Student Loan Plan Renewals

[Anonymous]

So, I about fliped when I got the renewal amount of my student loans being around 800$ for income-based. I do the yearly auto-transfer your tax return to lender way. Well this last year my income jumped drastically due to overtime and tons of bonuses. I called Navient and spoke to a wonderful lady who educated me on the renewal dos and donts. Figured that I would share. The big mistake that I did is that I elected for my tax return to auto-transfer to the lender to calculate this renewal. The representative stated that you can do this, however if you have a job where your income fluctuates then this is not good. She walked me through the process of logging in and manually inputting my income and attaching my last two paystubs to show true income without all the bonuses and OT. My payment then dropped down the $249/MTH. This also did not affect my 20yr income plan payment before the balance drops off which was great. She did mention that you should never select to have the lender decide which plan will work best for you because it may reset that clock for balance to be forgiven based on your plan. I was shocked that I was doing my renewal incorrectly. If you want lower payments that truley reflect your income (minus bonuses or OT) then call into the lender and speak to someone to help weigh your options. I was suprised that I did not know all the options for renewal verifications. Just a simple tip. Oh, and another thing she did mention is that you should be current on your loan payments so it does not mess with anything (which makes sense). Im just glad that I called someone instead of trying to figure it out all on my own. I can still make additional payments above the min due but in case there is a month Im leary on finances I know that my required payment now truley reflects my monthly gross income.

[Anonymous]

Very true!  Glad you are learning some of the things you can do to help your repayment.  

Using the IRS import option from the website might be easier and the application processes faster,  but just like you, I learned it can skew your income if you have overtime. The best way to submit it to wait until there is a month where there is a drop in your income. This can be anytime before your annual recertificatiom. You can have them recalculate it any time before the year is up!  Now they will look at these timesheets/ paystubs and they will apply this as your regular paycheck when they calculate your annual income. When they lower the payment, the new amount is good for a new year. 

I would agree with not letting them select the plan but only because IMO the student loan servicers cannot be trusted to have your best interest at heart. This is why Navient is being sued and I'm sure that they will only be the first. However it actually benefitted me when I accidentally selected it because I didn't know about the new REPAY plan.  I don't know what they're talking about that it resets your qualifying payments though. Mine did not change. I do know that you should occasionally contact the servicer and ask for the count though; they make mistakes a lot. 

On the federal student aid website you can also log in and the calculator will tell you the lowest IBR plan. 

Are you on track for loan forgiveness? I absolutely would NOT pay anything more than the lower payment. It won't count as an extra qualifying payment or anything. Save the extra money because they will not take into account overpayment. Yes, be sure to make all your payments on time too because a blemish will be reported to the credit bureaus. If you have more than one loan, each will report late. It can be a costly mistake.