Kathryn Posted January 7, 2016 Share Posted January 7, 2016 So, I have massive student loan debt and have been on an IBR plan for five years. It was the only income-driven plan I qualify for because my loans happened before whatever magical date they decided. I just found out about REPAYE, the new income-driven plan that would reduce payments by a third (right? 10% of discretionary income vs. 15%) and have half of the interest paid for. I *could* qualify, but I have FFEL consolidation loans, and not Direct consolidation loans. I *could* apply to have my loans reconsolidated as Direct loans, but then none of the five years I've been paying on them counts towards time in an income-driven plan and my twenty-five years would start over again. Why does this all have to be so darn convoluted? 2 Quote Link to comment Share on other sites More sharing options...
katilac Posted January 7, 2016 Share Posted January 7, 2016 That does sound like a major headache to figure out. Would it be worth it to pay for a session or two with an accountant? For such a substantial amount of money, making the right choices could really make a difference. Good luck! 2 Quote Link to comment Share on other sites More sharing options...
Liz CA Posted January 7, 2016 Share Posted January 7, 2016 If massive means med school / law school size loans, would it help to start over so you could be more comfortable with the payments? Is the monthly obligation strapping you or just a nuisance? Do you expect your income to increase or decrease in the next few years? Just some things to consider. 1 Quote Link to comment Share on other sites More sharing options...
Kathryn Posted January 7, 2016 Author Share Posted January 7, 2016 Massive as in more than our house is worth and there is no way we can pay a standard plan. If I hadn't had a baby right before I finished grad school who turned out to have life-threatening food allergies and then autism such that we felt my staying home with him was the best option, I'd be one year away from paying it off. We hadn't planned on having children, but you know what they say about planning... As it is, I spent two years on economic hardship deferment, two years on forbearance, and now five years on IBR. DH is actually going back to school next week. His company is helping him to earn a management degree to move him up, but it's going to take about eight years. They said he doesn't have to be done before he moves up, but close. So, if he makes it through, there's the potential of significant increase in about 7-8 years but not before. I don't see myself returning to work until my 10yo is an adult. I'd love to stay with my 6yo and 1yo also, but they don't *need* it the way the oldest does. 1 Quote Link to comment Share on other sites More sharing options...
Eliz Posted January 7, 2016 Share Posted January 7, 2016 I'm so sorry you're in this situation. I second talking to an experienced accountant. For me, the potential ramifications would be too great to try to figure out on my own. But then I'm not good at this kind of stuff. 2 Quote Link to comment Share on other sites More sharing options...
Pippen Posted January 7, 2016 Share Posted January 7, 2016 I'm so sorry you're in this situation. I second talking to an experienced accountant. For me, the potential ramifications would be too great to try to figure out on my own. But then I'm not good at this kind of stuff. I second this advice, especially since you're counting on uncertain future income that is years down the road to deal with the loans. We were counting on my future income to help pay for college costs, but the job market and my field changed so much in the years when I was at home with my kids that I'm no longer employable. 1 Quote Link to comment Share on other sites More sharing options...
Kathryn Posted January 7, 2016 Author Share Posted January 7, 2016 How do I find an accountant who could help with this? 1 Quote Link to comment Share on other sites More sharing options...
Lanny Posted January 7, 2016 Share Posted January 7, 2016 As others have recommended, it would be wise for you to document this, as well as is possible, on 2 or 3 sheets of Letter size paper and take those with you, for your appointment with a C.P.A. or possibly a Certified Financial Planner. What might happen in 8 years is not something, IMO, that should be given much emphasis (if any) in this decision. Your situation in 2016 is the situation that will be on any forms you might fill out regarding this. Your DH might earn far more money in 8 years. You might win the Lottery in 8 years. The facts of 2016 that you wrote about are the ones to work with. Also, take the paperwork you have about the loans and the repayment agreements and terms. Good luck! Quote Link to comment Share on other sites More sharing options...
Acadie Posted January 7, 2016 Share Posted January 7, 2016 I'd ask friends if they can recommend an accountant (folks who have their own businesses or freelance income tend to have good accountants!), and I'd look for someone in a small office. Not a chain like H&R block, but two or more CPAs who have an office together so that if one person isn't reachable or stops working you have a backup. A smaller office may be cheaper than a larger firm. You can also check online for reviews, but a good personal referral often seems more important to me. Then, before making an appointment, ask specific questions over the phone to see if they can advise you in this situation. This is what we did recently when we needed tax advice in addition to hiring an accountant to do our taxes (I'd done them up until this year). We did find one guy who was a CPA and CFP, but his rates were much, much higher, and the CPA was more than qualified to give us the advice we needed. Good luck! Amy 1 Quote Link to comment Share on other sites More sharing options...
