Income Based Loan Repayments

Updated on February 12, 2013
F.B. asks from Kew Gardens, NY
7 answers

Mamas & Papas-

Do any of you have any experience with income based loan repayments for grad school loans? Hubs law school loans will soon be due. We haven't sat down and crunched the numbers. He just landed a full time payed position in his desired practice area. It's with a small firm through, and has a small starting salary. He's concerned that he is going to get dwarfed with loan repayments and not be able to contribute to the household, or even pay his daily incidentals.

Thanks for your tips and advice.
F. B.

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answers from Philadelphia on

did you consolidate federally? they have plans as low as 100 a month for the first 2 years. he can also defer them for a year

he should call up and see



answers from Chicago on

It does depend on how he has the loans. Based on what I have read lately, if they are private, they don't have to work with you. Those are the loans that are really hitting default. If they are federal, then you have a lot of options. I am currently setup to not pay based on my income but I have been putting a couple dollars here and there so I can make a payment. I am sole income for us right now.



answers from Seattle on

2 things:

1) Consolidate. We shrank apst $2,000 a month in student loan payments down to under $400 by consolidating. Now... We had our loans scattered in something like 17 places... So having ACS bring them all together was huge beneficial. (Community college, university, masters... I had no idea how many different places our loans were sourced from until I went on a 3 day mission to track them all down, get the numbers, and get ACS to reissue under one lender. Thank. Heavens. It was mindblowing. Apparently every year, they changed sources, and sometimes every quarter. ) When they first come due, they "consolidate" as in you only make 1 payment, but you're still paying 120, 96, 214, 77, 385, etc. ACTUALLY consolidating usually cuts the bill at least in half, and in our case over 90%.

2) Streeeeeeeeeetch payments out to the Max. They highly discourage this with dire sounding verbiage. Duhn. Duhn. Duhn. <grin> Flr good reason! The apr on student loans is apx the same as inflation. Which jeans that if you can stretch them out the full ammt (30+ years)... It becomes free money. The faster you pay them off the more money they make. Its your right to take as long as possible to pay them off (and student loan debt is calculated differently than ANY other debt in buying houses, getting jobs, etc.). Not to mention that shrinks your monthly payments. My bestie pays less per month on her 200k in debt than I do in my 8k in debt.


After you consolidate everything (and if YOU have outstanding loans, married couples can consolidate all their loanss together between them), and stretch out to your max allowable timeframe... I've found ACS is very helpful in modifying, deferring, and in other ways making the payments manageable. Any gap of employment = instant deferment until reemployed, and any time there's a pinch or crisis, if you ring them up, they'll give you several months of partial payments (or held payments, tacking them down on the end, of course, you still have to pay everything). Its the calling them
And getting your account annotated that keeps you in good standing.


answers from Columbia on

Call the loan company. They can work with you based upon what is needed. I restructured my loan so as to have a lower payment over a longer period of time. Worked great.


answers from St. Louis on

Call whoever holds the loans, they are usually very helpful.



answers from Los Angeles on

My husband and I are both paying back our law school loans through the IBR program. IBR is good if he plans on working for the government or nonprofit, as he could get his loans forgiven after 120 minimum payments. If he's in private practice, however, he needs to remember that while he maybe able to keep his payments low now, his interest will continue to accrue and he will end up paying more in the long run. If he meets certain requirements, he may even be eligible for the new "pay as you earn" plan that may lower his payments even more. As the other commentors said, he should contact his loan servicer for more details. Hope this was helpful.



answers from Columbia on

Yes. I am paying back under "income based repayment" Basically you just call them up and tell them you can't pay your amount and they will offer you lots of other options..... I have $63,000 (just for Master's Degree.... nothing compared to law, I'm sure) and my original monthly payment was something around $800. He did a couple offers getting down to around $600, but I couldn't even swing that.

Once he goes through all the other payment options he will refer you to the income based repayments options.... there are 3 that were available to me: Income based / Extended / Graduated.
If you (or hubby) goes on the website where his loans are consolidated and will be managed he should be able to get info.

However.... I wouldn't worry about it until you get the payment details. Most likely they won't know any information until he comes up for repayment anyway.

My income is low enough that I am basically paying interest only, which is right under $300.... so I have paid for a year and my principle balance is EXACTLY the same. I will end up paying LONGER and eventually my loan will be "terminated" because I have hit the maximum time limit for repayment (after 20 years, I think).

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