Navient put me in Alternative repayment plan with very low payments?

[Anonymous]

Just finished loan rehabilitation and navient picked up my loans once again. I'm in what they call an "Alternative repayment plan" My monthly payment is the same as it was while in rehabilitation ($212)... I owe a total of about $68,000 combined on 2 loans. I will be in repayment until 2036 in which I would have payed roughly around $26,000 on each loan. I'm assuming the rest will be forgiven?  In actuality school only cost about 35-40k... anyhow, does this sound like a decent repayment? Mind you I thought I was going to be looking at a $500 a month payment after rehabilitation. This helps me out tremendously with my DTI next year when I buy a house

[Anonymous]

They did the same with me. However, what they told me is that it is only for three months, then it rolls to full repayment. Before that 3 months is up, I would contact them to set up whatever payment options you fit with. Also, in the meantime, you can pay more so your balance doesnt continue to climb. No idea what you interest rates are, but mine cost me a total of about 210.00 a month in interest. So while my payment is very low, I choose to pay at least $400 a month so Im covering all the interest plus some.

[Anonymous]

I rehabbed my loans and they are now serviced by Navient.  When they first received my loans I was also in an "alternative payment plan" with my payment the same as what I was paying in rehab ($315) and it was just a temporary arrangement until I was able to apply for IBR.  As soon as everything was cleared, I applied for IBR and now my payments are now $209.  I am still paying the same amount, but applying the extra to one loan at a time until they are knocked out.  I would check into the IBR just to see where your payments would be if you went that route.  My rehab amount was not going to amoritize the loans either, but I want to get them all paid off sooner rather than later, and hopefully end up ahead by saving on interest.  

[Anonymous]

So I called Navient and they pretty much confirmed what you guys stated. So my payments are $212 for the first 3 months and then will go up to the full amount of $471 A month. While that's still not too bad, it's kind of a let down as I thought I'd be paying $212 for the next 10+ years. Ima look into IBR but I make on average $85k a year.. actually my 1040 (form required for IBR) for last year has $88k.. So I don't for see my payments getting lowered more than $471. Not until I start a family I assume. The lady at navient did tell me that they can't require a payment higher than $471 though.

[Anonymous]

Your rehab payments were (or at least mine were) somewhat income-based as well.  I had to provide my tax return and then they gave me an amount to pay.  I am not sure what has more of an impact on your payments, the loan amount or your income.  I have about $46,000 in student loans and make roughly $32,000 annually and am paying $210 a month.  You have quite a bit more in loans, but also almost triple my income.  I honestly think that you would be lucky to have the $471 payment based on that information.  

Also, as far as student loans and a mortgage are concerned, depending on what type of loan you have, they will either use 1% of your loans as the payment amount for DTI calculations (even if your credit report says otherwise) or your monthly payment.  I know for a fact FHA loans use the 1% amount, as far as conventional, I believe it varies by lender.  Something to keep in mind.  

[Anonymous]

While they are very willing to help you with low income based repayments you need to be careful with the proccess during and after the payment cycle ends. as you are aware,  for Income based payments you will mostly be forgiven after about 20 years if you are undergraduate or 25 if you are a graduate...

Now here is the thing, UNLESS you are eligible for Teacher or social employment forgiveness program as well ass the veteran forgiveness program all the forgiven amount after the loan's term will be taxable. This mean that you will mostly pay a hefty amount of tax during your tax income period. Just be aware of this.

[Anonymous]

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@Anonymous wrote:

While they are very willing to help you with low income based repayments you need to be careful with the proccess during and after the payment cycle ends. as you are aware,  for Income based payments you will mostly be forgiven after about 20 years if you are undergraduate or 25 if you are a graduate...

Now here is the thing, UNLESS you are eligible for Teacher or social employment forgiveness program as well ass the veteran forgiveness program all the forgiven amount after the loan's term will be taxable. This mean that you will mostly pay a hefty amount of tax during your tax income period. Just be aware of this.

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I don't know about Navient but FedLoan Servicing seems to intentionally take FOREVER to process annual income verification (tax returns or online through their link with the IRS)! Any time a borrower can do something electronically with them, don't pass it up. Also, borrowers should keep a log of who they talk to and when. It will be useful they have to file a complaint later. 

True, the Public Service Loan Forgiveness program is one of the few that does not treat the forgiven amount as taxable income. One way around this though is insolvency. Immediately before the loan forgiveness, a borrower makes sure to have more liabilites (mortgages, car loans, etc.) than the fair market value of your assets (house, car, bank accounts, etc.), enough to cover the amount forgiven. 

[Anonymous]

that is a great insight. would you mind futher elaborating the insolvency proccess?

[Anonymous]

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@Anonymous wrote:

that is a great insight. would you mind futher elaborating the insolvency proccess?

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I don't know much about it but there are several articles I've read on the internet that give a summary of the process. 

"A borrower is insolvent when their total liabilities exceed the fair market value of their assets. If their insolvency amount is greater than the student loan debt forgiven, then they can completely exclude the COD income."  https://lawyerist.com/defusing-student-loan-interest-tax-bomb/