How to save over $100k on your student loans

[type b pharmD]

^^this is coming from someone who didn't know that he didn't qualify for PAYE until I posted the restrictions. Making life changing decisions when he didn't even know the facts

Comments like these make me think there is a component of anger and jealousy in your rants .. why should everyone else get forgiveness when you flagellated your way through and ignored the profit opportunities available to people who correctly use forgiveness and reduced payment plans.

Although i don't qualify for paye, as ive said before, doesn't change any of the strengths of the IBR argument . You can still save 100-150k through creativity with the regular IBR program . Jealous ?

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[All4MyDaughter]

Comments like these make me think there is a component of anger and jealousy in your rants .. why should everyone else get forgiveness when you flagellated your way through and ignored the profit opportunities available to people who correctly use forgiveness and reduced payment plans.

Although i don't qualify for paye, as ive said before, doesn't change any of the strengths of the IBR argument . You can still save 100-150k through creativity with the regular IBR program . Jealous ?

I think he lived with his parents while paying off his loans. Admirable, but not an option for all of us. It's certainly not something I would be able to do.

I think many of us (myself included) who are using IBR will never take advantage of the forgiveness aspect of the program. Many of us will make too much money to qualify for the program after a few years, or will want to pay the balance off sooner, or something else. For me, it's been very helpful. I was able to keep my monthly payment low during residency and while I got my business up and running. I just got the paperwork to re-certify for next year, and I'll probably submit it soon. I still haven't decided whether I will work full time next year or not, since my kids are so small. If I'm not working full time, IBR is ideal for reducing my required monthly payment. But I will continue to make payments and when I have extra money, I'll make additional principle payments and reduce the balance.

 

[type b pharmD]

I think he lived with his parents while paying off his loans. Admirable, but not an option for all of us. It's certainly not something I would be able to do.

I think many of us (myself included) who are using IBR will never take advantage of the forgiveness aspect of the program. Many of us will eventually make too much money to qualify for the program after a few years, or will want to pay the balance off sooner, or something else. For me, it's been very helpful. I was able to keep my monthly payment low during residency and while I got my business up and running. I just got the paperwork to re-certify for next year, and I'll probably submit it soon. I still haven't decided whether I will work full time next year or not, since my kids are so small. If I'm not working full time, IBR is ideal for reducing my required monthly payment. But I will continue to make payments and when I have extra money, I'll make additional principle payments and reduce the balance.

It just gets so frustrating when people try to make some kind of ethical argument about it. It is basically a financial instrument (a variable repayment contract). While there may be some debate about the ethics of creating the program itself , with its imbalances and potential moral hazard , it is farfetched at best to think that entire groups of individuals are 'abusing' the system. It would be like telling someone that they are silly for buying a certain bond or market fund because the returns are "too good". Participating in the financial / market economy is fundamentally an amoral activity. Even if IBR is "too good to be true" .. the facts are that it IS true, and overwhelming evidence suggests it is here to stay.

It's legal, it's tested and proven, and exists as a potentially profitable/helpful financial tool. There is NO argument against that.

 

[All4MyDaughter]

It just gets so frustrating when people try to make some kind of ethical argument about it. It is basically a financial instrument (a variable repayment contract). While there may be some debate about the ethics of creating the program itself , with its imbalances and potential moral hazard , it is farfetched at best to think that entire groups of individuals are 'abusing' the system. It would be like telling someone that they are silly for buying a certain bond or market fund because the returns are "too good". Participating in the financial / market economy is fundamentally an amoral activity. Even if IBR is "too good to be true" .. the facts are that it IS true, and overwhelming evidence suggests it is here to stay.

It's legal, it's tested and proven, and exists as a potentially profitable/helpful financial tool. There is NO argument against that.

I haven't yet seen a compelling ethical argument. If your income meets the guidelines, you are eligible. Yes, physicians and pharmacists and other HCP will eventually be very highly compensated, but why is it unethical to use IBR during residency when you aren't getting paid very much? Most physicians (and pharmacists) will not qualify after they start working full time, and if they DO qualify, it's probably because they took a lower paying public service job. In that case, they deserve the benefit of IBR and loan forgiveness. I just don't see why any of this is morally offensive.

