Question:
Dear Steve,
I left school at the age of 13 and decided to get a GED when I was 35. So that I could become a pharmacist. Yep I was nuts. Still am.
This was a little over a decade ago.
A BS in Neuroscience, a BS in Biochemistry, and FINALLY a PharmD (doctor of pharmacy – just graduated last Friday!) later… I find myself with almost half a million dollars in debt.
It is currently split between Navient and Great Lakes. Navient has been a nightmare and I would like to get all of my loans over to Great Lakes. After numerous calls to both Navient and Great Lakes, it seems my best option for now is to go with the RePaye program.
I still have to get through boards, and get a job, and somehow pay things in the meantime.
I have been living off loans for the last decade and learned a lot the hard way and have the debt to show for it. The main thing I want to do is keep payments as low as possible for now. I am angling to get a job at a non-profit or government based job and then would like to transition into the 10 year forgiveness program.
My biggest concern and source of confusion is: I do not understand what types of loans my various debts are. And I do not clearly understand what qualifies for income based plans, what can be consolidated (if that is the best thing), and how I can handle everything the right way the first time out of the gates.
From what I gather, some of my loans must be private, although I had to go through the government to get them. A GL rep told me I could consolidate various (non-Stafford) loans that I have with Navient (ex: Signature loan) with the Grad Plus Loans Great Lakes services and somehow get all my loans to the same servicer and then- if all the loans I have will qualify for the RePaye program.
I am looking at both servicer’s websites and the vernacular differs in a way that I cannot tell what IS or IS NOT possible!
I have attached screen shots of my loans and details – please do not post these images. I appreciate your time.
COC
Answer:
Dear COC,
First off, congratulations for crossing a lot of tough hurdles to start over. That’s amazing.
You do have a mix of government and private loans judging by the list you sent. The Signature and Tuition Answer are private loans and have few option other than deferment which just explodes the unaffordable amount you owe. Not much good comes from deferment unless it is used as part of a specific strategy.
Getting all of the federal loans into a Direct Consolidation Loan and then entering an income driven program, can help lower the payment but like deferment, every month the payment is lowered, the balance increases. The difference with the federal programs is the possibility of some forgiveness in a couple of decades.
The big issue I’m not a fan of with REPAYE is the requirement that “if you’re married, both your and your spouse’s income or loan debt will be considered, whether taxes are filed jointly or separately.” If you get married or change your marriage then a future spouse could get a big surprise when there potentially dedicated income is counted in calculating your payment.
This is different than PAYE or IBR where if you are married, the spouse income only counts if you file a joint tax return. So don’t file a joint tax return if you want your payment to be calculated on your income alone. You should always discuss your situation with your tax preparer to understand the additional cost of filing separately.
Here is the list of loans that can be included in a new Direct Consolidation Loan and then repaid with an income driven program:
- Subsidized Federal Stafford Loans
- Unsubsidized Federal Stafford Loans
- PLUS loans from the Federal Family Education Loan (FFEL) Program
- Supplemental Loans for Students
- Federal Perkins Loans
- Nursing Student Loans
- Nurse Faculty Loans
- Health Education Assistance Loans
- Health Professions Student Loans
- Loans for Disadvantaged Students
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
- FFEL Consolidation Loans and Direct Consolidation Loans (only under certain conditions)
The Department of Education has a good tool where you can enter your loan information and look at what your payment would be with the various repayment options.
You can find that here.
Servicers can be extremely confusing but if you start with the repayment estimator and enter your loans and income, it will give you a good idea what options really exist.
Once you get your loans into a Direct Consolidation Loan and on an income based repayment program then your next 120 on-time payments will count towards forgiveness in the Public Service Loan Forgiveness (PSLF) program. More details on the PSLF program can be found here.
And one little point, private loans are not available through the government, but they may have been available through your school financial aid office and that might have felt similar.
