Student Loan Repayment Plan Re-Certification and Other Options

It’s time for me to re-certify my income driven repayment plan for 2018. An income driven repayment plan is a way to lower the monthly payments on your federal student loans. If you’re having trouble making the payments on the standard plan you can continue to make payments at a lower amount. In order to qualify for an income driven plan you must have federal student loans and you must submit paperwork annually to MyFedLoan.org showing your current income.

The disadvantage of an income driven repayment plan is that it will stretch out the time you’ll be paying on your loans, which means more payments towards interest. When I first started working it was for a non-profit hospital and would have qualified for public service loan forgiveness, so I wanted to pay the least amount towards my loans as possible with the hope of having my loans forgiven after 10 years of working.

If you are working for a non-profit organization then student loan forgiveness might be an option to get rid of some of your student loan debt. You should make sure your employer qualifies, so that you’re not planning on this for ten years and then end up not qualifying.

In order to qualify for the forgiveness you must work for a qualifying employer for 120 payments (10 years). You can change jobs, but your next employer must be another qualifying employer.

I worked the first few years for a non-profit hospital and then changed jobs to a private practice. Unfortunately for me, working for a for-profit private practice does not qualify, but it was the right move for my family situation. Without qualifying for forgiveness I’m on the hook for the paying them, and had to re-evaluate my plans for paying off my loans.

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I’d still like to minimize the amount of interest that I end up paying; so I’m trying to pay them off sooner, rather than later. The reason that I’ve decided to continue with the income driven plan is that I can lower my monthly payments. I’ll end up making large payments to pay off the principal sooner, but I can pay off the higher interest loans first. If I remained on the standard repayment, I don’t have control over which loans my payments go towards.

Not all federal loans are the same. Some might be subsidized by the government and others are not, also each one has different interest rates. If you do not know what types of federal loans you have, you can look it up at MyFedLoan.org.

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If you don’t qualify for student loan forgiveness and want to lower your payments without stretching out the amount of time you’re making payments, another option might be loan consolidation or refinance.

By refinancing your loans through a private lender like Credible you can lower your interest rates. Before you decide to refinance make sure that this it is the best option for you, as you will lose out on other benefits that government loans offer, such as income-driven repayment plans, forbearance and loan forgiveness.

Are you on an income-driven repayment plan? Have you refinanced your student loans? Please comment below the original post, sign up to receive future posts by email and share with your friends!