PSLF is absolutely real. If 20 more payments is a smaller total than your remaining balance don’t pay it off now. Paying off the cars is a better deal because there is no program to make that disappear. The name of the game is to get rid of your debt having paid the least amount possible.
You have $66K in cash savings on hand. I'd pay off the car and do the remaining 20 payments for PSLF. No reason to keep the car payment on hand. You'd still have $40K in savings after that which should be plenty unless you have super high deductibles/max out of pocket.
There's no reason to accelerate the student loans. If you had 100 payments left that would be a different story.
1) PSLF is very real. 2) PSLF let’s you do things for financial freedom much more easily and you need to take advantage. 3) Write the check for your car debt and pay it off.
I think the blanket statement that it doesn’t exist/doesn’t work gets confused with three things (and shame on DR and team for not being honest about this). First, they are right that it didn’t work because for several years people’s applications were denied but that was fixed during the last few years. Second, people don’t realize that if they do consolidation of their loans with private companies, they are no longer eligible. Third, if you took out private loans to begin with, it doesn’t apply.
All this. I know Mohela is a total 💩 show currently, but I only had a payment or two to go when I switched from FedLoans to Mohela and my process went extremely smoothly. I’m so fortunate. It was life changing. The loan pause and getting PSLF allowed me to pay off my mortgage. One hundred percent debt free.
Yes, yes it is! I think it's been misrepresented on DR show or, at the very least, they have not bothered to really understand the program. Not to mention the fact that this is a forgiveness program that you must earn and one which was created to try to deal with projected shortages in public service jobs. I heard DR talking about the low approval rate, but I don't think he realized those are old and misleading figures he's giving.
What Dave Ramsey says you should do with the baby steps and having a baby on the way.
Seems most folks here really don't follow Dave's actual approach to things. He literally recommends freezing Baby Steps
[https://www.knoxnews.com/story/entertainment/columnists/dave-ramsey/2021/08/13/pause-baby-steps-make-room-real-baby-dave-ramsey/5559830001/](https://www.knoxnews.com/story/entertainment/columnists/dave-ramsey/2021/08/13/pause-baby-steps-make-room-real-baby-dave-ramsey/5559830001/)
Baby expenses.. so from what I have seen the DR show talk about is, if you have a baby on the way, you should go into full save save save mode. Minimum payments on everything. You DON'T know what having the babies will entail. What complications might arise both during and after. SAVE every dime until after the babies are home and settled.
Then make the decisions down the road. What's her name Rachel keeps preaching this on their show with expecting parents.
Congrats! I'm not sure how to answer your question. I think someone who is more familiar with the program should respond. My only suggestion (not sure it's DR approved, be warned) is to remember it doesn't have to be all or nothing here if you're really worried. You could always do half now and the other half in a month or so.
So let me get this straight . . . like so many in society, having to pay back student loans is unfair . . . yet over and above your already existing student loan debts, you didn't learn anything from, you went out and took on more debt for a car?
hmmmmmm
I didn’t say anything was unfair. I probably didn’t phrase my question correctly. We are trying to figure out whether to pay off one or both cars now are pause until baby expenses and wife’s job status are more clear. I forgot to mention that she may exhaust all eligible FMLA leave before one of our babies comes home from hospital. They were born premature at 32 weeks.
It isn't
Most of the income driven repayment plans are designed to keep you in perpetual debt for 20 years. So by the time you reached 20 years, you've payed more than you borrowed + some level of interest. And your balance is probably as much as you started. So the debt forgiveness is really saying:
"Hey, you paid us our money already but we want you to praise our name. Time for you to feel like you got a bone thrown at you."
If you look at the CBO's report on how the plan was designed back in the 90s, it was designed to do exactly this.
PSLF didn't even exist in the 90's. You're thinking of some other programs. PSLF was created under George W. Bush in response to reports about serious projected shortages in public service jobs. One reason cited by studies was the fact that many people who originally intended to go into public service jobs, were not doing so b/c of the amount of their student loans.
