Hello,

I have been making payments toward my PSLF for about a year and a half since I consolidated my loans.  I had 99k (eek I know) and now it has gone up to 102k.  The interest rate is 7%.  I know all the payments i make go directly toward the interest ... hence why the principal keeps getting bigger.

I guess my question is…. does it really matter if the principal gets bigger because ill still be making the same payments and all will be forgiven after 120 payments?  Or should i increase my payments to pay more of the interest off and get to the principal?  I guess I’m just freaked out that the numbers keep getting bigger and bigger….

Thank you.

Andrea

I’m in the same situation as you. Assuming the PSLF program actually still exists when your 120 payments are up, your best bet is to keep paying the minimum so that you end up paying as little as possible over the lifetime of your loan. That’s what I’m doing. The risk we take by doing that is that Congress could repeal PSLF or some other way it could just go away, then we’ll be on the hook for that entire amount. And nobody can guarantee that it will in fact be in place and do what it’s supposed to do, because we haven’t hit 10 years yet. So it’s really up to you ... are you willing to take that risk?

The principle shouldn’t get higher unless capitalization has occurred. What is most likely happening is your principle is still probably 99k, but the interest is about 3k. The total balance will rise, but in the end PSLF would wipe out both the interest and the principle after 10 years, as far as I understand it. I’m in a similar boat, roughly 102k myself… I’d pay the IBR/PAYE amount but if you come into great job at a for-profit business, consider taking that instead. For example, let’s say you work for a non profit doing one job for 40k a year. A job opens up at another company that wouldn’t qualify for PSLF, but it pays 60k, and it’s the same job. You’d make 20k more a year. If you lived off of 40k a year, and applied the extra 20k a year towards your loans, they’d be paid off in 5-6 year, and you’d have a much better salary afterwards (and no risk of PSLF going away). To me, that’s a much better option, especially if you just started PSLF.

I’d take the option if I could, but until that opportunity comes, I’ll remain at my pslf qualifying job and hope either a better job comes along or the PSLF is still in place after 10 years. Consider putting extra money into savings just in case PSLF doesn’t work out, and you can apply that to your loans if you need to down the road.