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REPAYE at $0 – $222: Question about “Negative Amortization” and making principal payments.

hello reddit friends!

i haven’t posted here and even though i’m pretty good at managing my money, i do it by just not buying stuff and also by not having a ton of debt – student loans being the exception. anyhow, that magic time in a girl’s life when those loans become a reality is on the horizon so i need some help with my options.

basically, my brain went from just being fine with doing standard, to maybe considering refinancing my two highest interest loans (which are also my two biggest), to hearing about this IBR option, in particular, the PAYE and REPAYE.

to be clear, i am in a wonderful position right now with a super cheap place to live and no other significant debt. I WANT to pay off my student loans, and i want to do this as quickly and with as little interest as possible. i’m not really interested in a small payment for the rest of my life…

in reading the FAQ about IBR plans, i noticed that it says that the government will cover all or half remaining interest for the first three years if your minimum payment is lower than the accrued interest and then half the remaining interest from there on out. your minimum is based on your previous years taxes or recent changes that you submit at recertification. i have recently accepted an offer at about 50K per year, but will only be working the remaining 4 months of 2019, which qualifies me for a $0 minimum payment for 2020, i believe. afterwards, i will submit my full pay at 50k, bumping my minimum payment up to $260. this means that for 2020, the government will cover my interest, right (~2,800)?

**so, my questions are: is my understanding of this correct or am i way off? also, assuming i am correct, will making excessively large payments in this first year (or at least a bit more than my standard plan amount of $560) mean this all goes to the principle or will the government see me making large payments and apply them to interest regardless of my minimum payment amount? are there downsides to this plan and do you all suggest i look at something different?**

here is what i owe: $48,000, no interest… 2 unsub at 6 and 6.6 APR ($37,500), 1 sub and 1 unsub at 4.28 APR ($10,600 total).

REPAYE at $0 – $222: Question about “Negative Amortization” and making principal payments. – RobinHood – Reddit Feed


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