Hello everyone,
I recently went back to school for a mid-life career change and I will be finished March of 2022. I had to take out Direct student loans. Luckily, they are not accruing interest until January but I was wondering if I should take advantage of my low income as a student and apply for the REPAYE plan.
In a nutshell, the REPAYE plan is income based. My AGI in 2020 was $17,000. My AGI for 2021 will be close to that number again. Based on estimates, due to that AGI my expected monthly payment would be $0 - $20.
I did some more digging and found this interesting tidbit: "If you have subsidized loans and your monthly payment amount under REPAYE is not sufficient to pay the amount of interest that accrues on a monthly basis, the federal government will subsidize 100% of the remaining interest that is due for the first three consecutive years. After the three-year period is over, the interest that's not covered by your monthly payment will be subsidized at 50% instead of 100%. Also, if you have unsubsidized loans, the remaining interest due will be subsidized at 50% for any period(s) of time that your REPAYE monthly payment due is not sufficient to pay the monthly interest."
According to my calculations, my monthly interest accrued will be $55.86 across my subsidized and unsubsidized loans with rates from 2.75% to 4.53%. If I apply for REPAYE, and pay more than $20 but less than $55, is there some kind of play here? Eg. invest what is subsidized for the first three years, or until I no longer qualify for the program, whichever comes first?
