IBR v. PAYE... Student loans can be scary. Deciding how to choose the right plan can be overwhelming. I hope this video makes them a little less scary, and gives you more knowledge/leaves you feeling empowered in making a repayment decision moving forward! ✩ Related Content: → Should You Refinance Federal Loans With A Private Company? ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-Ai3GRCFWEVw.html Thank you for watching 🧡
For over a decade I've ignored my loans because I just didn't want to deal with the reality-- I hate speaking to these loan people and I'm immediately overwhelmed by anything having to do with math, haha... I recently got a rude awakening (default!) and now I'm making a serious effort to pull it together. This is the clearest video I've found, with the best and most well-explained information, so THANK YOU. Still don't know what it all means but I'm eager to figure it out and this was a great first step
Great video. One thing to note, if you are concerned you may qualify out in the future, you can always increase contributions to a pre-tax retirement fund (401k or traditional IRA) to reduce your AGI. With a 401k you can reduce by up to 19,500, and traditional IRA by up to 6,000 (for tax year 2021 &
This is amazing. Thank you so much. It's so clear and it really eased my mind. I am consolidating and say that PAYE and IBR have the same repayment, according to the Federal Student Aid website, and it didn't give much information as to the differences. You also pointed out a ton of things that I did not know or think about, so I'm grateful to you for putting this out there. I freaked for a minute about qualifying out, since my job has a salary schedule that increases with years of experience, but your math helped me figure out that I would be fine. I also qualify for PSLE loan forgiveness, so I was able to reassure myself, with your guidance, that I'll be able to get my loans forgiven before I have to worry about qualifying out. Thank you so much! I think sometimes the people who can explain it best are the people that have been through it.
You should definitely get into finances! I can see your passion in your video. Wonderful job! Thank you for taking your time to explain everything in depth and figures!
This is great video and great info. ! There are some differences from my understanding and additional info.: For pay as you earn, partial financial hardship is 10% of discretionary income instead of 15%. Also, it is 240 payments instead of being consecutive 20 years for PAYE, which means you can be non-qualified to the plan due to no longer having partial financial hardship, but later on when you do, you can continue on the PAYE and finish 240 payments for loan forgiveness. And, of course, your interest will be capitalized since you are changing the repayment plan. Another chance of capitalization is when you recalculate your income for monthly payment anytime except when you re-certify and when your grace period is over and first choose your plan.
You are amazing! You did all the notes for me that I was going to do for myself - with all the same considerations! Love it. Careful paying back too much of your loans, you might disqualify yourself, haha. I can see someone quitting their job after getting a raise, lol! Having a spreadsheet for this will be really good. :)
This was the most helpful walk through video! Thank you sooo much! I know you said you weren’t a financial advisor, but maybe you should go into that field! You are great with numbers :)
I'm so glad this was helpful for you! Finances can be so confusing and anxiety-provoking, I've found that trying to approach them objectively and actually understand them makes me feel powerful instead of giving them so much power. Wishing you the best 💛
Amazing video, keep in mind that with inflation can increase salaries over the course of 10 to 20 years so in 10 years 100k could be an average salary.
You made this extremely simple and touched on great point. Your explanations were thorough and clear. However, I do have one question how did you calculate the $11110 dollars of payments on the $100,000 loan?
I'm so happy it was helpful to you! I'd love to answer your question, can you point me to the part of the video you are referring to? (A timestamp would be helpful, and then I can hopefully better explain what I meant!)
Amazing video! Can you make a video explaining what amount to pay? How do you figure out the amount you pay monthly? I have 4 loans but they equal up to 26,000.
So glad it was helpful to you! And I love that request. I could totally make a video outlining how I approach payments on my different loans. Added it to my request list 💕 Thanks so much for watching and commenting! Wishing you the best 🤗
I was going to write a whole essay in my situation, but everything boils down to two questions: Let’s say you do the pay as your earn plan. But you pay off your higher interest loans early. 1) If you paid off one of the loans while you were still under financial hardship, does the interest forgiveness still stand? Or will it still bite you in the butt if you make too much within the 20 years? And 2) If you pay off a loan early, does that subtract from what your monthly payment would have been? I have a couple of 4.25%(?) loans and the rest are much lower. I kinda want to sneak in and kill those ones first. Also, thanks to inflation, I have no reason to think I won’t qualify out eventually. I’m using the relief now to pay off my new truck in 3 years or less, then I’ll be tackling each student loan one at a time. Starting from highest interest rate to lowest, followed by lowest balance to highest if the interest rate is the same.
Really good questions -- I think the answer to #2 is no, the monthly payment stands as it would the day you enter the income based plan! #1 I am not sure... best of luck to you!
