Dear Heather,
I have 190k in loans, but 244k including deferred interest. I’ve been in IBR for 5 years, (20 years remain, and I am 45). I had several years of very low income, and thus the interest accrued. I recently found out that my current job qualifies for PSLF, but if I convert my FFEL consolidation to Direct Loans, 1) the interest will capitalize, 2) the clock would start over for the 25 year IBR forgiveness, should I ever leave PSLF, and 3) I’d lose my 1% interest rate reduction I’m receiving through Navient.

So converting to PSLF is risky, and essentially binds me to working public service for ten years.  (I’m an MD, and have been doing a combination of public health and private practice for 15 years already).  Also, under my current IBR plan I’d at least be paying the interest every month, but if the interest capitalized the same monthly payment would make my loan continue to grow. Scary.

However, when I started to go through the online process of consolidating to Direct Loans on studentloans.gov to see what the numbers were, it let me choose the PAYE program as an option and did NOT count my spouse’s income (we file taxes separately). I was under the impression that borrowers before 2007 couldn’t do PAYE, but the application calculator (which automatically plugs in your specific loan info, as opposed to plugging in numbers yourself) gave me this option.  This made my loan payment only 10% instread of 15%, which might be an added incentive to make sure I stuck out PSLF for ten years. So I thought maybe because it was consolidating into a new loan that i’d be considered a new borrower? I’m not sure why the application was letting me do this, unless it’s just a glitch.

Anyway I hope my question made sense. Thanks for all your work on this topic!