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Is there a MAX. amount of time to make the 120 payments?

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Joined 2015-08-02

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Heather, thank you so much for this amazing help you offer with your website.

My question is about how MUCH time, exactly, is permissible for the PSLF plan, since we CAN take longer than 10 years to complete the 120 payments. Is the permissible time frame up to the individual loan holder (in my case, Nelnet) to determine? Or, who decides this?

As it stands, with Nelnet I see that no more than 36 months of total unemployment deferment can be used, and no more than 36 months economic hardship forbearance can be used. A total of six years “grace” seems reasonable UNTIL one hits multiple economic recessions; takes time off to have/raise young children; struggles with a chronic illness (that remits and then flares unpredictably) or other medical/family crisis; or any other situation happens that makes working full-time completely untenable. This is the “real world” I live in.

What recourse is there then? Does one just become disqualified from PSLF eligibility? Can we transfer our whole loan balance to a new service provider (loan holder) that would give us more deferment/forbearance time if we used it all up with our previous loan holder? Given my current situation, I feel certain I will be face-to-face with this question within a couple of years, and I would like to know how to start to plan for it now, if at all possible. This whole scenario is really fear-inducing sometimes!

Many thanks in advance for any insight you may have.

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Total Posts: 154

Joined 2015-01-08

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As far as I know, there is no set max amount of time, but obviously if you were on IBR, and you took longer than 25 years, your IBR balance is forgiven anyways (albeit with taxes, as it is not the PSLF forgiveness). Yes, you have limits to the amount of deferments and forbearances that you have, but if you are on an income-based plan you will rarely need to use them. If you lose a job, reapply to have your monthly amount reassessed. It might take a billing cycle to go through, but you could potentially have little or nothing to owe and you wouldn’t use up any deferments or forbearances. There are some deferments/forbearances that have no limits though, such as in-school deferment, or administrative forbearances, and depending on how much interest you are accruing with subsidized loans, it might be cheaper to enroll in a cheap community college to reduce the amount of interest gained while making payments. If your federal loans transfer to a different servicer, they will most likely not reset the limits you have on deferments or forbearances. The federal govt owns these loans and remembers how many you’ve taken, regardless of the servicer. You “might” be able to reset some of them by consolidating into a new loan, but I’ve heard from some that not everything reset when they did so (I believe the forbearances might have reset, but the deferments did not). I know, it’s extremely complicated and there isn’t a whole lot out there to explain these things. But, back to the original point, just realize that PSLF never really “begins”. you just have to keep track of the qualifying payments that you have made, and when you have 120 payments (consecutive or not), then you send all that paperwork and hopefully you’ll be ‘forgiven’. Be sure to send the certification paperwork frequently though…preferably after you think you’ve made your first qualifying payment. You do not want to be in a situation where you make 10 years of payments, submit all the paperwork at once, and wait 8 months for them to process your forms only to tell you that you didn’t qualify for a few years because of reason xyz. If you do send in your paperwork, any direct loans NOT with fedloan servicing will be transfered to them, because they are the only ones chosen to keep track of it and process it. And, this takes a month or two…at least…

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Total Posts: 3

Joined 2015-08-02

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Thank you. That answered part of my question, for sure. Seeing as I am already 40+ years old and just last year started making eligible payments (both IBR and PSLF) on graduate student debt, I would still be cutting it VERY close to have the loans forgiven when I am retirement age (65), on the 25-year IBR plan (if I get automatically bumped there, if I take too many deferments/forbearance in PSLF alone). So, you can understand my anxiety about the timeline, and my fears about having to take extra deferments and such due to my unpredictable health, not to mention any other situations that may arise that would prevent me from working full-time. (If only IBR had existed 20 years ago—I wouldn’t have nearly the fear factor as I do now!)

That is a GREAT tip about asking my loanholder to reassess the monthly amount owed. I just did that, and now will be going from being in “unemployment deferment” to making an eligible (for IBR, but not PSLF) “payment” of $0. Wonderful! I wish I’d done that months ago. Ah, well! smile

So, something that seems “too good to be true” is that this reassessment just so happened to coincide with the start of my IBR year, where they re-certify my eligibility for IBR, and assess the amount of my monthly payment for the year. My current payment due will be $0, as I mentioned (once I send in all my verification of income, etc.). The representative said that even if I get a job in a few months’ time, I do not have to report a change in my income or make payments above $0 until my IBR re-certification process happens again in 12 months. That means that my qualifying payments for IBR (and presumably, towards PSLF) would continue to be $0 for the next 12 months, even if I get a full-time job at a qualifying non-profit! That is what I mean about “too good to be true.” Surely that would come back to bite me later?

Any insight about that, anyone? Thank you again! This site and forum have been amazingly helpful.

 

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Joined 2015-01-08

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The Dept of Ed and website certainly mentions the scenario of having IBR set at $0 while working in public service, so these $0 payments definitely are eligible. I’m sure if you worked in a public service job making minimum wage and had four kids to support, you payment would figure to be $0. As far as “too good to be true”....well the only catch that I see is that nothing is guaranteed. Congress could change it if they wanted to, but Heather as well as others feel that it is very unlikely. I suppose it is a gamble… Do you pay the absolute minimum in the hopes that PSLF works in the end? (You’d see your interest rising and rising over time?) or do you play it safe, find a good job, pay them off, and enjoy a good salary? You’d pay more in the end, but you’d also earn more and you wouldn’t have the nagging feeling of the tiny chance that the rug could be pulled out from underneath you if congress acts against your favor.

I do want to stress that you make sure you have eligible loans. I thought that my loans were eligible because they were stafford loans(so I figured they were federal) but it turns out they weren’t because they weren’t DIRECT stafford loans. That makes all the differnence. Just because they are eligible for ibr does not mean that they qualify for PSLF (PSLF qualifies fewer types of loans than IBR) You can convert your loans to direct loans through consolidation, but if I had made payments thinking they have counted, I would have been very disappointed. As Heather has stated, you need to make payments to the right type of loans, with the right repayment plan, while working at the right type of job. Good luck!

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Total Posts: 154

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Oh, and every time you have them reassess your monthly payments, that new amount is set for 12 months, regardless of how many months you are in with your current payment amount. You don’t have to recertify until twelve months after

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Joined 2015-08-02

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All very helpful. Thank you!