I’m currently enrolled in IBR and PSLF. Because I made very little money last year, my loan payments are currently set at zero. For the upcoming year, I imagine it will also be zero or something close to it.

My question is: is there any reason to make payments right now? Possibly to pay down the interest?

I think it already know the answer to this (“no, there is no reason to make payments”), but I wanted to ask here to be sure. While it’s nice to not be paying right now, it causes me anxiety to just sit by watch the interest accrue untouched.

Thank you!

Do not take my answer as absolute truth, as there could be something that I am missing, but I would say this.

If you are reasonably sure that you will remain in a public service role for 120 payments, or you are reasonably sure that you will be able to remain in good standing on your loans for 20/25 years of payments if you happen to leave public service, I would say no. The only caveat is that for loans forgiven under straight IBR or PAYE, as in NOT PSLF, the amount forgiven is taxed as income; HOWEVER, the President’s current budget proposal for 2015 eliminates this “tax bomb.” So, I believe that you would only see a benefit to making more than the minimum IBR payment IF you leave public service before 120 payments AND the “tax bomb” remains in place as it is as of today.

Like I said, I may be missing something, but I really cannot think of another realistic scenario under which paying extra now will really benefit you.  I would also that none of us really know anything about what will happen in the future.

If I am missing something, I hope that someone else will chime in!

Stop PSLF from being capped! Sign the petition and support students and public servants!

https://petitions.whitehouse.gov/petition/retain-public-interest-loan-forgiveness-program-its-current-form-forgiving-all-qualifying-student/wkqnqBCH

Do not take my answer as absolute truth, as there could be something that I am missing, but I would say this.

If you are reasonably sure that you will remain in a public service role for 120 payments, or you are reasonably sure that you will be able to remain in good standing on your loans for 20/25 years of payments if you happen to leave public service, I would say no. The only caveat is that for loans forgiven under straight IBR or PAYE, as in NOT PSLF, the amount forgiven is taxed as income; HOWEVER, the President’s current budget proposal for 2015 eliminates this “tax bomb.” So, I believe that you would only see any level of benefit to making more than the minimum IBR payment IF you leave public service before 120 payments AND the “tax bomb” remains in place as it is as of today. Because of the “tax bomb” issue, I would recommend paying close attention to the 2015 federal budget.

Like I said, I may be missing something, but I really cannot think of another realistic scenario under which paying extra now will really benefit you.  I would also that none of us really know anything about what will happen in the future.

If I am missing something, I hope that someone else will chime in!

Stop PSLF from being capped! Sign the petition and support students and public servants!

https://petitions.whitehouse.gov/petition/retain-public-interest-loan-forgiveness-program-its-current-form-forgiving-all-qualifying-student/wkqnqBCH

Thanks for the insight. That was sort of what I was thinking.

I’m just learning about the proposed cap. Frightening, frustrating, and alarming!! I just signed the petition. Thanks for sharing.