 

[BMBiology]

Although i don't qualify for paye, as ive said before, doesn't change any of the strengths of the IBR argument . You can still save 100-150k through creativity with the regular IBR program . Jealous ?

There are A LOT people who are in your shoes. You are betting the government will forgive your 150,000 in student loans. I am betting the government doesn't have that kind of money. If I am right, who are they going to cut first? The 40,000 a year teacher or 120,000 a year pharmacist?

 

[Momus]

What's the real money forgiven after 25 years? (accounting inflation). Too lazy to do the math my self -.-;

 

[BMBiology]

Oh to answer your question: I am so jealous that I worked hard, got accepted to a good pharmacy school, worked during pharmacy school, quickly paid back my loan and making a good pharmacist salary. Now I am having my money works for me. It is not tied up in student loans like you will be for the next 25 years.

 

[All4MyDaughter]

There are A LOT people who are in your shoes. You are betting the government will forgive your 150,000 in student loans. I am betting the government doesn't have that kind of money. If I am right, who are they going to cut first? The 40,000 a year teacher or 120,000 a year pharmacist?

Are you suggesting that they will:

1) Lower the income limits for participation
2) Abolish the program (what you seemed to be saying earlier)
3) Pass a law that says "no pharmacists allowed"
4) Something else

 

[BMBiology]

Are you suggesting that they will:

1) Lower the income limits for participation
2) Abolish the program (what you seemed to be saying earlier)
3) Pass a law that says "no pharmacists allowed"
4) Something else

Please see the article I posted.

 

[Pojman]

Please see the article I posted.

Are you a proctologist?

 

[pezdispenser]

Although i don't qualify for paye, as ive said before, doesn't change any of the strengths of the IBR argument . You can still save 100-150k through creativity with the regular IBR program .

Hey I want to beat me some dead horse too!

Ok seriously, and I'm not attacking you here, but how do you get that you save 100-150k on IBR?

Is that the amount forgiven? It's going to get taxed. Let's say at 33% so that's 33-50k.

You're also pushing your loan out to 25 years so you're going to pay a HUGE amount of interest.

I did another more worst case scenario on the FinAid IBR 15% calculator. http://www.finaid.org/calculators/ibr.phtml

2 people, married
3% for all discount rate, CPI, income growth, poverty level change
35k AGI x 2 years as a resident. Then 70k AGI. (+3% raises). Leaning towards the low side and also allowing large 401(k) and deductions.
Spouse 35k AGI +3% raises
$56,000 subsidized, $164,000 unsub = $220,000 total. 6.8% interest rate for both.

On IBR the payments are around $600 for the first 2 years, then $1038 increasing 3% per year. Totals are:

300k in interest
100k off the principal

120k forgiven, so 40k in tax

So you paid 400k (+40k tax) on a 220k loan. Like I said in a different post, the lender doesn't care if they have to forgive 120k (-40k) in principal because they took in 300k in interest over the 25 years so they have already received their money back AND still made a profit!

Alternatively you can bust your ass on the 10 year plan which is $2532/month. Actually that's still reasonable on a FT pharmacist's salary. Heck I make that much in overtime some months. You will pay 84k in interest and the whole 220k principal = 304k and be done in 10 years, and then you can get some income based INDULGENCE. Isn't this better than having a huge debt chained to your leg for 25 long years, and the whole time being at the whim of the government in a game of political football?

 

[All4MyDaughter]

Please see the article I posted.

I looked at them. What do you think is going to happen? Legislatively, what mechanism will be used to exclude pharmacists?

 

[xiphoid2010]

I don't see much need to have couple IBR with loan forgiveness other than as an incentive for a sub-population of public servants/under-served areas.

If someone take out too much student loans, they can pay it at the IBR rate until it's paid off. If their income drop below 150% of poverty line (e.g they retired and living on social security), then IBR payment becomes $0 and that's de facto forgiveness. There is no need for a hard 20 or 25 year forgiveness date.

