Student loan payments: get advice and actual numbers here Forum

[Danger Zone]

As someone who took out loans in September 2007, the cutoff is specifically October 2007

[A. Nony Mouse]

REPAYE's still better than IBR, so not exactly garbage.

[Br3v]

If you are under a standard repayment plan, say for 5 years, and then switch to PAYE, do you get credit for those 5 years (and thus only have to do 15 years of PAYE) or do you still have to do 20 years of PAYE (thus 25 years of payment)?

[bk1]

If you are under a standard repayment plan, say for 5 years, and then switch to PAYE, do you get credit for those 5 years (and thus only have to do 15 years of PAYE) or do you still have to do 20 years of PAYE (thus 25 years of payment)?

Based on my cursory reading of the regs, I believe that standard repayments count.

For REPAYE:

a qualifying monthly payment is -

(A) A monthly payment under the REPAYE plan, including a monthly payment amount of $0.00, as provided under paragraph (c)(2)(ii)(C) of this section;

(B) A monthly payment under the Pay As You Earn repayment plan described in paragraph (a) of this section, the income-contingent repayment plan described in paragraph (b) of this section, or the income-based repayment plan described in § 685.221, including a monthly payment amount of $0.00;

(C) A monthly payment made under -

(1) The Direct Loan standard repayment plan described in § 685.208(b);

(2) The alternative repayment plan described in paragraphs (c)(4)(v) of this section prior to changing to a repayment plan described in paragraph (a), (b), or (c) of this section or § 685.221;

(3) Any other Direct Loan repayment plan, if the amount of the payment was not less than the amount required under the Direct Loan standard repayment plan described in § 685.208(b); or

and

For a borrower who makes payments under the REPAYE plan, the beginning date for the 20-year or 25-year repayment period is -

(A) If the borrower made payments under the Pay As You Earn repayment plan described in paragraph (a) of this section, the income-contingent repayment plan described in paragraph (b) of this section, or the income-based repayment plan described in § 685.221, the earliest date the borrower made a payment on the loan under one of those plans; or

(B) If the borrower did not make payments under the Pay As You Earn repayment plan described in paragraph (a) of this section, the income-contingent repayment plan described in paragraph (b) of this section, or the income-based repayment plan described in § 685.221 -

(1) For a borrower who has an eligible Direct Consolidation Loan, the date the borrower made a qualifying monthly payment on the consolidation loan, before the date the borrower began repayment under the REPAYE plan;

(2) For a borrower who has one or more other eligible Direct Loans, the date the borrower made a qualifying monthly payment on that loan, before the date the borrower began repayment under the REPAYE plan;

(3) For a borrower who did not make a qualifying monthly payment on the loan under paragraph (c)(5)(v)(B)(1) or (2) of this section, the date the borrower made a payment on the loan under the REPAYE plan;

(4) If the borrower consolidates his or her eligible loans, the date the borrower made a qualifying monthly payment on the Direct Consolidation Loan; or

(5) If the borrower did not make a qualifying monthly payment on the loan under paragraph (c)(5)(v)(A) or (B) of this section, the date the borrower made a payment on the loan under the REPAYE plan.

For PAYE:

For a borrower who qualifies for the Pay As You Earn repayment plan, the beginning date for the 20-year period is -

(A) If the borrower made payments under the income-contingent repayment plan described in paragraph (b) of this section, the Revised Pay As You Earn repayment plan described in paragraph (c) of this section, or the income-based repayment plan described in § 685.221, the earliest date the borrower made a payment on the loan under one of those plans at any time after October 1, 2007; or

(B) If the borrower did not make payments under the income-contingent repayment plan described in paragraph (b) of this section, the Revised Pay As You Earn repayment plan described in paragraph (c) of this section, or the income-based repayment plan described in § 685.221 -

(1) For a borrower who has an eligible Direct Consolidation Loan, the date the borrower made a payment or received an economic hardship deferment on that loan, before the date the borrower qualified for the Pay As You Earn repayment plan. The beginning date is the date the borrower made the payment or received the deferment after October 1, 2007;

(2) For a borrower who has one or more other eligible Direct Loans, the date the borrower made a payment or received an economic hardship deferment on that loan. The beginning date is the date the borrower made that payment or received the deferment on that loan after October 1, 2007;

(3) For a borrower who did not make a payment or receive an economic hardship deferment on the loan under paragraph (a)(6)(iii)(B)(1) or (a)(6)(iii)(B)(2) of this section, the date the borrower made a payment on the loan under the Pay As You Earn repayment plan;

(4) If the borrower consolidates his or her eligible loans, the date the borrower made a payment on the Direct Consolidation Loan that met the requirements of paragraph (a)(6)(i) of this section; or