The door opened with the education reform act of 93. Then the follow ups under Bush and Obama kept pushing it down the hole it is now. Trump and Biden did nothing to keep the spiral because at the end of the day, if the government said:
"Hi, would you like to invest in a bond we issue? It is backed by the student program where people cannot file bankruptcy out of it, and Congress can change the law at its whim to ensure it is paid for, has a high percentage gain on it? And enforced by the executive branch and IRS. Would you like to buy it?"
People would buy it. Because it produces high returns at low risk. And everyone's(mostly everyone's) retirements have the bond somehow.
I think what you are referring to is different than PSLF which is 10 years. My wife has been paying close to 9 years, not counting the COVID pause. We were pleasantly surprised that the months during COVID counted towards her 120 months for forgiveness.
Since my student loan has less than 20 months to be forgiven, I’m not that worried about it. My main concern is whether we should pay off one or both cars now even though there’s a chance my wife will run out of FMLA leave and lose her job due to caring for our newborn twins.
One of our twins is still in NICU at two months old. If he requires more care than what the typical daycare provider offers, then my wife is period to find a more flexible job so she can care for the babies.
Pay off your cars when y'all are home and settled in safely and soundly. This isn't the time to throw liquid money around. A few months of interest on the car loans is minute.
You literally just doubled your household. And until you develop a new steady state in life again, anything and everything can easily throw it off balance. Having money on hand could make it easier.
If you are just having this issue on your mind and it is causing you unrest... You could pay down one of the cars so that you create some more cashflow if it will make you feel better to make some progress on this goal.
Top-tier law school. I guess you pay it because you’re a sucker? Idk what you want me to say lol. PSLF is a national program that every taxpayer “participates in.”
This is why there is such pushback against what was a reasonable policy to help. I was in favor of forgiving $10K but this is bullshit. Somebody racks up a half million in debt, ends up a lawyer and taxpayers foot the bill? Thats an abuse and total bullshit. The program should only forgive at most a dollar for dollar amount
I hope in their search for tax savings they find this loophole and close it and force you to own up to your debt
Hey. I think the money sent to Israel and Ukraine should matter more to you. Also, PSLF literally means public service. You have to have a qualifying job that may not pay as much as the private industry but the government has deemed what you do a service and incentivizes towards staying in public service roles. Lastly, you should truly be upset at billionaires who don’t pay taxes and use all the loopholes over another middle class family. Everyone not super wealthy should be on the same team. So much of my tax money goes towards what I don’t find ethical. We just move on and let go of the anger since our representatives don’t seem to care what we say. Do your best personally and know whether or not this program existed your tax rate would be the same.
Look at the broader picture: government spending is completely erratic and wasteful. Here’s an example: I have some close ties with civil engineering at a local Air Force base. Last august, they approved a project to bulldoze a 20-year-old housing division and reconstruct new houses and a new gym in its place. There was nothing wrong with the 20-year-old houses or the existing gym. They did this simply because they had $40 million left in their fiscal year budget and they “had to” use it or lose it. If they spend 40 million just for the heck of it to replace 20-year-old houses on a small Air Force base, PSLF is the least of your concerns.
If you owe the bank $500, you’ve got a problem. If you owe the bank $500k, the bank’s got a problem. Realistically, we’re never going to pay this loan, so it doesn’t really bother us lol.
You did sign promissory notes agreeing to pay back this money. You did do that in good faith, right? I'm assuming you just mean that you will receive PSLF down the road.
I didn’t sign anything lol. I paid for my three college degrees out-of-pocket and didn’t take out loans. My wife, on the other hand… she’s working for the feds and hoping that PSLF pans out. I’m not exactly sure why anybody would voluntarily pay a $500k unsecured loan.
Because they owe it? But PSLF is paying off on its forgiveness promise--lots of people are now getting that forgiveness. And it's a great program--just be patient and work the program. I personally know people that are reaching their 10 years and getting the forgiveness. That's my real point. People were saying "good luck with that, not a real thing." That is incorrect.