 

[BMBiology]

I looked at them. What do you think is going to happen? Legislatively, what mechanism will be used to exclude pharmacists?

Let me ask you, what mechanism is Obama planning to use to prevent some households from receiving the mortgage tax deduction? If the government needs to restrict any program, they will come up with a way.

 

[confettiflyer]

Sorry I fell asleep. hello from the airport.

IMO programs will change, but will fundamentally stay the same. If someone thinks the mortgage deduction is going away, they're on crack. More likely you'll see income limits or total deduction limits, not elimination.

A4M hits it right...the legislative mechanism to exclude a single profession at a single income level cutoff would be too narrow to be functional, or too broad such that an agency involved in enforcement couldn't do it (we'd just find loopholes).

Also BM has all private loans (per other thread discussion), so it's in his personal interest to see IBR/PSLF gutted or curtailed; to be fair, I borrowed to > $200k so it's in my interest to have the federal gov't forgive as much loan balance as possible.

I've already calculated my "need to make an extra..." amount in case a private employer came along and the magic number is $10k/yr.

And I can already think of about half a dozen loopholes with this proposed IBR legislation that will debut soon.

 

[BMBiology]

Sorry I fell asleep. hello from the airport.

IMO programs will change, but will fundamentally stay the same. If someone thinks the mortgage deduction is going away, they're on crack. More likely you'll see income limits or total deduction limits, not elimination.

A4M hits it right...the legislative mechanism to exclude a single profession at a single income level cutoff would be too narrow to be functional, or too broad such that an agency involved in enforcement couldn't do it (we'd just find loopholes).

First, who ever said the mortgage deduction will totally go away? That did not come from the NY Time article I posted. That article, however, shows the government can change the rules of the game any time they want.

Second, who ever said the government will exclude pharmacists only? If there's exclusion, most likely it will be high income earners which may include pharmacists. According to Obama, a household who makes more than $250,000 a year is rich and should pay more taxes. That's what a husband and wife pharmacists make. Who knows if it will be lower for student loans.

BM has all private loans (per other thread discussion), so it's in his personal interest to see IBR/PSLF gutted or curtailed; to be fair, I borrowed to > $200k so it's in my interest to have the federal gov't forgive as much loan balance as possible.

I've already calculated my "need to make an extra..." amount in case a private employer came along and the magic number is $10k/yr.

And I can already think of about half a dozen loopholes with this proposed IBR legislation that will debut soon.

Third, who ever said I owe any private loans? Show me this post. Who is that stupid to borrow private loans? I have mentioned that I have **drumroll, please** paid back all of my loans and I have encouraged others to work hard and paid it off ASAP because it would be a financially smart decision. Just punch in the numbers yourself on the IBR website.

I have also encouraged others to enroll in IBR if they can't find a well paying pharmacist job. If you are like A4M who graduated from pharmacy school while in her 40s, married someone who doesn't make as much and who has children, yes IBR is a good option because you will be paying less per month compared to someone who is single, makes $120,000 a year and doesn't have children.

 

[BMBiology]

Hey I want to beat me some dead horse too!

Ok seriously, and I'm not attacking you here, but how do you get that you save 100-150k on IBR?

Is that the amount forgiven? It's going to get taxed. Let's say at 33% so that's 33-50k.

You're also pushing your loan out to 25 years so you're going to pay a HUGE amount of interest.....

Alternatively you can bust your ass on the 10 year plan which is $2532/month. Actually that's still reasonable on a FT pharmacist's salary. Heck I make that much in overtime some months. You will pay 84k in interest and the whole 220k principal = 304k and be done in 10 years, and then you can get some income based INDULGENCE. Isn't this better than having a huge debt chained to your leg for 25 long years, and the whole time being at the whim of the government in a game of political football?

What bothers me is financially ignorant people who think IBR will save them $100,000s. 15% for 25 years IBR plan allows you to pay less per month but over a much longer period of time. For most pharmacists, it is not a financially smart decision because you will be paying a lot more in the long run. Don't take my word for it. There's a calculator on the IBR website..punch in the numbers yourself.