Thank you so much for sharing your knowledge with us on this video. This is a great video to watch to consider both LONG term effects, and short term effects of IBR V PAYE. I think this advise is very honest, and in efforts to continue personal diligence will continue to research other potential effects that weren't covered in this video. If you pay too much will you disqualify yourself from the plan? Thank you for your guidance.
I'm so glad this was helpful for you! And no, as long as you meet your minimum monthly payment, you can make separate, larger payments and no be disqualified. Disqualification would be based on your income when it's time to annually reapply 💛
Thank you so so much for this video!!! Helped clarify so much for me. Would you advise to start with REPAYE in the first place if I think my income will grow in the future qualifying me out of PAYE/IBR and I want debt forgiveness in the future?
Thanks for the clear info!! Why is a PAYE better than an IBR? I understand why an IBR would be better than a PAYE if you have to consolidate or have FFEL loans, but what benefits does PAYE have in general that makes it more attractive? Thanks again for working this out and sharing it.
You're so welcome! Hmmm... I think PAYE is more attractive to those whose intention is to use the program for loan forgiveness, as the loans are forgiven faster and you owe less % of your annual income on PAYE than IBR :)
I believe both IBR for new borrowers and PAYE are the same in that regard. They are both forgiven after 240 payments and both are 10% of your discretionary income. I can see no real difference other than what I mentioned above and the requirement for being a new borrower could be different in some cases. There must be more of a difference, but I can't figure it out. Any more help?
@@jaymacpherson5090 I think this is the most helpful resource I've found comparing the two! studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven Wishing you the best 🤗
This video has helped me sooo much!! Do you do personal tutoring when it comes to figuring out what amount to pay monthly through income driven repayment plan?
I am so, so happy to hear that this video was helpful for you! I would love to further discuss personal tutoring with you. Would you mind emailing me at officialpelvicempowerment@gmail.com so that we can work out specifics there?
Hey Tori, thank you very much for your explanation. I will like to know if you have a video comparing IBR vs. REPAY? If no, do you have any highlights to help me with my comparison? Much appreciated?
Hi Ruth! Unfortunately, I do not have a video comparing IBR vs. REPAYE, and I haven't done a deep dive into REPAYE because (if I am remembering correctly) I wouldn't qualify for it! Here is the link to the federal website comparing REPAYE and IBR, though! Lots of good info, here: studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven Wishing you only the best ❤
How much more should I pay for loans at5%? I think $2,000 a month instead of standard rate so I can pay off loans the fastest. I thought income based repayment is bad and it’s just a way Forman companies to get more money
So, if I understand this if I owe a total of $70,000 in student loans with a consolidation rate of 5.1% and make approximately $33,000 a year then by reason I should opt into the PAYE to keep my payments low, but make more than the required payment to pay off the interest and some principal. I think this would work unless I take a job with the government then it would be wise to opt into the PAYE and make lower payments for ten years at which time forgiveness would be an option.
If you take a job with the government you'd likely want to consider Public Service Loan Forgiveness, a different type of income-driven repayment plan ❤
Before I forget: it was alluded to but, if one stops the plan and becomes eligible again, do the years carry over? Or is it only for new borrowers so inapplicable?
Ty for your Very informative video! Does everything mentioned here still hold true today? Any modifications? How often are these student loan repayment options modified or changed completely?
Those are excellent questions! I'm not sure how often the repayment options are modified, and I still use this information to determine my loan repayment!
If I’ve been on an IBR for a few years and I switch to a PAYE without consolidating my loans, would the lender honor that time or would I have to start counting the 25 years again?
That's a really good question... and I'm honestly not sure! I know that IBR and PAYE are both income-driven repayment plans, so they fall under the same umbrella... but I'm not sure if the calculation is plan-specific or just based on the number of IDR-qualified payments made. I wish I could be more helpful, but hopefully that's a question a loan officer could answer for you! Wishing you the best 🧡
lol damn. It only took you a "day". Im 15yrs plus in and im still confused. Wow are you married?? lol . Seriously though this is great and you did a gd thing whipping out the pen and pad. Great job Thanks so much for the detailed break down.
Thank you so, so much for the kind words! I am so glad that this was a helpful video for you ❤ loans are terrible, the language is so heavy. I'm so glad it makes a little more sense!
Have you made sure the larger payments are qualified payments? Do you make one 'qualified' payment and one extra payment every month for the excess, does that work? I asked one of the myfedloan people about being able to pay extra on one of these plans and she yelled at me, saying the amount I paid couldn't be any more or less than the new minimum payment. This was for the public service forgiveness program, but I didn't feel comfortable discussing these other plans after she was yelling at me, 'no more, no less than the minimum payment!' every time I asked for clarification.