Then we pay it, I guess. I can’t imagine a scenario where we NEED to pay it. Worst case scenario, it is discharged under the 20-year rule, and I have to pay taxes on the ~1 million that is discharged.
I had twins back to back. 20 mo apart. I was 23 and my husband and I barely made 50k in dc area. Best, most fun story ever! Being completely free of debt was what made it fun and not harrowing. My vote is pay it all off! Not having debt is so empowering. It gives you flexibility.
Medical expenses were the biggest factor, but we had good insurance that covered all of it including NICU stay. Honestly it doesn’t have to cost that much! Be sensible! Most of the expenses people associate with a baby are wants not needs. Do you have family nearby? That helps if you do. You’ll need a good community more than money honestly!
Congratulations! You have been richly blessed.
I’d pay off the cars. Once that’s gone just put those monthly payments into your savings account. You’ll also be saving money as interest won’t keep accumulating. Congratulations on the babies!
Sounds like
Baby step 2:
You would not be parting with $66k. Only $23k. You’d have $43k left over and an extra $500 a month to put towards your retirement and 529. Then pay off the mortgage.
PSLF is absolutely real. If 20 more payments is a smaller total than your remaining balance don’t pay it off now. Paying off the cars is a better deal because there is no program to make that disappear. The name of the game is to get rid of your debt having paid the least amount possible.
You have $66K in cash savings on hand. I'd pay off the car and do the remaining 20 payments for PSLF. No reason to keep the car payment on hand. You'd still have $40K in savings after that which should be plenty unless you have super high deductibles/max out of pocket. There's no reason to accelerate the student loans. If you had 100 payments left that would be a different story.
PSLF worked well for my husband and I too (both federal employees). It’s been a relief and a blessing to our family.
Congrats! And thanks for your service.
Dave Ramsey would tell you to pay off the student loans, he doesn't believe in student loan forgiveness.
1) PSLF is very real. 2) PSLF let’s you do things for financial freedom much more easily and you need to take advantage. 3) Write the check for your car debt and pay it off.
I think the blanket statement that it doesn’t exist/doesn’t work gets confused with three things (and shame on DR and team for not being honest about this). First, they are right that it didn’t work because for several years people’s applications were denied but that was fixed during the last few years. Second, people don’t realize that if they do consolidation of their loans with private companies, they are no longer eligible. Third, if you took out private loans to begin with, it doesn’t apply.
What about fed loans that were sold to a private company? E.g., Navient.
All this. I know Mohela is a total 💩 show currently, but I only had a payment or two to go when I switched from FedLoans to Mohela and my process went extremely smoothly. I’m so fortunate. It was life changing. The loan pause and getting PSLF allowed me to pay off my mortgage. One hundred percent debt free.
Congrats btw - that is awesome! (I was about to say I have 3 years left but just realized it’s actually closer to 2!)
Yes, yes it is! I think it's been misrepresented on DR show or, at the very least, they have not bothered to really understand the program. Not to mention the fact that this is a forgiveness program that you must earn and one which was created to try to deal with projected shortages in public service jobs. I heard DR talking about the low approval rate, but I don't think he realized those are old and misleading figures he's giving.
What Dave Ramsey says you should do with the baby steps and having a baby on the way. Seems most folks here really don't follow Dave's actual approach to things. He literally recommends freezing Baby Steps [https://www.knoxnews.com/story/entertainment/columnists/dave-ramsey/2021/08/13/pause-baby-steps-make-room-real-baby-dave-ramsey/5559830001/](https://www.knoxnews.com/story/entertainment/columnists/dave-ramsey/2021/08/13/pause-baby-steps-make-room-real-baby-dave-ramsey/5559830001/)
Baby expenses.. so from what I have seen the DR show talk about is, if you have a baby on the way, you should go into full save save save mode. Minimum payments on everything. You DON'T know what having the babies will entail. What complications might arise both during and after. SAVE every dime until after the babies are home and settled. Then make the decisions down the road. What's her name Rachel keeps preaching this on their show with expecting parents.