(5) If the borrower did not make a payment or receive an economic hardship deferment on the loan under paragraph (a)(6)(iii)(A) or (a)(6)(iii)(B) of this section, the date the borrower made a payment on the loan under the Pay As You Earn repayment plan.

see https://www.law.cornell.edu/cfr/text/34/685.209

But if I understand it right, you get fucked if you make both PAYE and REPAYE payments after making standard payments. This is because if you make a PAYE payment, that payment's date becomes the new start date for REPAYE regardless of whether you made prior standard payments (see 34 CFR 685.209(c)(5)(v)(A)); and if you make a REPAYE payment, that payment's date becomes the new start date for PAYE regardless of whether you made prior standard payments (see 34 CFR 685.209(a)(6)(iii)(A)). Note that consolidation also restarts the clock (see 34 CFR 685.209(a)(6)(iii)(B)(1), (c)(5)(v)(B)(1)).

Someone feel free to correct me if I got this wrong.

That said, I don't understand why you wouldn't just do PAYE/REPAYE and then overpay (to what the standard repayment would be) if you wanted to make standard sized payments.

[Pokemon]

If you are under a standard repayment plan, say for 5 years, and then switch to PAYE, do you get credit for those 5 years (and thus only have to do 15 years of PAYE) or do you still have to do 20 years of PAYE (thus 25 years of payment)?

Based on my cursory reading of the regs, I believe that standard repayments count.

For REPAYE:

a qualifying monthly payment is -

(A) A monthly payment under the REPAYE plan, including a monthly payment amount of $0.00, as provided under paragraph (c)(2)(ii)(C) of this section;

(B) A monthly payment under the Pay As You Earn repayment plan described in paragraph (a) of this section, the income-contingent repayment plan described in paragraph (b) of this section, or the income-based repayment plan described in § 685.221, including a monthly payment amount of $0.00;

(C) A monthly payment made under -

(1) The Direct Loan standard repayment plan described in § 685.208(b);

(2) The alternative repayment plan described in paragraphs (c)(4)(v) of this section prior to changing to a repayment plan described in paragraph (a), (b), or (c) of this section or § 685.221;

(3) Any other Direct Loan repayment plan, if the amount of the payment was not less than the amount required under the Direct Loan standard repayment plan described in § 685.208(b); or

and

For a borrower who makes payments under the REPAYE plan, the beginning date for the 20-year or 25-year repayment period is -

(A) If the borrower made payments under the Pay As You Earn repayment plan described in paragraph (a) of this section, the income-contingent repayment plan described in paragraph (b) of this section, or the income-based repayment plan described in § 685.221, the earliest date the borrower made a payment on the loan under one of those plans; or

(B) If the borrower did not make payments under the Pay As You Earn repayment plan described in paragraph (a) of this section, the income-contingent repayment plan described in paragraph (b) of this section, or the income-based repayment plan described in § 685.221 -

(1) For a borrower who has an eligible Direct Consolidation Loan, the date the borrower made a qualifying monthly payment on the consolidation loan, before the date the borrower began repayment under the REPAYE plan;

(2) For a borrower who has one or more other eligible Direct Loans, the date the borrower made a qualifying monthly payment on that loan, before the date the borrower began repayment under the REPAYE plan;

(3) For a borrower who did not make a qualifying monthly payment on the loan under paragraph (c)(5)(v)(B)(1) or (2) of this section, the date the borrower made a payment on the loan under the REPAYE plan;

(4) If the borrower consolidates his or her eligible loans, the date the borrower made a qualifying monthly payment on the Direct Consolidation Loan; or

(5) If the borrower did not make a qualifying monthly payment on the loan under paragraph (c)(5)(v)(A) or (B) of this section, the date the borrower made a payment on the loan under the REPAYE plan.

For PAYE:

For a borrower who qualifies for the Pay As You Earn repayment plan, the beginning date for the 20-year period is -

(A) If the borrower made payments under the income-contingent repayment plan described in paragraph (b) of this section, the Revised Pay As You Earn repayment plan described in paragraph (c) of this section, or the income-based repayment plan described in § 685.221, the earliest date the borrower made a payment on the loan under one of those plans at any time after October 1, 2007; or

(B) If the borrower did not make payments under the income-contingent repayment plan described in paragraph (b) of this section, the Revised Pay As You Earn repayment plan described in paragraph (c) of this section, or the income-based repayment plan described in § 685.221 -

(1) For a borrower who has an eligible Direct Consolidation Loan, the date the borrower made a payment or received an economic hardship deferment on that loan, before the date the borrower qualified for the Pay As You Earn repayment plan. The beginning date is the date the borrower made the payment or received the deferment after October 1, 2007;

(2) For a borrower who has one or more other eligible Direct Loans, the date the borrower made a payment or received an economic hardship deferment on that loan. The beginning date is the date the borrower made that payment or received the deferment on that loan after October 1, 2007;

