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Student loan rehab complete! Need advice. questions about repayment, refinancing and consolidation.

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Valued Member

Student loan rehab complete! Need advice. questions about repayment, refinancing and consolidation.

Please bare with me here this is kind of long but i wanted to add as many details as possible. 


Alright so this month has been a great one for me in terms of my credit and finally seeing progress. A few weeks ago my 200$ navy federal card graduated to a $2,000 unsecured card! Also a few days after that was my last student loan rehab payment! 


My current Fico scores are 628 on experian 642 equifax and 654 on transunion. These are scores pulled before the rehab and new spending limit on navy federal have reported. 


Great lakes sent me a letter letting me know whats up. I have about $26,000 worth of student debt with them at 6.625% intrest rate. The repayment options they listed are either i can pay 241$ per month for 14 years or i can pay 182$ a monthand have my payment increase by about 30$ every 2 years. I calculate 145$ worth of intrest every month on this loan


I also have another $10,111 worth of student debt with Myfedloan at 4.66% intrest. This is currently in a status where i dont have to make any payments untill november. Not sure what its called forbarance maybe? But i do pay down the intrest every month and pay a little bit extra tword the principal but not much. I calculate a monthly intrest accrual of about 40$ on this loan.


This brings just the intrest accural to about 186$ montly by my calculations. Meaning id have to pay well over 200 a month just to make a dent.


My current financial situation is i make roughly $1,800 a month. My monthly bills including food and gas come to roughly $1,200. This is a ball park estimate as i've only been keeping track of my food and gas spending the last 2 months, But it should be close. 


So that leaves me with about 600$ a month. What would you suggest? As far as i can tell my options are to re-finance with a private bank. Maybe navy fed or something? Depending what intrest rate they give me i could more easily make the payments but would loose out on the protections of a standard student loan like IBR and such. I know consolidation would create a new loan at 100% utilization but my current loans are all already over 100% utilization because i wasnt paying on them for awhile. These are my oldest tradelines by far but i dont think it wouldnt be the end of the world to loose them for a signifigant interest rate reduction?


I could get both loans on an IBR program and pay as much as i can on the 10k with myfedloan but i think this is backwards because those loans have the lower intrest rate even though its the smaller balance. 


i checked out the consolidation option on and i can consolidate all 4 loans into one loan with a 6.125% intrest rate which would not help at all. 


Anyhow just looking for some advice. My job is steady and i feel like i do have the option to make more money with them within the next few years but iv'e only been with the company a little over 6 months now. Maybe its time to ask for a raise?

Established Contributor

Re: Student loan rehab complete! Need advice. questions about repayment, refinancing and consolidati

There are several Income-driven repayment or IDR plans. Some of the more popular are REPAYE, which I think can probably benefit you the most, and IBR. The way that REPAYE works is the take 10% of your income, after they've subtracted 150% of the federal poverty level. In your case, there will barely be anything left. So your payment on REPAYE will be close to zero. Now if you can additionally later have a paycheck that's less than normal, you can use it to have your payments recalculated early (you have to recertify annually) and that lower payment will be good for the next year.
You can use the repayment estimator but in your case it will be highly inaccurate. It takes into account annual raises, etc that you may not get. While moving up in the company later is great, I would suggest planning on what you have right now.( It is also highly recommend that people focus on building up an emergency fund rather than paying off loans earlier to avoid interest. )
Once you sign up for REPAYE, you'll Benefit from the interest subsidy. For the first 3 years there government will pay the interest on your subsidized loans not covered by your payments. According to your numbers, that's almost all of it. Thereafter they will pay half. For your unsubsidized loans, they will pay half the interest period.
I highly suspect that you will not only be eligible for loan forgiveness in 20 years, I think you will have paid a lot less than what you owe. Can't beat that interest rate.
I'm not seeing the benefit of consolidation. It will give you a brand new loan (new tradeline on your CR), at 100% utilization.
The good news is that if you later get paid much better and you would benefit from paying the loan off early, you can always name higher payments than required.
Btw, did you every make payments on an IDR plan before rehab?

Message 2 of 4
Valued Member

Re: Student loan rehab complete! Need advice. questions about repayment, refinancing and consolidati

Thanks sabii, as always great advice! I never knew about the nuances of the Repaye plan until you mentioned it. I will definately look into that. Also i do believe i was on a IDR plan before collections but that wasnt the greatest period of time in my life and i dont really remember exactly. 

Message 3 of 4
Established Contributor

Re: Student loan rehab complete! Need advice. questions about repayment, refinancing and consolidati

You're welcome. 🙂
There are subsidy benefits to IBR to but I would only go for them if you are unable to qualify for REPAYE for some reason. If you've already paid on some IDR plan and your loans are not too old (I've heard something about much older loans not qualifying for loan forgiveness in 20 years? I'm still looking for the text), I would definitely stick with forgiveness. Once you get to 100% utilization on your student loans there's no additional penalty on your CR. Pay the minimum (Probably less than $20/ month), let the gov pay most of the interest and let the majority of the loan be forgiven in 20 years imo.
Just be aware that if you consolidate, you'll lose all the qualifying payments you've made so far.

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