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Deferring only subsidized loans

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Established Contributor

Deferring only subsidized loans

So I had this idea and thought I would post here to see if anyone has heard if this is possible. I did a google search but came up empty and have not called Navient to ask.

 

I have two consolidated loans now working my way towards PSLF at some point. It occurred to me that it would make more financial sense in terms of helping my utilization get down quicker is to defer the subsidized loan and just pay everything on the unsub. I'm just not sure if this is possible and I'm also not sure if it would affect my PSLF if I just paid on one of the loans if it was possible. This would let me put all my payment towards the unsub and bring my balance down quicker since while in deferment the sub-loan would not accrue interest. I would even take a few classes during this time if this was possible as it would save me the interest in the long run as well as help my scores grow quicker

 

Has anyone ever heard of this and know if it may be doable. 

Started Rebuild 4/2018: EX 616| TU 604| EQ 621

Current 10/12/19:


First Goal Score: 750+ Reached 3/2019

Next Goal all over 800
Message 1 of 5
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Valued Contributor

Re: Deferring only subsidized loans

The short answer is: maybe.
People are under the impression that the single bill you get is for a single payment but often if you look at the breakdown it's multiple payments for multiple loans. There is nothing stopping people from targeting a certain loan or loans after the minimum payment is made.
However, as to whether you can put only a few on deferment or forbearance, I don't know. I would suspect the answer is no in certain cases such as saying you've got the financial inability to pay. However, I would question if it's a wise plan in the first place.
First, the account being in a non-payment status will be reflected on your credit report. You'll be loosing out on a positive (or negative) payment history reporting. If you go back to school at least half time you can halt the payments but again, I believe this is all-or-nothing. If you do make payments, the deferred status of the loans would cause all of the payments to be unqualified for forgiveness. This will be automatic. To avoid the deferment you'll have to sign a waiver and list when you want it to start. If you change your mind, you only get once chance to undo the waiver. Ever.

I would suggest finding the lowest IDR plan. Then pay the minimum on your loans except the one you want to make extra payments on. In addition, some like REPAYE will have the government pick up all or part of the interest if your minimum payment don't cover it.

Any questions?

"Ask Your Student Loan Servicer to Ungroup Your Loans"
https://twocents.lifehacker.com/ask-your-student-loan-servicer-to-ungroup-your-loans-1831579569



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Established Contributor

Re: Deferring only subsidized loans

Thanks, I had not come back by here to see any responses. I'm already on the REPAYE plan. splitting the loans may be another option and would not jeopardize my PSLF. I think I'm going to talk to them about that. The main reason I was thinking about the deferred o[ption is the REPAYE payment is not covering my interest. I know the end game is to get them forgiven, but who knows if that will even bee there when I get to that point. I just don't like seeing the principal go back up each month instead of down. 

Started Rebuild 4/2018: EX 616| TU 604| EQ 621

Current 10/12/19:


First Goal Score: 750+ Reached 3/2019

Next Goal all over 800
Message 3 of 5
Valued Contributor

Re: Deferring only subsidized loans

Oh heck, you're on PSLF? Forget about all this then, lol!
First, it sounds as if your payments are too low to cover the interest on you unsubsidized loans. That's okay. REPAYE actually has a great benefit. The government pays for half of the unpaid interest each month. That's money that's being paid...but not by you. If you make larger payments, enough to cover all the interest, then they don't pay anything. The same for subsidized loans. All interest for I think the first 3 years, and half for the remainder.
Second, I believe all payments go toward interest first. I don't think you need to split your loans for this. I also wouldn't jeopardize your PSLF with something that may well affect it in the fine print. They could also just mess up what you asked for because they didn't understand what you were asking them to do and endanger your PSLF status. I wouldn't risk it if I were me.
But you spoke about wanting to raise your score fast. I originally thought the same thing. Focus on the major debt, right? It turns out that the members here told me it isn't my >100% util loans keeping me from 800+. It's frustrating to see the balance continually got up but it's not what's holding your scores back. Its likely something on your credit report that you might be able to try to fix now or wait until something ages/ drops off.
Do you know what it might be?



Message 4 of 5
Valued Contributor

Re: Deferring only subsidized loans

About the forgiveness, yes there has been talk about doing away with the program. I'm not sure of they'll focus on it so much right now because they've managed to mess it up so only a small percentage of the people who applied actually got it. However out of the proposed changes and cancellations there has been one thing most of them agree on; the existing borrowers must be grandfathered in. It isn't in the contract that we signed that these would be options. To take them back would create a legal situation they just don't want to even think about. So while technically they could...nobody is talking about doing that. Instead the new borrowers would not have the option.
Additionally there has been talk about putting a cap on the forgiven amount. This has a lot of support, especially with the rising cost of education and interest rate. Another thing is the IDR forgiveness was originally 30 years for undergraduate loans. It was reduced to 25 then 20 in the last decade. They could potentially change the number of payments required for IDR and PSLF forgiveness. But again, they'll probably apply it to new borrowers rather than risking being viewed as Lucy moving the football.
I think you're forgiveness under PSLF is pretty safe.



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