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Author Topic: Graduated Repayment might qualify for PSLF depending on payments made?  (Read 6145 times)

pslf2017

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Several things I have read say that *some* older graduated repayment plans do qualify if the amount paid equals what would have been paid the 10 Year Repayment Plan. I'm trying to figure out what loan balance I should be estimating off of? My loan at the beginning, or my loan balance at Oct 1, 2007?  I'm hesitant to submit the certification form because servicing of the loan auto-transfers to FedLoan Servicing, and I don't want my loan mucked up if I don't qualify.

I have worked 17 years full-time for the same 501(c)3, so my certification form is easy to complete. And have always made on-time ACH payment on my loan.

My Staffords from grad/undergrad have been Direct consolidated since Feb 2000, under 20 year Graduated Repayment. EdFinancial took over servicing my loan in 2012, at a lower 7.0% interest (from the 8.125% I was paying Direct). I have 38 payments remaining totaling $22,811.

To further complicate matters, our oldest car needs $4,000 worth of engine/transmission work this year, so I'm trying to decide if I can swing a second car payment, and loan forgiveness would make that much easier.
« Last Edit: January 15, 2017, 09:19:19 AM by pslf2017 »

TheCollegeInvestor

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Re: Graduated Repayment might qualify for PSLF depending on payments made?
« Reply #1 on: January 15, 2017, 12:17:12 PM »
I have not seen that - it's pretty clear you must be on the standard 10-year plan, or an income-driven plan. In fact, I've seen countless people see what they thought were qualifying payments NOT count because they were on graduated plans.

pslf2017

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Re: Graduated Repayment might qualify for PSLF depending on payments made?
« Reply #2 on: January 15, 2017, 12:45:11 PM »
I have not seen that - it's pretty clear you must be on the standard 10-year plan, or an income-driven plan. In fact, I've seen countless people see what they thought were qualifying payments NOT count because they were on graduated plans.

I wonder if it's because they hadn't yet started paying an amount in excess of the "regular" 10 year monthly payment. It takes awhile to get there. I think I crossed that threshold in year 8, which would be 2008. So I *may* have made 9 years of qualifying payments.

This fact sheet says (pg 2):
https://studentaid.ed.gov/sa/sites/default/files/public-service-loan-forgiveness.pdf

"Any other Direct Loan Program repayment plan; but only payments that are at least equal to the monthly payment amount that would have been required under the 10-year Standard Repayment Plan may be counted toward the required 120 payments."

And this one (pg 4) says:
https://studentaid.ed.gov/sa/sites/default/files/public-service-loan-forgiveness-common-questions.pdf

"15.What other Direct Loan repayment plans would give me a monthly payment that is at least equal to the payment that would be required under a 10-Year Standard Repayment Plan?
Under the Graduated Repayment Plan, payments start out lower and then gradually increase, generally every two years. Therefore, payments made during the later portion of the repayment period under the Graduated Repayment Plan may in some cases equal or exceed the payment amount that would be required under a 10-Year Standard Repayment Plan, and these payments would count for PSLF."

Since I'm not sure which loan amount they are using - Feb 2000 start or Oct 1 2007, I'm not sure what they will calculate as the 10 year standard monthly payment.  And since they switched my servicer, I don't have my loan amount remaining in 2007. And even using my 2000 loan start, the interest rate switched mid-loan, so calculating the amortization on a 20 graduated repayment has been messy.
« Last Edit: January 15, 2017, 12:54:17 PM by pslf2017 »

TheCollegeInvestor

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Re: Graduated Repayment might qualify for PSLF depending on payments made?
« Reply #3 on: January 15, 2017, 11:38:14 PM »
Well, to go back to your question, your entire Direct Loan balance remaining at the end of 10 years/120 qualifying payments will be forgiven.

And very true about the payments - with PSLF each payment is counted individually, so many people under graduated plans haven't made any qualifying payments (since they don't exceed the standard 10-year plan amount).

The choice is always yours:
- You have 3 years remaining to pay off your loans
- How many qualifying payments have you made to date? You can look at your payment amount under the standard plan if you have it (or it should be on your credit report - annualcreditreport.com), and see when your graduated payments were equal or greater.

If you have 120 or more, I'd apply and get it forgiven this year when the law comes out. If you're not quite there yet, see how many you need.