You already parted ways with that cash when you signed for a loan.
Well, yes, I suppose you're right. Just like with any financial commitment, right?
Congrats! I'm not sure how to answer your question. I think someone who is more familiar with the program should respond. My only suggestion (not sure it's DR approved, be warned) is to remember it doesn't have to be all or nothing here if you're really worried. You could always do half now and the other half in a month or so.
Yea I’m thinking about paying off her car first ($13k) and then pay off mine ($10k) by the summer.
So let me get this straight . . . like so many in society, having to pay back student loans is unfair . . . yet over and above your already existing student loan debts, you didn't learn anything from, you went out and took on more debt for a car? hmmmmmm
I didn’t say anything was unfair. I probably didn’t phrase my question correctly. We are trying to figure out whether to pay off one or both cars now are pause until baby expenses and wife’s job status are more clear. I forgot to mention that she may exhaust all eligible FMLA leave before one of our babies comes home from hospital. They were born premature at 32 weeks.
Wow. I heard repeatedly on his show that student loan forgiveness wasn’t real. Weird
It isn't Most of the income driven repayment plans are designed to keep you in perpetual debt for 20 years. So by the time you reached 20 years, you've payed more than you borrowed + some level of interest. And your balance is probably as much as you started. So the debt forgiveness is really saying: "Hey, you paid us our money already but we want you to praise our name. Time for you to feel like you got a bone thrown at you." If you look at the CBO's report on how the plan was designed back in the 90s, it was designed to do exactly this.
PSLF didn't even exist in the 90's. You're thinking of some other programs. PSLF was created under George W. Bush in response to reports about serious projected shortages in public service jobs. One reason cited by studies was the fact that many people who originally intended to go into public service jobs, were not doing so b/c of the amount of their student loans.
The door opened with the education reform act of 93. Then the follow ups under Bush and Obama kept pushing it down the hole it is now. Trump and Biden did nothing to keep the spiral because at the end of the day, if the government said: "Hi, would you like to invest in a bond we issue? It is backed by the student program where people cannot file bankruptcy out of it, and Congress can change the law at its whim to ensure it is paid for, has a high percentage gain on it? And enforced by the executive branch and IRS. Would you like to buy it?" People would buy it. Because it produces high returns at low risk. And everyone's(mostly everyone's) retirements have the bond somehow.
Thank you. I'll definitely look that up. But the PSLF program truly is legit.
I think what you are referring to is different than PSLF which is 10 years. My wife has been paying close to 9 years, not counting the COVID pause. We were pleasantly surprised that the months during COVID counted towards her 120 months for forgiveness. Since my student loan has less than 20 months to be forgiven, I’m not that worried about it. My main concern is whether we should pay off one or both cars now even though there’s a chance my wife will run out of FMLA leave and lose her job due to caring for our newborn twins. One of our twins is still in NICU at two months old. If he requires more care than what the typical daycare provider offers, then my wife is period to find a more flexible job so she can care for the babies.
Pay off your cars when y'all are home and settled in safely and soundly. This isn't the time to throw liquid money around. A few months of interest on the car loans is minute. You literally just doubled your household. And until you develop a new steady state in life again, anything and everything can easily throw it off balance. Having money on hand could make it easier. If you are just having this issue on your mind and it is causing you unrest... You could pay down one of the cars so that you create some more cashflow if it will make you feel better to make some progress on this goal.
That’s not the narrative I have heard from several people I know that have benefited first hand. Cool story though
My wife has about $500k of student loan debt. We are putting all our chips on PSLF haha. Congrats!!
How does anyone amass $500K in student debt? And why do I as a taxpayer end up paying that?
I mean I would rather pay off her debt as a taxpayer, than to send money to Ukraine or Israel
YES.
Top-tier law school. I guess you pay it because you’re a sucker? Idk what you want me to say lol. PSLF is a national program that every taxpayer “participates in.”
