Hi,

Thanks for having this forum - very helpful :
Two somewhat unrelated questions questions for you:

1) I am planning on using PSLF for my student loans, so my goal is to keep monthly payments to a minimum and wait out the 10 year time period. One thing I’ve been trying to figure out is at what point the PAYE plan would switch to the standard 10 year repayment plan e.g.:
With an initial debt of $100k @ 5% making PAYE payments of $800/month ($1060/month on the 10 year standard plan), my remaining balance would be $75k after 5 years. $75k at 5% on standard 10 year repayment plan would be a monthly payment of $791. Would my monthly payment then be dropped to $791, or would I stay on the PAYE at $800 since it is less than the $1060/month standard payment based on the initial balance? Similarly, could I reset my 10 year plan the following year (year 6), so my payment would be $729 ( the balance would have dropped to $68,818, and $68k @ 5% on the standard 10 year plan is $729)? Could I keep doing this every year until the debt is forgiven?

2) On the application for PAYE, they asked if my income this year was “substantially similar” (or some language like that) to my AGI on last year’s taxes; I’ve changed jobs and my income is going to be higher this year than last year. They don’t give any guidance that I could find as to how to define “substantially similar” - what are the potential repercussions of not pointing out that my expected AGI for 2014 is going to be higher than 2013?

Thanks!

Hi!

1) Nope.  You don’t get to reset the standard 10-year plan.  Borrowers can access longer repayment terms under various repayment options but you can’t just keep re-amortizing the debt over another term.

2) It is up to each borrower to decide and report honestly whether or not any income difference is significant.

Borrowers are asked:  “Is your current income or your spouse’s current income (if you completed Section 3 or if you file a joint federal
income tax return) significantly different than the income reported on your most recent federal income tax return?”  Then you must certify that: “all of the information I have provided on this form and in any accompanying documentation is true, complete, and correct to the best of my knowledge and belief.” 

The only further clarification provided states:

YOU ARE NOT REQUIRED to provide alternative
documentation of your income if you can provide a
copy of your most recently filed federal tax return
or an IRS tax return transcript from either of the two
most recently completed tax years; and that
documentation reasonably reflects your current
income.

djdj - 23 June 2014 08:01 AM

Hi,

2) On the application for PAYE, they asked if my income this year was “substantially similar” (or some language like that) to my AGI on last year’s taxes; I’ve changed jobs and my income is going to be higher this year than last year. They don’t give any guidance that I could find as to how to define “substantially similar” - what are the potential repercussions of not pointing out that my expected AGI for 2014 is going to be higher than 2013?

Thanks!

I have the exact same question and there is absolutely no guidance. 

I checked the “NO” box (stating my $16K increase was not “significantly different” than my previous year’s AGI).  I then had a panic attack that 10 years down the road someone would be reviewing my PSLF request and say I didn’t qualify because my new income WAS significantly different.

I have put this question directly to my loan servicer so that I can revise if needed, but they are giving me the run around.  If you find anything let me know.