Questions for Nelnet - Plan of Attack (Help!)

[ladyjaye82]

So due to being young and dumb and naive I got myself into a boatload of student loan trouble when I was trying to obtain my master's degree and now I owe considerably more than what I borrowed and I need some advice in formulating a plan of attack to knock down this debt.

Let me first start by saying I have a TON of 30, 60,90, 120 day lates on these accounts. I know there's virtually nothing I can do about those and just wait as they begin to fall off over the next few years. My account with them has been in excellent standing since October 2014. There are 6 TLs associated with my account with Nelnet.

Original Total Amount Borrowed: $42,333.00

Current Total Amount Owed: $63,524.00

I'm currently on an income-based repayment plan paying $277.36 each month. I'll have to re-certify in August and I'm sure it will go up at that time because I switched jobs last year and received a significant increase in my salary.

My question is what is the best way to attack this debt to start paying it down? I'm really looking to improve my DTI ratio since I'm hoping to purchase a home next year.

Loan A

Original Loan Amount: $2,750

Current Balance: $3,416.38

Interest: 2.32%

Loan B

Original Loan Amount: $8,500

Current Balance: 12,385.64

Interest: 6.8%

Loan C

Original Loan Amount: $10,583.00

Current Balance: $16,678.85

Interest: 6.8%

Loan D

Original Loan Amount: $8,500

Current Balance: $12,385.64

Interest: 6.8%

Loan E

Original Loan Amount: $12,000

Current Balance: $18,866.73

Interest: 6.8%

[SCF]

Make a budget and devote as much money as you can to repaying your loans.  If you stay on iBR, your interest will not capitalize into the principal of your loans, which is good, because if it does, you wind up paying interest on your newly-converted-to-principal interest.  Beyond your minimum payment, devote as much as you can to one of your 6.8% loans.

It might be worthwhile to delay purchasing a home at this point.  Not only does more time give your score more opportunity to recover, which gives you access to different loan products and better interest rates, but it lets you pay down more of your debt and save more for your down payment and emergency fund.  In your situation, I might be planning to buy a home in 3-5 years, not next year.

[ladyjaye82]

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@SCF wrote:

Make a budget and devote as much money as you can to repaying your loans.  If you stay on iBR, your interest will not capitalize into the principal of your loans, which is good, because if it does, you wind up paying interest on your newly-converted-to-principal interest.  Beyond your minimum payment, devote as much as you can to one of your 6.8% loans.

It might be worthwhile to delay purchasing a home at this point.  Not only does more time give your score more opportunity to recover, which gives you access to different loan products and better interest rates, but it lets you pay down more of your debt and save more for your down payment and emergency fund.  In your situation, I might be planning to buy a home in 3-5 years, not next year.

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Ok, so if I stay on the iBR can I make huge monthly payments without being switched over to another option? My fear is if I do that, as I have been considering, that when I go to re-certify they'll knock me into the general repayment fund at which point all of the interest capitalizes. Additionally my loans are going to take nearly 17 years to pay off if I stay on the iBR plan and I'm not sure I want to be paying this debt that much longer.

I totally get where you're coming from about waiting another 3-5 years and if my current living situation were different I'd be into that. I'm currently living with my folks following my divorce and I can't stay here forever for a variety of reasons and rent in the metro-Atlanta rate is extremely high. I'm trying to find a balance in between everything.

[SCF]

Your IBR payments are based on the income information you submit and the IBR formula, not how much you actually pay each month.  As long as you re-certify when you are supposed to and provide the information they ask for, you can stay on IBR - I believe the payment caps out at some point, either at the amount of the stanard payment, or maybe it's 150%?

[ladyjaye82]

Thanks for the info. It certainly at least warrants a call to their CS team to get more information. I plan on attacking these loans after I pay my car off this year. I'm definitely ready to get rid of these as quickly as possible.