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REPAYE question: Issues with making payments that exceed minimum?

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REPAYE question: Issues with making payments that exceed minimum?

I’m currently on REPAYE. After analyzing my loan situation, I recognized that the SLs would be paid off before the 20/25 year term based on my current income potential. These loans are the biggest impediment to financial independence and given that REPAYE does not provide me with a long-term financial benefit, I decided to accelerate the payoff term (approximately 42 months). 

 

Assuming that I move forward with this plan, here are my questions:

  1. When making payments larger than the REPAYE amount, does that impact how they calculate the future monthly payment in subsequent certification periods?
  2. Is there are any NEGATIVE implications by making significantly larger payments while on REPAYE or is it better to move to standard (10 year) or extended (15 year) plans? 

FYIs

  • I will continue pre-tax contributions (max 401k / HSA)
  • I will suspend after-tax savings with the exception of amounts used to pay insurance premiums and deductibles 
  • I have no other debt 

 

 

$mart $$$: #1 Invest, #2 Prioritize health, #3 Limit debt
Garden Goal: Mortgage ready and below 5/24
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Valued Contributor

Re: REPAYE question: Issues with making payments that exceed minimum?

With the understanding that I'm not a student loan expert, just someone else on a completely different payback schema (ICR instead of REPAYE):

 


@Namaste7 wrote:


Assuming that I move forward with this plan, here are my questions:

  1. When making payments larger than the REPAYE amount, does that impact how they calculate the future monthly payment in subsequent certification periods?

    Again, I'm on ICR - but nothing changed after completing my recertification - I am paid FAR ahead and they did not recalculate anything for me.  My anniversary is in September, but I received notification that my recert is complete and nothing has changed on their end.
    When I was researching going to Standard (because I'm doing the same thing, just paying it off), there didn't seem to be much difference re: recertification for the various IDR/IBR/ICR/RePAYE/PAYE payment plans.


  2. Is there are any NEGATIVE implications by making significantly larger payments while on REPAYE or is it better to move to standard (10 year) or extended (15 year) plans? 

    I can't think of any negatives by paying ahead - there are no penalties for early payment.
    I've been making payments 3x larger than my payments due and watching my info at the NSLDS and other than moving my "next due" out, nothing has happened.

    IF you move to a standard plan by not recertifying, you will probably have your outstanding interest capitalized, but if it's not much, it might not be worth it to recertify every year for you.  I just recertified to keep everything tidy and continue to pay ahead.
    I don't know what happens if you specifically request the standard plan vs not recertify, though.



Oct 2019


Garden goal: keep on keepin' on
Usually a faithful practitioner of AZE5or6or7; working on AZE1or2 and grumbling about it.
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Valued Contributor

Re: REPAYE question: Issues with making payments that exceed minimum?

As with any simple interest loan, I would take the option for the longest payback period as long as the interest rate is the same.

You can always pay extra without the obligation of paying more each month because you shortened the terms.

 

 

 

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