(I said I stopped payments on my student loans here and this post is my follow up, like I promised, on how)
What if you’ve found yourself in a jam, maybe you have no job and you have monthly student loan payments due- it can be a real pressure cooker, right? I’ve been there and I don’t want you to have to deal with that stress. Here’s a quick (and legal) tutorial on how to not pay your student loans.
Step 1: Call your loan servicer.
What is a “loan servicer?” In short, your loan servicer is the company that handles the billing and collection of your payments. Their name will be at the top of your bill. My servicer is Navient, so I will be speaking directly about their process, but it should be about the same, servicer to servicer. If you use Navient as well, you can call Navient at (800) 722-1300
When you dial in, enter your social, choose the options for payment, delay payment, and then just press 0. This will take you to a representative who can actually help you. You’re going to have the option of a deferment or forbearance.
What is a deferment and forbearance?
Technically, step 1 should read- be in a financial jam. That’s where the options of deferment and forbearance come into play.
Per: studentaid.gov (direct link here):
“During a deferment, you do not need to make payments. What’s more, depending on the type of loan you have, the federal government may pay the interest on your loan during a period of deferment.”
…
“If you can’t make your scheduled loan payments, but don’t qualify for a deferment, your loan servicer may be able to grant you a forbearance. With forbearance, you may be able to stop making payments or reduce your monthly payment for up to 12 months. Interest will continue to accrue on your subsidized and unsubsidized loans (including all PLUS loans). “
Because I had no job and didn’t qualify for a deferment, I was told to request an income driven repayment plan, and this is probably what you will want. My representative put my payments on hold for 60 days so that I could fill out the proper paperwork and they would have time to process it. I received this e-mail following my call:
Step 2: Fill out app at studentloans.gov
The rest of this process should be uniform across all servicers because it is handled at studentloans.gov
For the application, you answer some pretty straight forward questions:
Why do you want a repayment plan?
My Answer: “I’m not in an income driven plan and want to be in one.”
Then you select what type of plan. For my situation, no job, no income, I needed Revised Pay as You Earn or “REPAYE.” Because I wasn’t earning, I wouldn’t be paying. Plans are good for 12 months.
NOTE: When I was filling out my information, it linked my tax documents online. It gave estimated payments based on my previous year tax documents and it showed my payments hadn’t changed. That’s okay because if you’re like me, your situation probably changed from last year and those numbers may not apply. One of the questions on the form asks directly if you have an income, to which I answered: “No,” and that will be considered during processing and bring my income, and therefore my payments, to $0.
Step 3: Submit. Be Patient.
Answer the questions honestly, because they will find out if you’re lying, and then submit online. When you are approved you will receive an email similar to this:
But be patient. I applied for REPAYE on February 16 and received this notice on March 8.
Step 4. Live life.
And you’re done. In all honesty the application can be completed in an hour and then you can go on with your life.
A couple notes moving forward:
- In ten months they will send you a form to reapply for the next year.
- For a family the size of one (like mine) the income limit for REPAYE is $17,820, and that’s gross, not net.
- For subsidized loans, I am accruing 0% interest. Unsubsidized loans are only taking on 50% of their usual interest and it will capitalize. This is good for 36 months, afterward 36 months subsidized will go to 50% and unsubsidized will go to 100% of their usual interest. Hopefully by 36 months you and I are out of our jam.
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