Find solution
Another tax question. Am I still considered a full-time student?

Student loans: feeling the crunch. Suggestions?

  • I owe $40k in student loans. Not sure of the best way to proceed, so am reaching out for advice. More under the fold. I have about $40k of (unconsolidated) unsubsidized student loans staring me in the face. The due date for my first payment is September 17th. I think all this is federal; previously through Sallie Mae, but now with Navient. There are two categories: Department of Education; and Federal (both has separate payment total amounts). This is a bit of a complicated situation, so I'll do my best to explain clearly what's happening. I graduated from college in May 2010, had an one year deferment of my student loans after graduation, then in fall 2011, enrolled as a graduate student, so got an automatic deferment. The program didn't work out for me, so I resigned at the end of the semester. I didn't have a job, so I deferred my loans for about 6 months (showing proof of searching for a job), then again in later 2012 (as I only had a part-time job). In 2013, I deferred my loans again due to financial hardship, but had a job, still. (To be honest, I'm not sure why or how I deferred my loans in 2013, even though I had a full-time job. That part is blurry in my memory.) In December 2013, I left my job, went back on SSI, and deferred due to a financial hardship (showing proof of me getting SSI), and the deferment was for a full year. I did the same thing in September 2014, while still on SSI. The deferment period beginning September 2014 lasted a year (until this September). The original start date of all this (loans) began in September 2006. This year, however, I got a job in March, a stepping-stone kind of job, that is, then in May, I found a better job that pays about $39k a year (gross income). I was still in the deferment period while finding and beginning both jobs, but now I'm nearing the end of the deferment period. I'm nervous because even with $39k a year for my current job, after tax deductions/health insurance, TSP, etc., my take-home pay is almost $2000 every month. My rent is ~$650 (including utilities) a month. I'm staring at a $469 expected payment every month for the student loans currently (grand total). I need money for food, other bills, etc. As this is my first time actually facing the prospect of paying back student loans in 5+ years, I'm facing several options. I would like help wading through those options, because quite frankly, I'm overwhelmed. Option 1: As I'm deaf, I'm considered permanently disabled - I could apply for the permanent disability discharge to get my student loans completely discharged. Caveats: I'm employed full time, and I read somewhere that the disability discharge period has a monitoring period of 3 years where you would have to keep under a certain income limit. That would mean I'd have to quit my current job and remain jobless for the next 3 years or so. I do have SSDI, which is around $900 a month. It's a bit dreadful thinking about quitting my job and sitting around the next 3 years being jobless, but if that means $40k being wiped away, the more the better. Not the best option, but something that I would do in the worst case scenario. I also am not sure if I can go "beyond the ceiling" in my job in terms of a pay increase. Questions: I was jobless for the full year of 2011, about half of 2012, 2014 in full, then 2 months in 2015. Would those times be counted against the 3-year monitoring period retroactively? Is that even a possibility? Also, could I be mistaken about the 3-year monitoring period? Would just having a note from the doctor/a letter from SSA stating I'm getting benefits from them and that my disability review is within 5-7 years be enough? A bit unclear with this policy. Option 2: I'm on SSDI currently (on the 9-month trial period), so I could technically just submit another hardship request, furnishing proof of my SSDI (I can easily provide a letter from ssa.gov proving that I currently get SSDI benefits), throwing this down the road another year. Caveat: Wouldn't this be "lying" to the loan agency? Do they have a way of knowing I'm working? Question: I'm on a 6-month probation period at work until November, so that means my job isn't even guaranteed until November passes. Would this help my case? Option 3: I could try for the Income Based Payment - have my student loans paid off that way. Caveats: as my student loans are older than 2014, I read online that it'd take 25 years for the loans to be completely forgiven, as well as a tax penalty. Questions: as I work at an university, I read somewhere that I might be eligible for a 10-year forgiveness program (people who work at an educational or government institution). How would I go about finding that out? Also, if I'm hit with the tax penalty, approximately how much would I need to pay (percentage-wise)? Other questions I have: a) I believe my parents have a college fund saved up for me, about ~$10k or so (need to find out the amount and/or if this fund even still is there). Despite how awkward it may be, I could ask them if they could use that money to pay off the loan amount monthly, using whether payment option, then go from there. Would that be something you would recommend? b) Should I consolidate my loans? All of them are at 6.8%, not sure of the benefits or the best way. Yes, I tried googling this, but got some conflicting answers. c) Is there any other way you know of to discharge student loans? I know they can't be discharged in bankruptcy, but there must be a way. I think I've got all my questions covered. Sorry if it's so much! I actually kept throwing off this question because just the thought of typing all this overwhelmed me, but time is tight, so I need to get going. The whole process is so overwhelming for me, and I really dread the prospect of having to pay loans for the next 20-25 years. To add insult to injury, all those loans are actually for the dorms/food, which wasn't even that good - my main regret is that I didn't live off-campus during my undergraduate years. (My vocational rehabilitation counselor paid off my tuition and books.) I would really, really, really appreciate your insight and help on this. Of course, if anyone has questions, please feel free to ask. If anyone has other ideas that I didn't think of, or any other workarounds, that would also be great. Many thanks for your time, and hope I've explained everything clearly enough!

  • Answer:

    I'm in the public service loan forgiveness program (120 qualified payments, the remaining balance is forgiven and you don't have to pay income tax on it). I consolidated my loans into Direct Loans to take advantage of PSLF. The government has a website with all of the information that you need https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service. Getting my loans consolidated and 'enrolling' in the program was not hard or time consuming. If your university is a 501(c)(3) non-profit, your work qualifies. Look at the website. It's clear and easy to understand. If you have questions on this, please PM me. The only advice I have is don't assume anything! Actually find out if something is true or not by looking at the website or calling your loan service. I have friends with a lot of debt who didn't take advantage of this because they assumed they didn't qualify when they did. So now they're making payments they can't afford when they didn't have to. As an aside, you'll be fine. I have 2x the amount of loans you do and I make a lot less, and I'm fine.

dubious_dude at Ask.Metafilter.Com Visit the source

Was this solution helpful to you?

