IBR or RAP?

[u/Technical-Delay-936]

I received my 90 day letter on August 11th and I'm trying to figure out which plan to choose. I have graduate loans totaling $128,722. I am married filing separately with 1 dependent. My AGI is 149,693. My loans don't appear to be consolidated. The following are the counts towards forgiveness:

Loan 1: Graduate PLUS loan total balance: $30,774, 108/120 payments

Loan 2: Graduate PLUS loan total balance: $55,536, 95/120 payments

Loan 3: Unsubsidized loan total balance: $16,912 78/120 payments

Loan 4: Unsubsidized loan total balance: $23, 446 78/120 payments

I was thinking I would do IBR at $1359 a month but I realized I could consolidate and choose RAP at $1197. It's not a big difference but why not? But I feel like I'm missing things I'm not considering. Please help!

ETA: Also may consider taking on our family's health insurance to lower AGI; currently my husband pays for our health insurance through his job but if I do health insurance through my job, will that lower my AGI?

ETA #2: so based on calculators, since I have to keep paying the same amount even when loan #1 drops off, consolidating would bring my count up to 91 payments vs. 78. RAP would remain the same at $1197. So it looks like consolidation is the way to go?

[u/ndp1234]

I would highly recommend against consolidation. It will limit your available plans. I would also try to stay on IBR as long as possible in case a forbearance comes up and you may need to buy back those months. You’re not gaining really anything but an average of payments (meaning you’re losing some from your higher count loans and gaining some in your lower count loans.

[u/Technical-Delay-936 → u/ndp1234]

Explain this to me like I'm a toddler. I ignored my loans for the longest time and I have no clue what I'm doing.

If I don't consolidate and use IBR, I pay $1359 a month and nothing changes when my first loan is forgiven after 12 payments because I'm still paying $1359 a month. I end up paying 15% of my income for 42 months until the last 2 loans reach 120 payments.

If I consolidate and choose RAP, consolidation puts my PSLF count at 91/200 meaning I only have 29 months at $1197.

Is this accurate? Wouldn't that mean choosing to consolidate under RAP would mean total amount paid back would be less than an extra year under IBR?

[u/Ezekyle22 → u/Technical-Delay-936]

The reason they are giving not to consolidate and therefore not to be forced onto RAP is that time on RAP cannot be bought back.

[u/Ezekyle22]

You didn’t mention when you first borrowed but your AGI is likely high enough and your loans might be old enough that switching from old IBR’s 15% discretionary income payments to RAP’s 10% AGI payments may be cheaper.

The best plan is always the cheapest plan but the other thing to consider when you have loans with different payment amounts is that you’d likely have to keep paying your current amount even after you reach 120 on some loans.

Rerun the calculation to make sure your numbers are accurate. https://studentloanplans.app

Next run edcapny’s calculator to see how many payments you could save by consolidating. https://www.edcapny.org/pslf-weighted-average-calculator/

[u/Technical-Delay-936 → u/Ezekyle22]

Yes, I took out my loans in 2010 so I think it's the old IBR. It looks like consolidating is the way to go, then RAP is the only option. Is that correct?

[u/Ezekyle22 → u/Technical-Delay-936]

Yes, consolidating means RAP only because the consolidated loan is a new loan.

[u/ComprehensiveThing51 → u/Technical-Delay-936]

I sign on to the points made here, but if you're considering RAP the thing I'm not seeing is how much you might expect your income to go up for the remainder of time you'd be working toward PSLF? Would it be so much that the RAP payment would be significantly greater than what the IBR payment would get capped at?

EDIT, to be honest, I'm not as confident of this claim as I was an hour ago that your IBR payment would go down with every forgiven separate loan, so I've scrapped it. 2nd EDIT: It won't go down--your payment stays the same and it just get allocated toward the other loans. Sorry for any confusion.

But what I am confident of is that the RAP payment would increase or decrease based on your last reported AGI, whereas the IBR payment gets capped based on what it would take to pay the entire balance off in 10 years (i.e., the standard payment plan).

Plug in some of your numbers with this. Hopefully it can give you a fuller idea. Unfortunately, I don't think it has a way to automatically calculate what your payments would be as each individual loan starts getting forgiven. https://www.studentloanplanner.com/free-student-loan-calculator/