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Default loans + rehab in progress

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Re: Default loans + rehab in progress

Is there a reason you file so early?

  
The average person files later because we need time to get all of our documents (W2s, 1099s, etc).   I pretty much file before everyone else I know, and that's in February (my financial institutions get their forms to me quickly, my workplace gets me my W2 the day after payday, and I have a pretty simple tax return).

The only document you'll need to worry about for your student loan will likely be your 1098-E, which is for your student loan interest deduction.

Even when I defaulted, I received one, so as long as you qualify you'll get it.   Once you are no longer in default, it might be easier to get it from your servicer (mine was available for download pretty quickly).




Garden goal: keep on keepin' on until 2020.
Faithful practitioner of AZE5or6or7
Message 11 of 13
New Member

Re: Default loans + rehab in progress

Okay, so what I've gathered so far:

1. File taxes after my 9th payment (February 2020) and I have until April to do it.
2. Keep track and documentation of everything from start to finish.
3. Keep tabs on when I who my new servicer is.
4. Once I'm no longer defaulted, ask for a 1098-E from my servicer.

 

I usually file my taxes around the first week of January. My question is, if I file my taxes in say March, when does the count on my income stop? It just stops on my last pay of December? (I'm asking because if I make "too much" my medical insurance will go up and that's more expenses I have to think about). That's also another issue with filing early, I have until December 2019 to renew my medical insurance, what would I be putting as my income if I were to file in March? I think I'm going to speak to my insurance about this one, I'm sure I'll figure it out.

 

I used the repayment calculator, if I make the same amount (with a 5 % interest) the options for "Standard" is $257 / mo. for 120 months for a total of $30,889. My current "balance" is $ 24,248, even though bills in the mail say its $28,000 (about that amount). For what I earn $257 eats a lot out of my pay, I pay something like $300-$350 in bills and my job is not steady so I could be working 86 hours two weeks and 70 hours the next two weeks. Sometimes I'm working only 40 or 60 hours in two weeks total. I'm currently in the process of leaving my current job (doing a part time job) and just saving up for next year to still be able to make payments.

 

I have a question though, if I have "9" accounts and I'm paying say $257 a month, is the $257 being put towards all 9 accounts? Wouldn't it be better to consolidate them into one loan? Or is that too much for a loan of $20,000+? When should I consider consolidating or can I even do that if the amount gets smaller?

 

I also ordered out all my loans (not including the full account numbers) to get a better idea of where I'm at:

Image: https://imgur.com/xl8PB60

Message 12 of 13
Established Contributor

Re: Default loans + rehab in progress

Yes, great list. I would also add to do some research in the coming months so you'll know what plan you need to be on. I think I gave you a link to the repayment estimator.

Thank you for asking questions about things you're not sure of. When you file your taxes in 2020, they will be for the year 2019. They give you a large window to do so. It doesn't change the period the taxes are for though. Sometimes I do mine in January, sometimes I'm lazy and do them in April. It doesn't change anything other than when I get my refund. As far as the insurance, they are asking for a previous tax year; nobody has filed taxes yet. Nothing changes in how you do that. The form you get from your insurance for 2019 tax purposes will just be filed later. (I'm not 100% sure what you're question is). One thing to think about is some health insurance has the ability to change plans/ update anytime with a change in employment (such as with Covered California).

I strongly recommend against the standard repayment plan. I believe this leads many borrowers into default a first and second time. Keep in mind, all these payment plans are about the *minimum* payment that will be required. You do not need to be on a high minimum payment plan to make larger payments. However you definitely need to be on a lower minimum payment plan like IDR plans if you maybe cannot afford that minimum payment. The standard repayment plan also has no forgiveness. You never know what might happen when you might need to qualify.
My suggestion is pick an IDR plan with a low payment. Pay what you can afford to pay, or at this time just pay the minimum and later when you're set in a new job you can pay more. The great thing with IDR plans, you can recertify early. So when you leave your job, you'll have no income. You'll recertify early, and have $0 minimum payments for the next year. On REPAYE and IBR the government will pick up all or part of the interest! (I can give you the details on that if you want). This will give you some breathing space. Or you can make payments, but now they will be flexible to what you can pay.
I think consolidation is rarely necessary, and often makes things worse. It's pushed by servicer's to make them make unnecessary changes. If you read the narratives on the failed PSLF applications, they pushed consolidation on PSLF people, knowing it would reset their Forgiveness payment counts. They are not looking out for you.
All you need to do is call up your servicer and ask them to group your loans. They might already be grouped. Then when you make a payment, it's actually the total of the minimum payments for each loan rolled into one amount. You're welcome to pay extra and even target the extra to certain loans. Consolidation will give you a brand new tradeline at 100% on your credit report and close out the older loans that are helping your file age nicely. After 10 years they'll age off. This is why people pay off student loans steadily but not at once when they can; it pushes back their oldest tradelines falling off. When the amount gets smaller, if you consolidate you'll go from multiple loans with reduced utilization to a loan with 100% utilization.
Hope this helps.



Message 13 of 13
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