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New Contributor
shinedown87
Posts: 65
Registered: ‎10-03-2012

I Need help qualifying for "Pay As You Earn" (PAYE)

[ Edited ]

I am often over at the credit card forums, but haven't really spent much time here on the student loan side because I haven't been paying on my student loans yet. Here is a little background (I am hoping someone on here can help me, since I have been unsuccessful getting information from my school's financial aid department and from searching online).

 

I will be graduating from dental school next month (May, 2013), and have accumulated nearly $160,000 in federal student loans (some subsidized, most unsubsidized). My interest rates on all of these loans is 6.8%. 

 

I was recently doing the required online exit interview repayment counseling where I learned about the new federal student loan payback program called "Pay As You Earn." I read that in order to qualify one must be a "new borrower" which they define in the following way: 

 

 "You are a new borrower if you had no outstanding balance on a Direct Loan or FFEL Program loan 

as of Oct. 1, 2007, or if you had no outstanding balance on a Direct Loan or FFEL Program loan when you received a new 
Direct Loan or FFEL Program loan on or after Oct. 1, 2007. In addition, you must have received a disbursement of a Direct 
Subsidized Loan, Direct Unsubsidized Loan, or Direct PLUS Loan for graduate or professional students on or after Oct. 1, 
2011, or you must have received a Direct Consolidation Loan based on an application that was received on or after Oct. 1, 
2011."

 

 

I have 3 federal student loans prior to Oct. 1, 2007 totaling $7,625. My last federal student loan was 9/4/2012. As it stands right now, it appears that I would not qualify for the PAYE program because I have outstanding balances prior to Oct. 1, 2007. 

 

To me, it sounds like if I pay off the $7,625 that I owe on loans prior to Oct. 1, 2007, and am able to get a new direct federal student loan after my old loans are paid off, I will be able to qualify?

 

If this is the case, I am thinking that if possible it would be more than worth it to enroll in some online university, take a random course, pull out a federal student loan (assuming that I still can - I am not sure if that would still be an option since I already have earned two degrees) and qualify for PAYE. This could potentially save me hundreds of thousands of dollars (that's why I am willing to do whatever I need to in order to qualify).

 

Any and all help would be greatly appreciated. Thanks!

 

 

 

 

 

 

 

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Senior Contributor
laz98
Posts: 4,291
Registered: ‎09-06-2008

Re: I Need help qualifying for "Pay As You Earn" (PAYE)

Did you use their eligibility thing?

 

It looks like it also depends on what kind of loans you have, as FFEL loans are not eligible.  It looks like it's only for Direct Loans.  Is that what you have?

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New Contributor
shinedown87
Posts: 65
Registered: ‎10-03-2012

Re: I Need help qualifying for "Pay As You Earn" (PAYE)


laz98 wrote:

Did you use their eligibility thing?

 

It looks like it also depends on what kind of loans you have, as FFEL loans are not eligible.  It looks like it's only for Direct Loans.  Is that what you have?


Yes, when I was doing the exit loan counseling it gave me a list of all my student loans, and which repayment programs I qualified for. There were a few of my earlier loans that don't qualify for PAYE, but the majority of them do. I called and spoke with someone at the direct loans department, and she told me that all of my federal loans could be consolidated into a direct consolidation loan, and the direct consolidation loan qualifies for the PAYE.

 

I was just reading that in order to qualify for additional student loans, I would have to be working towards a degree. So, it would me more than just taking an online class, I would need to be admitted as a degree seeking student.

Community Leader
Senior Contributor
laz98
Posts: 4,291
Registered: ‎09-06-2008

Re: I Need help qualifying for "Pay As You Earn" (PAYE)

Sounds like you got your answer then!  :smileyhappy:  Good luck!

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kjel
Posts: 362
Registered: ‎11-27-2012

Re: I Need help qualifying for "Pay As You Earn" (PAYE)

You really need to consult with your lenders/servicers to see what the eligibility is. It appears that some of your loans do qualify for Pay as You Earn but others do not due to type and origination date. If you have multiple loans with different terms and differing repayment plan eligibility you might be better off with cosolidation and an Income Based Repayment plan.

 

Much of what is right for you depends on your post graduation plans and what you can reasonably expect to earn. I have some pretty significant student loan debt, consolidated it, now on an IBR with very reasonable payments, and because I work in non-profit/government service I will qualify for the 10 year forgiveness provided all my payments are made on time.

 

 


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RhubarbPie
Posts: 105
Registered: ‎01-31-2013

Re: I Need help qualifying for "Pay As You Earn" (PAYE)

Not sure if you're still checking this thread, but were your federal loans (prior to Oct 1 2007) direct loans? I also had federal loans prior to Oct 1 2007 but they weren't direct loans. I think many federal loans at that point were not direct loans. If they were not direct, you should still qualify.

 

I actually thought that I wouldn't qualify for PAYE, but I consolidated one of my federal loans (the largest one I had) last year under the umbrella of direct loan consolidation, so even though I have not had any federal funds disbursed to my school since 2009, the direct consolidation counts as a new loan.

 

Call your loan servicer about it directly - they may be able to just tell you directly if you qualify.

 

New Contributor
shinedown87
Posts: 65
Registered: ‎10-03-2012

Re: I Need help qualifying for "Pay As You Earn" (PAYE)


RhubarbPie wrote:

Not sure if you're still checking this thread, but were your federal loans (prior to Oct 1 2007) direct loans? I also had federal loans prior to Oct 1 2007 but they weren't direct loans. I think many federal loans at that point were not direct loans. If they were not direct, you should still qualify.

 

I actually thought that I wouldn't qualify for PAYE, but I consolidated one of my federal loans (the largest one I had) last year under the umbrella of direct loan consolidation, so even though I have not had any federal funds disbursed to my school since 2009, the direct consolidation counts as a new loan.

 

Call your loan servicer about it directly - they may be able to just tell you directly if you qualify.

 


Sorry for the delay in getting back to you. Thanks for taking the time to answer. My loans prior to Oct 1 2007 are Saffford Loans. 

 

So, you did in fact qualify for PAYE? Was this because you didn't include your prior to Oct 1 2007 loans in the direct consolidation loan?

New Contributor
shinedown87
Posts: 65
Registered: ‎10-03-2012

Re: I Need help qualifying for "Pay As You Earn" (PAYE)

 
New Contributor
dta
Posts: 66
Registered: ‎07-08-2013

Re: I Need help qualifying for "Pay As You Earn" (PAYE)

My interpretation of the reg is that any borrower with Direct or FFEL debt as of 10/1/2007 is ineligible for PAYE, and therefore the current or future status of the loan(s), including if they are consolidated, is irrelevant.

 

"You also must be a new borrower as of Oct. 1, 2007... You are a new borrower if you had no outstanding balance on a Direct Loan or FFEL Program loan 

as of Oct. 1, 2007"

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wdsmith
Posts: 1
Registered: ‎10-24-2013

Re: I Need help qualifying for "Pay As You Earn" (PAYE)


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