(3) For a borrower who did not make a payment or receive an economic hardship deferment on the loan under paragraph (a)(6)(iii)(B)(1) or (a)(6)(iii)(B)(2) of this section, the date the borrower made a payment on the loan under the Pay As You Earn repayment plan;

(4) If the borrower consolidates his or her eligible loans, the date the borrower made a payment on the Direct Consolidation Loan that met the requirements of paragraph (a)(6)(i) of this section; or

(5) If the borrower did not make a payment or receive an economic hardship deferment on the loan under paragraph (a)(6)(iii)(A) or (a)(6)(iii)(B) of this section, the date the borrower made a payment on the loan under the Pay As You Earn repayment plan.

see https://www.law.cornell.edu/cfr/text/34/685.209

But if I understand it right, you get fucked if you make both PAYE and REPAYE payments after making standard payments. This is because if you make a PAYE payment, that payment's date becomes the new start date for REPAYE regardless of whether you made prior standard payments (see 34 CFR 685.209(c)(5)(v)(A)); and if you make a REPAYE payment, that payment's date becomes the new start date for PAYE regardless of whether you made prior standard payments (see 34 CFR 685.209(a)(6)(iii)(A)). Note that consolidation also restarts the clock (see 34 CFR 685.209(a)(6)(iii)(B)(1), (c)(5)(v)(B)(1)).

Someone feel free to correct me if I got this wrong.

That said, I don't understand why you wouldn't just do PAYE/REPAYE and then overpay (to what the standard repayment would be) if you wanted to make standard sized payments.

Bk, you are correct. This is what happened to me when I switched from ibr to repaye. Also not sure why people would not overpay (that is what I was doing under ibr)

Also, imy

[Anonymous User]

With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

[Br3v]

Thanks for the response guys.

Also, can someone explain what the heck this means below? I see it often but don't really get it.

With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Eta: this has helpful examples
https://lawyerist.com/83690/defusing-st ... -tax-bomb/

[Tiago Splitter]

With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

[Danger Zone]

With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

This is contrary to the link brev posted above, which says that if the cancellation of debt income renders you insolvent, you can exclude it entirely.

[Winter is Coming]

With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

This is contrary to the link brev posted above, which says that if the cancellation of debt income renders you insolvent, you can exclude it entirely.

I think it's really dangerous to use current, vague Treasury Department guidance to try to predict exactly what will happen in almost 20 years. All of this can be changed by statute or even Treasury regulations. I would be comfortable saying that the insolvency calculation will likely always be there, but the specifics likely won't be set in stone for some time.

[Tiago Splitter]

With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

This is contrary to the link brev posted above, which says that if the cancellation of debt income renders you insolvent, you can exclude it entirely.

Seems like it's in line with Bob in example two.

[Tiago Splitter]

With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

This is contrary to the link brev posted above, which says that if the cancellation of debt income renders you insolvent, you can exclude it entirely.

I think it's really dangerous to use current, vague Treasury Department guidance to try to predict exactly what will happen in almost 20 years. All of this can be changed by statute or even Treasury regulations. I would be comfortable saying that the insolvency calculation will likely always be there, but the specifics likely won't be set in stone for some time.

It's hard to predict but this insolvency stuff comes from the rules about cancelled debt which have been around for a long time.

[Winter is Coming]

With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

This is contrary to the link brev posted above, which says that if the cancellation of debt income renders you insolvent, you can exclude it entirely.

I think it's really dangerous to use current, vague Treasury Department guidance to try to predict exactly what will happen in almost 20 years. All of this can be changed by statute or even Treasury regulations. I would be comfortable saying that the insolvency calculation will likely always be there, but the specifics likely won't be set in stone for some time.

It's hard to predict but this insolvency stuff comes from the rules about cancelled debt which have been around for a long time.

That's a good point.

[Danger Zone]

With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

This is contrary to the link brev posted above, which says that if the cancellation of debt income renders you insolvent, you can exclude it entirely.

Seems like it's in line with Bob in example two.

You're right, I misread the examples

[Tiago Splitter]

With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

This is contrary to the link brev posted above, which says that if the cancellation of debt income renders you insolvent, you can exclude it entirely.

Seems like it's in line with Bob in example two.

You're right, I misread the examples

I feel like every time we get into these discussions I screw up the calculations so I'm honestly pretty shocked to have been right.

[Winter is Coming]

Quick question, and I know this has probably been asked already so sorry in advance:

I'm starting at a big firm this fall, planning on signing up for PAYE but probably going to pay the standard payment on top of that until I can figure out how long I can survive in Biglaw and then maybe target my debt more aggressively. I'm going to use my 2016 (summer associate tax return) for the PAYE calculations and my repayment is slated to start in November after my grace period.

