Educate me on these darn student loans and IBR

[zebra15]

Ok- so I'm not exactly uneducated about finances in general but I obviously do NOT have a clue about how my student loans work.

Last fall I finally swallowed my last little bit of pride and filled out the IBR forms and qualified for zero payments.  (this was huge for me because I am a firm believer in paying debts, I filed chapter 7 years ago and swore never to  fall behind or not pay again).  Anyway, off went the papers and I thought everything was fine. Somehow I thought I would get getting some sort of minimum payment credit toward my balance each month, but here it is 8 months later and I have a higher balance due to interest charges than I started with!

I just want to kick myself in the butt for doing this.  My loans are held with 'Nelnet'. I feel like the interest rate is sky high (over 6%), I have 4 loan accounts that total 17k and change.  (ya I know I know, all for a teaching certificate I'm not going to use but that point is moot right now).

What I need to know is HOW DOES IBR work?  Should there be some type of 'credit' toward the balance each month or does IBR just defer payments while interest continues to accrue on the accounts?  I'm not working yet but honestly I can find money to toss at this monster.

Has anyone successfully called NELNET and gotten answers?  The couple times I've tried to contact them, well its not been productive for anything but raising my blood pressure.

I feel like a fool. I have 15 years of banking experience, I know how the credit and lending markets work, I've worked in banking. This is WHAT I DO... I just don't know about student loans.   UGH  (I really want to cry)

Help

[hildare]

you might want to call and talk to them, but i do IBR.  i pay a minimum payment each month that doesn't affect the principal, i am only paying on interest at this point. 

however, legislation changed things somewhat so that there is a maximum number of years you must pay on it, i think it's 25 for you if you don't teach.  if you do work (i do) in education, then it drops to ten years.  so you will pay the minimum payment that doesn't really affect the amount you owe but you are off the hook after 10 or 25 years (25 if you don't work). 

i learned more by discussing the options with a loan officer though, and i can't vouch that what i am telling you is 100% correct, just my understanding of how the legal changes affect what you have to pay.

[iowaorganic]

IBR doesn't put a credit to your account- it is just like a yearly deferral.  Interest continues to accrue if you aren't making a payment.  Every year you will have to send in a tax return  to requalify- and if you start making more money- your payment may go up.  Thats how it works.  I am on it too- but my interest is 2%- so I am not worrying about it right now- just trying to build our business...

[TiredX2]

This might help:

http://studentaid.ed.gov/students/attachments/siteresources/IBR_QA_FINAL_20111207.pdf

Are your loans subsidized or unsubsidized?  If subsidized, it looks like the govt will pay the interest for up to three years (so the balance doesn't increase), otherwise the balance will increase because of the interest charged.

Good luck!

[zebra15]

I can NOT stomach this for 25 years. I will be 63 years old when its all *over*.  It's been 8 months and I'm back in a state of panic.  I just need to start throwing some money at this monster and deal with the mess.  

I am in the process of rebuilding my life.  Some of you are probably following my personal saga LOL.

I'm waiting to hear about a potential job offer.  But if not this one, there will be another.

Tiredx2- 2 loans are subsidized, 2 are unsubsidized, how's that for keeping things fair? (they are with in 2k of each other as well)

Time to follow my own advice, create a spreadsheet of debts, interest rates and create a plan.

[TiredX2]

Originally Posted by zebra15 

Tiredx2- 2 loans are subsidized, 2 are unsubsidized, how's that for keeping things fair? (they are with in 2k of each other as well)

Determine if what I found is correct (that the subsidized loans are not accruing interest) and then start throwing money at the highest interest rate loan of the unsubsidized.

Good luck!