It Pays to Ask Questions

Hello again! Another post about loan payoff.

We have two loan servicers--one from the government where the majority of David's Dental School loans came from, and one through his school. For the government one, making extra payments on any particular loan is easy. You just select a loan, specify how much extra you want to pay on that loan and you're done! Easy! It will make using our debt snowball, and paying off individual loans a much easier/cleaner process.

From his school we had two loans: a Perkins loan and a Health Professions Loan. They both have the lowest interest rate and he had a apply for the Health Professions one. Anyway, there is no easy way to make extra payments on either loan, separately. A couple weeks ago, when I made a large payment toward loans, my intent was the completely pay off the Perkins loan. So, I made a payment of the minimum payment for the Health Professions loan, and the payoff amount for the Perkins loan. Thinking that would be all there was to it, I went on my merry way.

Well, a few days later I checked the status of that payment, only to get somewhat annoyed. Rather than pay off the Perkins loan, like I wanted, the servicer divided the extra payment between my two loans. So each loan was significantly less (good), but we didn't have one completely paid off (bad). I wanted to be able to use the Perkins loan minimum payment in our debt snowball, and instead I was left with a smaller principle to pay, but still having to make loans and a much smaller snowball.

So, I asked questions. The servicer has an online customer service chat feature. I used it. I asked the customer service rep if there was a way to reallocate the funds I had already paid, or if there was a way to specify where extra payments go in the future. Turns out, she was able to create a work order for a supervisor to reallocate the funds where I wanted them to go. Booyah! The next day, it was done! So, rather than just 3 loans paid off, with a tiny snowball, we have 4 loans paid off, and a larger snowball amount to work with! It is a small start, but it is a start! It pays to ask questions. :)

A Major Setback and a Small Step Forward

Here we go. Post #2 on our Student Loan Payoff Saga.

First: The Setback

We found out about 2 weeks ago that we will not be receiving loan repayment from the national loan repayment program. So, we will not be receiving any loan repayment for this year. This is a major setback in our plans/goal to be done with student loans by our 10th Anniversary. Yes, we can , and will, apply again next year. But, in the mean time, the next year looks a little grimmer.

The most frustrating part is that it might have been different. There is a big long story about what happened, but I will shorten it. An error was made on our application, after the time line to fix such errors. We did not make the mistake. We feel pretty sure that if the mistake had not been made, we would have received the loan repayment help we were counting on. We have called and emailed the national loan repayment office and have been told that there is nothing that can be done to fix the error now. We are just out of luck for this year and try again next year.

Since David did not receive any loan repayment this year, it is in his contract that the company he works for will add some income to his paychecks every month, which is great. Right now we aren't sure how much that will amount to, but unfortunately, it won't match up to the tax free loan repayment we were anticipating.

Second: The Small Step Forward

I finally got up the gumption to make our first large payment on some student loans. In my last post I mentioned planning to pay $10,000 right away. I didn't do all of that amount because we have had some expenses come up that I want to make sure we can cover before draining the rest of our savings. But, I was able to fully pay off the first few smallest loans. So, YAY! A small victory for us. Once I make sure the expenses are covered, I will pay off more.

Until next time...