Other answers

My answer to b) would be "Why haven't you consolidated already?" I consolidated my loans ($40K) ten years ago and went on the income-based 25-year repayment plan, which dropped them from $500/month to about $250/month. I've since paid them off (got married in 2012 and my husband helped me throw money at them), but that eased the burden considerably, and I managed to pay about 2/3 of the total in that 7 years myself.

telophase

I'm nervous because even with $39k a year for my current job, after tax deductions/health insurance, TSP, etc., my take-home pay is almost $2000 every month. My rent is ~$650 (including utilities) a month. I'm staring at a $469 expected payment every month for the student loans currently (grand total). I need money for food, other bills, etc. I have a similar income, similar rent payment, and similar wad of bills to pay (just in credit/loan/student loan debt), and I do just fine. It's not ideal, but you can afford food and phone, internet, probably medication if you have insurance, etc. So, for now, don't be nervous. My boyfriend and I are on income-based repayment because frankly there's no freakin' way we're going to be paying these off any time soon at our income level. Can you get a better paying job? Do you see that in your future? We're both on track in careers where we will eventually have much more income, and will try to nuke our student loans from space then. Until then, on the income-based repayment plan, our monthly payments are very very manageable and honestly if I'm making this payment for 25 years, I don't really mind. As for the 10-year forgiveness plan, you can look at the website. I don't see information about universities, but maybe you can ask someone at work about this? Or get in touch with someone through the website?

easter queen

Do they have a way of knowing I'm working? Yep, they will know, because your employer is reporting your wages to the government. Unless you get a job where you're paid under the table, they will know.

desjardins

Option 1 is clearly a no-go. Disability forms for discharge of student loans are very clear that, for student loan purposes, disability means total and permanent inability to work at any job. You are working now, and by definition do not meet that standard. In addition, if your doctor did somehow fill out a form saying you were totally and completely disabled by your deafness, the physician would get another form later on asking them to confirm, really and truly, on penalty of falsifying medical documents, that you are unable to work at any job. I think you would have a tough time getting a physician to do that. I think Option 2 is, as you mention, just kicking it down the road a bit. Spend a few hours now figuring out your options and what you would really need to pay under an income-based repayment plan and you can decide if that's a good idea once you really have the numbers. The likelihood that your employer is a qualifying nonprofit is high. Most universities are nonprofit entities even if they are private and make more than they spend. They just have a charitable purpose (education) and don't distribute profits to shareholders but put them back into the entity. You can make a first quick check at GuideStar.org. The financial aid office at your current workplace can probably confirm that it's a 501 3(c). The HR department can probably also confirm it.

The Elusive Architeuthis

Clarifying the first paragraph above: * Qualifying for an income driven repayment plan is purely based on income. * Qualifying for PSLF is based on working for government or a non-profit.

cnc

Just do not lie to the government about this kind of thing. You have enough money to live on even if you make the full payment. It is so totally not worth it to lie.

internet fraud detective squad, station number 9

Should I consolidate first, then change to IBP, then apply for PSLF, or is there another order to this process? When I did this, I consolidated and then changed to IBR. Now I'm tallying up the payments. I've had the same job for the whole time so I haven't had much to keep track of the PSLF program. If you ever leave, you need to get some kind of statement that you worked from X to Y dates and the employer is a non-profit or gov't entity. I think there's a way to log your time every year, but I've been told it's not necessary. I should probably check to make sure as I've got 6-figures riding on that... To clarify, every year your payment has a chance to change. If your income goes up, your payment goes up (it's basically a 15% tax). If, however, you start earning enough money that your payment would be more than it would have been on the regular 10-year repayment plan, you only pay the 10-year repayment amount. So if you're paying $250/month and then get a huge raise (or marry someone with a big income) , you'd pay $469 a month for the rest of your 10 years and the remainder would be forgiven. It's worth reading through it all. http://www.ibrinfo.org/ was my guide a few years back.

the christopher hundreds

c) I tried figuring out my monthly cost, but I can't figure out my AGI. Use your http://www.taxact.com/support/298/2014/locate-your-previous-year-agi-adjusted-gross-income/.

cnc

b) So, assuming my university IS covered under PSLF PSLF and IBR go hand-in-hand. Apply for PSLF. I don't know off-hand how long it takes. Weeks not months, I think. They may let you defer (or ask you to defer) while the application process is ongoing. If not, you just pay your regularly scheduled payment that month. Also note that if you've already made any student loan payments as a member of a qualifying university, those will count toward your 120 payment PSLF forgiveness requirement. (You will have to file an employment certification form.) However, IBR is not retroactive, as I understand it. If you make a full payment, they won't refund you the difference between that and the lower IBR payment you'll eventually have. Edited to add: PSLF and IBR do not depend on consolidation. If you'll be in PSLF for 10 years, there's no need to consolidate.

cnc

Load more

Related Q & A:

Just Added Q & A:

Find solution

For every problem there is a solution! Proved by Solucija.

  • Got an issue and looking for advice?

  • Ask Solucija to search every corner of the Web for help.

  • Get workable solutions and helpful tips in a moment.

Just ask Solucija about an issue you face and immediately get a list of ready solutions, answers and tips from other Internet users. We always provide the most suitable and complete answer to your question at the top, along with a few good alternatives below.