Time to Reapply for Income Based Loan Repayment

The standard repayment plan for federal student loans is based on equal payments over a ten year span. If you have a high loan amount and cannot afford the standard loan payment, income based repayment can help make your student loan payments more affordable.

Although it might give you more income on a monthly basis, in the long run your payments are stretched out so you’ll be making payments for longer; which means you’ll be paying more for your loans.

If you work for a qualifying employer that would allow you to have student loan forgiveness under the public service loan forgiveness plan, you’ll want to stretch out your payments. In order to do this you would want to apply for income based repayment. After ten years of working for a qualifying employer you can apply to have your loans forgiven.

One caveat to the income based repayment plan is that you need to re-apply annually and your payments will be adjusted based on your income from the previous year. Although this sounds like an easy way to have you loans paid, the process is difficult and not a guarantee. There have been people who have counted on this and did not end up qualifying for forgiveness.

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Out of PA school I accepted a job with a non-profit hospital. My plan was to work for a non-profit (a qualified employer for student loan forgiveness) so that I could have my loans forgiven. I wanted to lower my monthly payments to the lowest amount possible, so after ten years I would have a balance that would be forgiven.

Things in life do not always go as planned and we ended up deciding on moving for family reasons, and I decided to take a job that was for a private practice. The new employer was not a qualifying employer for public service forgiveness. I am now working on paying off my loans the old fashion way; however I still wanted to do an income based plan so that I could pay off my higher interest loans first. On the standard plan the payments go towards older loans first.

This is the time of year that I have to reapply for income based repayment. It used to be a burdensome process, but they have made it much easier. To apply for an income based repayment plan log in to your studentloans.gov account, from there you can follow the menus to apply.

There are pros and cons to every payment plan and there is no one-size fits all plan. It’s best to do your research and make the best decision for what will work for you and your goals. Circumstances in life often change and it is important to re-evaluate your plan on a consistent basis to make sure you reach your goals.

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