If your income has been impacted by COVID-19 or you’d like to lock-in lower monthly payments beyond 2021, consider enrolling into an income-driven repayment plan.
Income-driven repayment (IDR) plans cap your required monthly payments in proportion to your discretionary income, with monthly payment caps ranging from 10%, 15%, or 20%, depending on the plan you choose.
For borrowers with a large amount of debt relevant to their income, IDR plans can especially be beneficial due to the forgiveness potential after 20-25 years of repayment. Please note though, IDR forgiveness is taxable.
But then again, 20-25 years is a long time. Democratic Presidential candidates could cancel $10K for each borrower, or even make total student loan forgiveness a reality. It’s hard to tell in the coming decades how Congress will deal with the student loan debt crisis.
If you know your income isn’t going to increase much come October 2021, and you couldn’t or you’d struggle to make payments now if you had to, you should definitely consider enrolling into an IDR plan now so when payments do resume, you’ll be set.
If you are one of those borrowers with a lot of debt compared to your income, (an example of this is if you have $45K in debt and make $18K in income)—you may actually benefit from IDR forgiveness!
If this is you, enrolling into an IDR plan now will benefit you even more since suspended payments actually count toward IDR forgiveness. In other words, even if you don’t make any payments until October, the months until then will count toward the 20-25 year required repayment term for IDR forgiveness (that’s 10 months free toward the 240). And if you were already enrolled in an IDR plan, you’ve had 11 months count so far!
If you are on an IDR plan and your income has changed significantly, you can update your information and get a new payment amount based on your current income that you can lock-in beyond October, 2021.
Our FREE Explore tool will help you determine which IDR Plans you’re eligible for, what your monthly payment would be, as well as the pros and cons for each plan. And if you’d like, a Chipper Concierge can help you decide which plan will be best for you and your unique financial situation. For a limited time too, we’re offering a complimentary 15-minute chat with one of our student loan Concierges for you to understand your options and how to make sure you’re maximizing your savings potential.
The #1 reason for PSLF denial is misinformation... ineligible loans, incorrectly filed forms, and not meeting all of the requirements for the PSLF program are the consequences of misinformation. If you think you’re on the right path toward forgiveness, I would challenge you to read through each section of this blog to make sure you really are. When it comes time to apply, make sure you’re approved for the forgiveness you deserve!
Qualifying for the Public Service Loan Forgiveness program requires long-term investment and commitment. However, once you complete your 120 qualifying payments, it is pretty straightforward from there to get your student debt forgiven. Make sure to follow the instructions in this blog and if you’re ever confused by which repayment plan is best for you, when to recertify your income, how to fill out the Employment Certification Form, we’re here for you!