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Income Based Repayments

Started by campbellsoup11, August 08, 2017, 01:03:28 pm

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I am a recent graduate from college and I have a lot of student loan debt, as well as my family having a large amount of debt in the parent plus loan that I will also be paying (yes I know we did not borrow responsibly however I just need to go forward with the situation).  I have applied for Income Based Repayments.  My question is regarding income based repayments: I want to pay off my debt as quickly as possible and in theory with as much forgiven as possible.  I was advised to apply for income based repayments because my income is low right now (but will pick up within the year).  If I went into the standard 10 year repayment, I would have thrown as much extra income as I could at the debt to pay it off as quickly as possible.  With IBR though, it doesn't sound like that will help you because then less will be forgiven at the end of the 20 year repayment - is this correct or should I still be throwing as much money at the debt as possible? If it is correct, then as I understand it there would be no incentive to pay extra each month because then over the course of the life of the loan you would be paying more into it and less will be forgiven at the end than if you waited out the 20 years.  My loans did show the payments and what would be forgiven and on multiple IBR plans, a large portion of the loan would be forgiven with a fairly small monthly payment.  I understand that this would mean I would be in debt longer if this indeed is the case, but then I would only be paying a fraction of the total loan amount.  Boiled down I just want to understand if I should be paying extra on my loans if they are in an income based repayment plan or if I will ultimately be paying less overall over a longer period of time by making the minimum payment on them.   Any help or explanation would be appreciated - this does only apply to my personal loans not the PPL.


I have an IBR plan.  IBR plans sound too good to be true because they are.  I was on an IBR plan serviced by mohela for the last 8 years.  During that time, interest balloned by 70k while I made my payments each month.  My credit score was over 800.  Then mohela decided it was going to report all the past due interest, tanking my credit by 150 points.  In other words, mohela set me up, got me to accrue a ton of interest based upon a promise of debt forgiveness and then damaged my credit.  I have been totally bamboozled.