My wife’s loans have been in graduated repayment for two years and all of her payments are scheduled to go up starting in September.  She has just over $60K of debt from undergraduate and graduate school spread across four or five loans (including one FFEL consolidation loan).  She’s never been late, never defaulted, etc…  She is a public school teacher, so we’d like to consolidate her loans with a direct loan which would be eligible for Public Service Loan Forgiveness (PSLF) after 120 payments (10 years).  I plugged all of her information into the repayment calculator on StudentLoans.gov:

https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

-Her exact amount owed (they pull this from their records): $60,530
-Our adjusted gross income: $94,843
—My total loans: $57,767 (I have not consolidated yet but will once my loans are out of grace)-I just graduated with my MA and am in public service as well.
-We are a family of four, living in NJ

This gave me a payment under the REPAYE program (which, as far as I understand it, is eligible for PSLF) of $142/month to start and a seperate payment for some of the loans which though not eligible for REPAYE, are eligible for standard repayment over 360 months.  Basically the goal here is to consolidate all of hers with a direct loan to start the clock on the 120 payments and be done 10 years from now with a managable payment in the meantime.  I just don’t want to screw anything up in the process of consolidatiing since this process is so confusing and there seem to be a lot of possible missteps.  Does it sound like this option will work for us?

Are any of your wife’s loans direct loans already?

If so, you don’t need to consolidate them. Doing so would eliminate any PSLF progress you have made on them (if she’s made any qualifying payments so far) If only one isn’t a direct loan, you MIGHT have to take one of her direct loans merge it with the FFEL loan to make it qualify, but I’d check on that. I’m unsure if you need a direct loan included within the consolidation to make it a direct consolidation loan. I’ve heard different things.

Once you consolidate, your interest rate with be slightly higher since they round up an 1/8 of a percent. You can minimize this impact by consolidating only the loans that you need to, and leave the other’s untouched. This is beneficial in case PSLF does not follow through on its promises or if she decides to pursue a career change in the private industry. if any of your direct loans have variable interest rates, I’d consider consolidating them if the rate is good (such as variable interest rate around 2%).  That way it’s locked in with no surprises.

Be wary of the studentloans.gov calculations. They only calculate the loans that are eligible. For example, they told me my IBR payment would be around $500, but under ICR it would be $180. This is because only two of my loans qualified for ICR where many more qualified for IBR….so it was deceiving. (FFEL loans are eligible with IBR, while they are not with ICR unless I were to consolidate, so it was only calculating loans that were currently eligible) If I chose ICR i’d be paying a lot more per month overall. It looks like REPAYE follows similar criteria as ICR https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven. So, what I’m saying is you might want to verify that REPAYE is showing you the right amount. Chances are they are only showing you the required payment for the eligible loans only, and not the overall monthly amount for all your loans. I’m on IBR with maybe 55k combined income and family of 4 and I pay $230 a month. When i had about 80k combined income and family of 3 I had to pay $500 a month.

hart47 - 23 May 2016 02:20 PM

Are any of your wife’s loans direct loans already? If so, you don’t need to consolidate them. Doing so would eliminate any PSLF progress you have made on them (if she’s made any qualifying payments so far) If only one isn’t a direct loan, you MIGHT have to take one of her direct loans merge it with the FFEL loan to make it qualify, but I’d check on that. I’m unsure if you need a direct loan included within the consolidation to make it a direct consolidation loan. I’ve heard different things.

Thanks for your comments.  Her graduate school loans were direct and she started paying on them in 2013 but she was on graduated repayment the entire time so unfortunately none of those payments count…  We just didn’t know what we were doing at that time and are kicking ourselves now of course.

hart47 - 23 May 2016 02:20 PM

Be wary of the studentloans.gov calculations. They only calculate the loans that are eligible. For example, they told me my IBR payment would be around $500, but under ICR it would be $180. This is because only two of my loans qualified for ICR where many more qualified for IBR….so it was deceiving. (FFEL loans are eligible with IBR, while they are not with ICR unless I were to consolidate, so it was only calculating loans that were currently eligible) If I chose ICR i’d be paying a lot more per month overall. It looks like REPAYE follows similar criteria as ICR https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven. So, what I’m saying is you might want to verify that REPAYE is showing you the right amount. Chances are they are only showing you the required payment for the eligible loans only, and not the overall monthly amount for all your loans. I’m on IBR with maybe 55k combined income and family of 4 and I pay $230 a month. When i had about 80k combined income and family of 3 I had to pay $500 a month.

I’ll double check all of this but I as far as I could tell it was showing the full amount of her debt (a little over $60K), also, I don’t know if IBR does this, but REPAYE also takes into account your spouse’s loans.  Right now I have a little over $36K but will have $56K once I finish grad school in May ‘17.  Also, by the time we consolidate my loans were plan to be a family of five, so that should make a difference as well.