In this month’s column, a SAVE borrower needs to choose a new repayment plan. An income-driven plan seems like the obvious financial choice, but they worry it will leave them “stuck.” For help, we’ve tapped Nika Booth, a personal finance educator and founder of .
If you have a student loan question for an expert, send it to askastudentloanexpert@usnews.com.
Dear Expert,
I just received my letter telling me I have to a new repayment plan. But I’m wondering if I should just do nothing and let them put me on the standard plan instead.
Here’s my thinking.
I have $40K in federal student loans, and I make about $55K a year. If I go on the Repayment Assistance Plan, I believe my monthly payments would be between $200 and $300. With my loans averaging an interest rate of about 7%, my monthly payment on the standard 10-year plan would be a little over $450.
One more thing: My current job qualifies me for Public Service Loan Forgiveness after 10 years. So a straight 10-year comparison makes RAP seem like a no-brainer.
But I worry that PSLF would leave me feeling stuck in my career and might prevent me from taking higher-paying jobs and increasing my income. Even if I do get raises while still eligible for PSLF, my RAP payment would just rise with it.
A $450 payment would certainly stretch my budget, but that’s where I’m leaning. Am I crazy?
— Conflicted in Columbus
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