner


There’s a little bit of a problem in the
student loan world right now, especially for people going for PSLF. FedLoan is
telling people that you have to switch to Revised Pay As You Earn if you want to
remain eligible for Public Service Loan Forgiveness if you no longer have what’s
called a “partial financial hardship”. What that means, is that the required payment
on the standard ten year plan is more than what you’d have to pay if you paid based
off of your income on an income-driven repayment option.
So, for IBR, for example, you’d have to pay fifteen percent of your discretionary
income. If that number is lower than your standard ten year plan amount, then
you have a partial financial hardship, regardless of how much income you have
so it’s really more based off of your payment relative to what the standard
ten year plan would be. Now, here’s the problem. Most people tend to consolidate
their student loan debt. So that does away with the standard ten-year plan
that’s no longer an option that you can access. You now have something called the
standard repayment plan, which sounds like the same thing but it’s not, it’s
actually something that you can pay based up to thirty years basically,
based off of how much debt you actually have. So you no longer can access the
standard ten year repayment plan on a consolidation loan. So the reason that’s
important is if you no longer have a partial financial hardship where your
standard ten year payment that you would be paying, is gonna be more than
what you’re paying based on your income. So hypothetically let’s say you’re a
physician. You’re making three hundred thousand a year. You have a two hundred
thousand dollar debt. This just happened. You’ve been on IBR or
Pay-As-You-Earn and you’ve been submitting this stuff to FedLoan and
suddenly they say you no longer have a partial financial hardship. Then you’re
gonna hit a situation where, if you call them, they’re probably
gonna tell you switch to Revised Pay As You Earn which could actually cost you
probably $5,000 or more per year. So what you really should do is kind of ignore
whatever they send to you saying you’re no longer eligible to pay based on your
income. They’ll probably send you some sort of follow-up piece of mail saying
that now that you’re no longer eligible to pay based on your income. Your payment
is going to be capped at whatever the standard of the payment amount would
be. So that’s gonna be the standard ten year amount. So, what you need to know
is that if you’re going for Public Service Loan Forgiveness, reacting the
wrong way to what fedloan saying could literally cost you thousands of dollars
every year, and that’s one of the reasons that we exist is to prevent that from
happening. So reach out to [email protected] if you’d like to get a custom look at your repayment strategy to make
sure that you’re saving every dollar that you possibly can.

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