What the heck is REPAYE? (source StudentLoanhero.com)
The government also covers 50 percent of accrued interest charges on unsubsidized loans throughout the REPAYE repayment period.
What does that mean for me:
The difference (Standard Repayment vs REPAYE):
Using standard repayment as the original: $3642
Using REPAYE amount as the new: $566
The percent difference is (3642- 566)/ 3642 * 100 = 84.5% decrease in monthly payment
Because I chose to contribute to a traditional 401k vs Roth 401k, I decrease my adjusted gross income and this helps keep my payments low. This year (2018) will be the first year I attempt to contribute the maximum. Although I can calculate how this will affect my monthly payment the next time I re-certify, I’d rather just wait and see the impact My Early Retirement Journey had on this facet of my life!
I know debt is sacrilege in the FIRE blogosphere, but each person’s journey is different. It makes more sense to me from a financial standpoint to carry this debt and apply for loan forgiveness after 25 years. I hope and pray it pays off! The most salient ramification is that if I were to take on a mortgage, my debt-to-income ratio would be quite high. Psychologically, carrying a mortgage and this loan is burdensome which plays a role in why I have gotten out of the housing market.