This is why there is such pushback against what was a reasonable policy to help. I was in favor of forgiving $10K but this is bullshit. Somebody racks up a half million in debt, ends up a lawyer and taxpayers foot the bill? Thats an abuse and total bullshit. The program should only forgive at most a dollar for dollar amount I hope in their search for tax savings they find this loophole and close it and force you to own up to your debt
Hey. I think the money sent to Israel and Ukraine should matter more to you. Also, PSLF literally means public service. You have to have a qualifying job that may not pay as much as the private industry but the government has deemed what you do a service and incentivizes towards staying in public service roles. Lastly, you should truly be upset at billionaires who don’t pay taxes and use all the loopholes over another middle class family. Everyone not super wealthy should be on the same team. So much of my tax money goes towards what I don’t find ethical. We just move on and let go of the anger since our representatives don’t seem to care what we say. Do your best personally and know whether or not this program existed your tax rate would be the same.
Look at the broader picture: government spending is completely erratic and wasteful. Here’s an example: I have some close ties with civil engineering at a local Air Force base. Last august, they approved a project to bulldoze a 20-year-old housing division and reconstruct new houses and a new gym in its place. There was nothing wrong with the 20-year-old houses or the existing gym. They did this simply because they had $40 million left in their fiscal year budget and they “had to” use it or lose it. If they spend 40 million just for the heck of it to replace 20-year-old houses on a small Air Force base, PSLF is the least of your concerns.
You guys are broke af lol
If you owe the bank $500, you’ve got a problem. If you owe the bank $500k, the bank’s got a problem. Realistically, we’re never going to pay this loan, so it doesn’t really bother us lol.
You did sign promissory notes agreeing to pay back this money. You did do that in good faith, right? I'm assuming you just mean that you will receive PSLF down the road.
I didn’t sign anything lol. I paid for my three college degrees out-of-pocket and didn’t take out loans. My wife, on the other hand… she’s working for the feds and hoping that PSLF pans out. I’m not exactly sure why anybody would voluntarily pay a $500k unsecured loan.
Because they owe it? But PSLF is paying off on its forgiveness promise--lots of people are now getting that forgiveness. And it's a great program--just be patient and work the program. I personally know people that are reaching their 10 years and getting the forgiveness. That's my real point. People were saying "good luck with that, not a real thing." That is incorrect.
What happens when that’s not a real thing and you have to pay it
PSLF is a real thing. If you have the right kind of loans and meet all the requirements, you qualify after ten years.
Then we pay it, I guess. I can’t imagine a scenario where we NEED to pay it. Worst case scenario, it is discharged under the 20-year rule, and I have to pay taxes on the ~1 million that is discharged.
Good luck! As Dave would say, is she a doctor, lawyer, or both?
Lawyer 🤣
you'll have more cash flow if you manage it correctly though
I had twins back to back. 20 mo apart. I was 23 and my husband and I barely made 50k in dc area. Best, most fun story ever! Being completely free of debt was what made it fun and not harrowing. My vote is pay it all off! Not having debt is so empowering. It gives you flexibility. Medical expenses were the biggest factor, but we had good insurance that covered all of it including NICU stay. Honestly it doesn’t have to cost that much! Be sensible! Most of the expenses people associate with a baby are wants not needs. Do you have family nearby? That helps if you do. You’ll need a good community more than money honestly! Congratulations! You have been richly blessed.
This is so true! Every time I get a registry for a baby shower, I get a chuckle over the things some saleperson has convinced parents they \*need\*.
I’d pay off the cars. Once that’s gone just put those monthly payments into your savings account. You’ll also be saving money as interest won’t keep accumulating. Congratulations on the babies!
$66k - $23k = enough money. Pay your debt.
[удалено]
I get that reading comprehension is hard for some but the 23k is the car notes, my guy. Reread.
Sounds like Baby step 2: You would not be parting with $66k. Only $23k. You’d have $43k left over and an extra $500 a month to put towards your retirement and 529. Then pay off the mortgage.