Payment Too High
Dear Betsy
I recently started a new job after having been laid off over a year ago from, you guessed it, the tech industry. While I’m relieved to be working again, my new job is paying me almost 30% less than what I had been making previously and there’s just no way I can keep up with my bills right now. I was in deferment while I was unemployed but now my $450 payments are due again. Is there anything I can do? Thank you for your help,
Steve
Dear Steve,
There are several options that may be available to student loan borrowers who are finding their monthly payments too high for their current budgets. These payment options are commonly called the graduated repayment option, extended repayment option, consolidation (which I’ve discussed in previous columns) and the income sensitive repayment option. The information you’ve given me suggests that the income sensitive repayment (ISR) option may be best for your situation. ISR allows you to essentially choose the amount that you think you can afford your monthly payment to be. To start the process, you’ll need to contact your loan holder and let them know you are interested in this option (you also may find an application on their web site). Once you receive the application, you will be asked to choose a percentage of your gross monthly income—usually between 4% and 25%—to be your new monthly payment for the next 12 months. For example, if your gross monthly income is $2,000 and you know you can afford to pay $200 per month, you would choose 10% on the application. Be aware that while you could conceivably get your payment as low as $5 per month with this option, it is in your best interest to ensure that what you are paying per month will at least cover the interest that is accruing. Once you’ve completed the application, mail or fax it, along with your most recent months’ pay stubs, to your loan holder for processing. After a week or so, give them a call to make sure they’ve received your paperwork and updated your account. If for some reason this doesn’t work for you or you don’t qualify for it, ask your loan holder about the other options I listed above. Congratulations on your new job!!!
Regards,
Betsy
