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Fed Loan Servicing is NOT giving me a payment!

Started by lasoyoga, April 22, 2016, 02:24:07 pm

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lasoyoga

Hello,

First I would like to say that I am huge fan of this site and the wealth of information given. THANK YOU!

I have read many posts on this site and I remember reading over one that stood out in my mind. Someone asked what was the best way to get out of debt and you suggested them to make payments no matter how small. That your student loans shouldn't just sit there and accumulate interest.

Well, I am on a IBR program with Fed loan Serving and every year they have you re-qualify for the program. This year I am making $1,600 a month and they said according to my family size and income, I do not make enough to have a scheduled payment so I have a zero payment for the next 12 months.

I called them and asked if they can consider scheduling me a small payment of any amount each month. I did this because Fed Loans is offering a .25% interest rate on loans that have a monthly direct debt set up on their accounts.  Here's the dilemma, In order to have direct debt on your account, You need to have a scheduled monthly payment and since I don't.. I am not eligible.

This is so frustrating and literally makes depressed every time I think of my student loans.

They said if my income changes, I can resend my paystubs to them to revaluate my payment amount. I've talked to a few people about this situation and I've been given many different opinions about this.
Option 1: Keep the zero payment and save the money for years to come. Since this is my 3rd year with Fed Loans, Next year I will only have 22 years left until my loan amount is forgiven. (Yay! not)
Option 2: Resend my monthly paystubs with a higher amount then before because my income fluctuates and I can show I make more money. Then I might be able to get a monthly payment and then qualify for a .25% interest rate...

Soooo my question to you is... What should I do? I am so lost and confused and would like a little direction from someone that knows this space the best.

Thank you for any feedback.



TheCollegeInvestor

Well, enjoy the $0/mo payments this year, but leverage the "Extra" amount you would have used to build an emergency fund. Don't worry about the interest accruing because there's nothing you can do.

But, you have a one-year runway - focus on earning as much as you can and saving it. You can always make additional principal payments whenever (it just won't be automatic), but I'd rather see you make sure all your finances are in order as a holistic picture. Emergency fund, saving for retirement if possible, etc.

Realize that next year your payments may rise with your income.