Ravin Posted January 7, 2016 Share Posted January 7, 2016 Well, if your DH's loans are going to increase, keep in mind that you can factor in both your loans (but then also both your incomes) in the repayment plan. This is significant for us because DH is still racking them up and we basically lived on Grad PLUS loans while I was in law school, so my loan balance is close to $300K. DH's pile isn't that big but since he's still in school we're on one income. I'm going to have to look into the REPAYE plan; I thought IBR at 15% was what I was stuck with because of when I got the loans. In my case, IBR means paying $0 right now, but it will go up at the annual recalculation in August. I also only need to pay for 10 years for forgiveness because I'm working in the public sector as an attorney. All my loans, including the consolidation loan for my undergrad loans, are Direct at this point. 1 Quote Link to comment Share on other sites More sharing options...
Kathryn Posted January 7, 2016 Author Share Posted January 7, 2016 Ravin, you can check if you're eligible for REPAYE (it sounds like you are) and compare repayment plans here: https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action Here's a comparison/explanation: https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven For me, the big considerations between the two are: - 10% in REPAYE vs 15% in IBR of discretionary income - having 50% of all interest paid in REPAYE (after three years; before three years, both programs pay all subsidized interest) - in REPAYE, spouse's income is always considered, but only if filing taxes jointly under IBR - in IBR, your payments can never exceed what the standard 10 year payments would have been when you started paying, regardless of how much your income goes up, while in REPAYE, it can go over that amount if your income goes up that much. And then my other consideration, which you wouldn't have, is that to turn it into a Direct loan, I lose five years' time. Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted January 7, 2016 Share Posted January 7, 2016 Yeah I'm in somewhat of a similar boat. What ticks me off is they were never clear about every time I refinanced (through govt programs) that it basically reset the clock. I have no advice. I'll probably die in debt. 1 Quote Link to comment Share on other sites More sharing options...
Kathryn Posted January 7, 2016 Author Share Posted January 7, 2016 Yeah I'm in somewhat of a similar boat. What ticks me off is they were never clear about every time I refinanced (through govt programs) that it basically reset the clock. I have no advice. I'll probably die in debt. Yeah, I was all excited about it last night until I read that after pages and pages of fine print. The other thing is that it sounds like to go to a Direct loan, they give me my original high interest rate and not the lower going rate for loans now or even the rate I have now for so many on-time payments and having automatic withdrawal. 1 Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted January 7, 2016 Share Posted January 7, 2016 Yeah, I was all excited about it last night until I read that after pages and pages of fine print. The other thing is that it sounds like to go to a Direct loan, they give me my original high interest rate and not the lower going rate for loans now or even the rate I have now for so many on-time payments and having automatic withdrawal. They are hopelessly disorganized too. One time they changed my name on the bill. So I was getting bills with some other name. I called to ask about it because on top of that my payments were not being credited to my account. I kept getting no payment notices (I had automatic payments). It took me a year to sort that out. I called every week and spent at least an hour on the phone, sometimes screaming at them, to get it fixed. What happened is someone sent in name change information and changed my name instead of whoever else it was supposed to be. We had the same first name. I mean even the freaking electric company won't talk to you without asking you 100 questions to identify yourself yet apparently it was pretty easy for that mistake to happen. Quote Link to comment Share on other sites More sharing options...
Carol in Cal. Posted January 7, 2016 Share Posted January 7, 2016 A caution--I am quite sure that my CPA would be no help at all with a question like this. You want to find someone with that specific experience. The laws have been changing so fast that not everyone is up on them. I wonder whether you could talk to a mortgage broker or a credit repair specialist for free first, and get some recommendations from them, and then consider those? And THEN maybe go see a CPA or bookkeeper who you have to pay by the hour, but only one who you have heard is good with student loan issues? 1 Quote Link to comment Share on other sites More sharing options...
Kathryn Posted January 7, 2016 Author Share Posted January 7, 2016 A caution--I am quite sure that my CPA would be no help at all with a question like this. You want to find someone with that specific experience. The laws have been changing so fast that not everyone is up on them. I wonder whether you could talk to a mortgage broker or a credit repair specialist for free first, and get some recommendations from them, and then consider those? And THEN maybe go see a CPA or bookkeeper who you have to pay by the hour, but only one who you have heard is good with student loan issues? That was my concern. I can't find an exact date, but it seems REPAYE only became available a few months ago, so it's pretty new. Quote Link to comment Share on other sites More sharing options...
Ravin Posted January 7, 2016 Share Posted January 7, 2016 Thanks for the info! I'll probably take a look at which puts me with a lower payment come August. The 10 year loan forgiveness program won't involve resetting the clock, it applies to time in any of the income-based loan repayment programs. I have non-student-loan debt I need to pay down, and we're hoping to buy a house, so keeping those payments as low as possible is a priority for me. Quote Link to comment Share on other sites More sharing options...
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