How Enrolling in an Income-Driven Repayment Plan Saved My Life

By: Paul Haackenson

This post first appeared on genprogress.org.

After graduating from college, I was ready to take on the world. I had my degree in hand, a big accomplishment checked off my bucket list, and, accompanying my newly enriched education, a newfound self-confidence that I hoped would make me appealing to employers as I applied for open positions. This satisfaction, however, came with a price: the cost of my many student loans. I did not know what to do or how to address the situation. I did not know who to ask for fearing of looking lazy or naïve when I had many questions and everyone else had schedules. My student loans brought me an unforgettable college experience but slowly engulfed my mind with fear, worry, and self-doubt. I made calls to Great Lakes, my student loan servicer, and was told that based on my salary and poverty guidelines I would have to pay $216 in monthly student loan payments. I was surprised: I knew my friends were paying around $100 monthly, but I had to pay $216. There had to be something that I could do.

By sheer chance, I found out about Public Service Loan Forgiveness (PSLF). I thought it was my loan servicer’s job to educate me on all the repayment options available to me, but I never would have known that programs like PSLF or Income-Driven Repayment (IDR) existed, let alone that I would qualify for them, unless I had vented to a coworker about how frustrated I was with my high monthly payments. Because of that off-chance conversation, I found out that through the PSLF program my loans would be forgiven after working for ten years in the nonprofit field. I was already in an income-based repayment plan, which brought me to the number $216. Upon realizing that $216 would be my monthly payment, I decided to place a forbearance on my account to come up with time to go about this. After my forbearance expired my interest accrued and a new number had resulted. My newly calculated payment came out to $475 a month. Based on my earnings and after rent, making this monthly payment would mean scraping by with less than 30 percent of my income for things like food, utilities and exploring a city that was brand new to me.

I knew this couldn’t be my only option, so I took to the internet and went on studentaid.gov and found information and the application for Income-Driven Repayment (IDR). Customer service representatives from the website told me to send in an IDR payment application, my PSLF application with my employer’s signature, along with a recent pay stub to account for how much I make on a bi-weekly basis. I started by creating  an account on the studentaid.ed.gov website and my loans were then transferred from Great Lakes to FedLoan Servicing. This is when my relief began to set in. I knew that things were beginning to fall into place for me once I saw the approval letter in the mail, letting me know I had been approved for FedLoan Servicing.

Both applications took approximately three weeks to process since they coincided with the holiday season, but after all was said and done, I got my new payment schedule and amount: $150.53 a month. I could not believe it! Ultimately I came down to that number because I went from IBR to Revised Pay As You Earn, which was the lowest monthly payment option offered. Along with my new payment of $150.53, I had the benefit of knowing that after working in the nonprofit field for 10 years, the rest of my loans would be forgiven which was definitely an eye-opening reason to celebrate. I chose the Revised Pay As You Earn plan because I felt that it would save me the most money considering my junior level position. I feel that paying $150.53 is reasonable and definitely doable. I like the fact that I am still maintaining responsibility by slowly paying back my student loans but at a reasonable payment that allows me to save for things in my future – like making a down-payment on a home and holiday gifts for my family. I feel more self-assured knowing I have a set plan in motion instead of previously living in fear staring at intimidating numbers. I know that I am one step closer to paying off all of the support that brought me the best four years of my life.

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