Wow, sorry for your experience! The public service forgiveness program forgives your loans in 10 years (or after 120 qualified payments) - if you are going to be working for a nonprofit for 10 years and will continue to qualify, it makes sense not to pay any extra! The big difference between IBR/PAYE and the public service option is that many using the IBR/PAYE option won't qualify for the program for all 20-25 years, where those using the public service option can likely qualify for all 10 years. So the person using the IBR/PAYE has to plan for their loans NOT being forgiven. So, for example, I am using the IBR plan not because I think my loans will be forgiven, but because I want to keep my debt to income ratio manageable. So I pay the "qualifying payment" monthly (it is automatically withdrawn from my account), and then I pay an extra specific amount on each loan so as to save myself from the capitalized interest because I know I won't qualify x20-25 years and therefore I know my loans will not be forgiven. So in your case, you could pay the "qualifying payment" monthly and then manually pay on your loans if you want to put extra money there, but if you think you'll be forgiven I wouldn't worry about the extra payments! Hope that helps, and best of luck ❤
Hmm, good question, I’m not sure! But if you call the customer service line I bet you could speak with someone who would be able to answer that question!
For clarification, if you make 100k a year and are in PAYE or IBR, would the loan interest be capitalized eventually if you're actually paying down the loan?
I’m not sure I fully understand your question, but if you are paying on the principle balance, that would mean interest isn’t accruing (as you’re paying it off and then some every month), which would mean there is no interest to capitalize at the end of the year! Did I understand you correctly?
I got through everything, and understand it! Until I realized that I don't know how to estimate my AGI in the future. I know where to find it in my previous tax information, but do you have any resources for doing the math for future AGI? So that I can use that AGI to calculate my future elligibility? Does AGI include the taxes that are deducted from my bi-weekly paycheck? Does it include what I pay in taxes each year? Funny how I now understand a ton about loans, but still not enough about general finances!
Oh! But one thing I didn't understand was the 10% cap on capitalized interest. I understand the concept of capitalized interest, but does the 10% cap just mean that your capitalized interest won't exceed 10% of your principal balance total?
Hi Sky! I’m so glad this was a helpful video for you! Your AGI is your total gross income (so what you make before taxes) minus any deductions or expenses (like student loan interest deductions, or deductions on your IRA!) I’m so glad you are feeling like you have a better understanding of your loans!!
Yes! With the PAYE, only an amount of your interest equal to 10% of your STARTING principle balance will be capitalized. The rest will just remain as interest ❤️ Wishing you the best!
sigh. is there any fixed rate plans that take into account income? also what if the settled balance is paid off early. hypothetically. lets say a friend has inherited a lump sum of money after they entered one of these programs. would they be applicable to pay off the entire balance gifted or would it just opt them out of the program?
Hmmm... I am not aware of any government fixed-rate plans that do no change yearly that take income into account. If you inherit a lump sum of money after entering one of these programs, I would assume that you may no longer qualify (pending on the math!) when you go for the annual renew of/reapplication to the program. That being said, I don't see any reason you couldn't use the lump sum of money to pay off the remainder of the loans! Wishing you the best ❤️
I think you can have a Perkins and qualify! I have a Perkins and still qualified for IBR! PSLF... I think you have to consolidate. But you could choose to keep the Perkins and consolidate your other loans to apply for PSLF. I think the Perkins are some of the best loans in the game, honestly!
If I plan to apply and qualify for PAYE or IBR after graduating from grad school is it not worth paying the interest on loans that are accruing while I am still in school?
If you think you'll qualify for all 20 years and have your loans forgiven in the end, then it wouldn't be worth it. I think qualifying for 20 years is a long time, and there is a lot to consider in how your qualifications may change over time. I paid back my interest when I could while still in school, because I figured then (as I still figure now) that I wouldn't qualify for the entire time and therefore I wouldn't be forgiven in the end. Best of luck ❤
I have a few questions, it makes sense to me but I feel a little slow when it comes to this, I’ve already started with the IBR about 3 years ago Is there a way I can break this down to you privately ?
I recently looked into the tax on the remainder of the loan that was forgiven, I found that there are a few exceptions. Are you familiar with insolvency?
Hmm, I'm not sure about this! I am not a financial advisor and cannot give individualized financial advice. I do remember a dear friend of mine not being given enough money for her tuition by the federal government and I remember her petitioning the government for more funding. That could be a potential avenue worth researching. I wish I could be more helpful! Wishing you only the best ❤️
not 100 % forgiven but better than paying 100% of your debt and interests. More money you can push into forgiven amount less money you pay since you will be paying income tax amount which will be 30-37% of your debt.
i wouldve continued watching but backed out after 1 minute 41 seconds because the audio is SO LOW. you prolly have great information, i just need something a little louder lol