When can I actually send in the PAYE paper work? Will it be processed in time for my first payment due?

[Nebby]

Quick question, and I know this has probably been asked already so sorry in advance:

I'm starting at a big firm this fall, planning on signing up for PAYE but probably going to pay the standard payment on top of that until I can figure out how long I can survive in Biglaw and then maybe target my debt more aggressively. I'm going to use my 2016 (summer associate tax return) for the PAYE calculations and my repayment is slated to start in November after my grace period.

When can I actually send in the PAYE paper work? Will it be processed in time for my first payment due?

You can send it in 90 days before repayment begins (so like late August). Yes it will be processed in time.

[Winter is Coming]

Quick question, and I know this has probably been asked already so sorry in advance:

I'm starting at a big firm this fall, planning on signing up for PAYE but probably going to pay the standard payment on top of that until I can figure out how long I can survive in Biglaw and then maybe target my debt more aggressively. I'm going to use my 2016 (summer associate tax return) for the PAYE calculations and my repayment is slated to start in November after my grace period.

When can I actually send in the PAYE paper work? Will it be processed in time for my first payment due?

You can send it in 90 days before repayment begins (so like late August). Yes it will be processed in time.

Awesome, thanks.

[ballouttacontrol]

Pretty basic question, but I'm starting to look into my repayment options following graduation in May. What is the difference/pros and cons of PAYE and REPAYE?

A little background:
Loan Balance: $250k
Income: $63k
I am PSLF eligible
Single right now but will be getting married in the next few years

It looks like I'm eligible for PAYE and REPAYE and when I do a repayment estimator on on the FSA website, the payments are calculated to be the same. Is there any significant advantage to choosing one plan over the other?

REPAYE is only for people with federal student loans before 2008. If that doesn't apply to you, then you'll do PAYE. They are calculated the same because they are the same in that regard.

just wanted to point out, this reply is completely wrong in every way.

everyone is eligible for REPAYE, repaye has a longer repayment period to loan forgiveness, on repaye you pay a lower $ amt per month, and under repaye the govt will pay 50% of your excess interest every month that it exceeds your monthly payment

Uh both are calculated at 10 percent, and I said REPAYE and PAYE are both "calculated the same in that regard." Nice try

Also, on this subject, REPAYE is garbage for most people and that's why I said it's only for those with loans before 2008 (actually 2007 after checking myself).

gov't paying 50% of unpaid interest under REPAYE is pretty huge for your first 1.5 yrs in biglaw when u can certify using super low annual income. It basically cuts your interest rate in half.

don't see how that's shit. it's a free $10k or so in your first year, if you're someone with the 250-300k ish sticker debt.

If u can't afford to refinance after ur first year and a half for whatever reason, u can just switch to PAYE to get on the shorter forgiveness plan



to the other post above, I applied WAY in advance, but dont remember quite exactly when. my app was not approved for my 1st scheduled loan paymnt. was in time for 2nd payment. that sucked but not that big of a deal. I think u can extend up to another 6 months w forbearance or grace period or something if u want as well.

[Anonymous User]

https://www.nytimes.com/2017/03/30/busi ... p=cur&_r=0

Can anyone else confirm. This news is only referring to people working in the public sector for non-profits which are not 501(c)(3)s?

[Nebby]

https://www.nytimes.com/2017/03/30/busi ... p=cur&_r=0

Can anyone else confirm. This news is only referring to people working in the public sector for non-profits which are not 501(c)(3)s?

I believe so. We discussed this previously, and the plaintiffs in that suit all worked in non 501c3 nonprofits.

[Anonymous User]

https://www.nytimes.com/2017/03/30/busi ... p=cur&_r=0

Can anyone else confirm. This news is only referring to people working in the public sector for non-profits which are not 501(c)(3)s?

I believe so. We discussed this previously, and the plaintiffs in that suit all worked in non 501c3 nonprofits.

Thanks! I have since found that thread and have read the complaint, because, you know, obsessive when we're dealing with $250k+

[Nebby]

https://www.nytimes.com/2017/03/30/busi ... p=cur&_r=0

Can anyone else confirm. This news is only referring to people working in the public sector for non-profits which are not 501(c)(3)s?

I believe so. We discussed this previously, and the plaintiffs in that suit all worked in non 501c3 nonprofits.

Thanks! I have since found that thread and have read the complaint, because, you know, obsessive when we're dealing with $250k+

Trust me, as a PI attorney on the PSLF-track, I understand your concerns.

[ballouttacontrol]

Weren't the complainants working for the ABA or something?

[A. Nony Mouse]

Weren't the complainants working for the ABA or something?

2 worked for the ABA, one for a professional lawyers association (American Immigration Lawyers Association), one worked for veterans' groups.