 

[SHC1984]

What bothers me is financially ignorant people who think IBR will save them $100,000s. 15% for 25 years IBR plan allows you to pay less per month but over a much longer period of time. For most pharmacists, it is not a financially smart decision because you will be paying a lot more in the long run. Don't take my word for it. There's a calculator on the IBR website..punch in the numbers yourself.

I guess for idiots that borrowed 200K to 300K it will save them some money? Maybe?

For reasonable people that borrow less than 100K it will not save them any money....but for people that borrow an insane amount of money it could help?

But then again WHY ON God's green earth will anyone be foolish enough to borrow that much is beyond me.

I guess they think they can make a profit off ripping off the government? But instead they will most likely be hurting themselves in the long run. :/

 

[All4MyDaughter]

I have also encouraged others to enroll in IBR if they can't find a well paying pharmacist job. If you are like A4M who graduated from pharmacy school while in her 40s, married someone who doesn't make as much and who has children, yes IBR is a good option because you will be paying less per month compared to someone who is single, makes $120,000 a year and doesn't have children.

I'm not in my 40's.
I didn't "marry a man who doesn't make as much." He made more than I did when we got married, but then I went back to school to become a pharmacist. Not that there is any issue with spouses have different income levels.
I would also not say it's accurate to say that I "can't find a well paying pharmacist job."

Any other misconceptions I can dispel for you?

 

[Pharmacy Kid]

I'm not in my 40's.
I didn't "marry a man who doesn't make as much." He made more than I did when we got married, but then I went back to school to become a pharmacist. Not that there is any issue with spouses have different income levels.
I would also not say it's accurate to say that I "can't find a well paying pharmacist job."

Any other misconceptions I can dispel for you?

You must be in your 50's, then.

 

[BMBiology]

I'm not in my 40's.
I didn't "marry a man who doesn't make as much." He made more than I did when we got married, but then I went back to school to become a pharmacist. Not that there is any issue with spouses have different income levels.
I would also not say it's accurate to say that I "can't find a well paying pharmacist job."

Any other misconceptions I can dispel for you?

he's not making as much now...right? you have a kid right? Hence, lower payment. I dont know about your age but i know you are older.

 

[All4MyDaughter]

You must be in your 50's, then.

Must be!

 

[All4MyDaughter]

he's not making as much now...right? you have a kid right? Hence, lower payment. I dont know about your age but i know you are older.

Good job with the assumptions!

 

[SHC1984]

You must be in your 50's, then.

he's not making as much now...right? you have a kid right? Hence, lower payment. I dont know about your age but i know you are older.

She just had a baby so you guys KNOW she can't be older than her early to mid 30s. LOL....

40s and 50s do not have children anymore....

Okay let's not talk about getting older...I am getting depressed again.

 

[confettiflyer]

First, who ever said the mortgage deduction will totally go away? That did not come from the NY Time article I posted. That article, however, shows the government can change the rules of the game any time they want.

Second, who ever said the government will exclude pharmacists only? If there's exclusion, most likely it will be high income earners which may include pharmacists. According to Obama, a household who makes more than $250,000 a year is rich and should pay more taxes. That's what a husband and wife pharmacists make. Who knows if it will be lower for student loans.

Third, who ever said I owe any private loans? Show me this post. Who is that stupid to borrow private loans? I have mentioned that I have **drumroll, please** paid back all of my loans and I have encouraged others to work hard and paid it off ASAP because it would be a financially smart decision. Just punch in the numbers yourself on the IBR website.

hmm...i shall have to dig through SDN at another time, might have been someone else i argued with.

even so, as someone who paid off all their loans, it's in your best interest to keep me from handing a chunk of my balance off to taxpayers at large.

so now we're in agreement, you were originally arguing that specific professions would be targeted (surgeons in BH), now you're arguing income. glad we persuaded you.

 

[BMBiology]

^^yes, it is my best interest to prevent you from paying back your student loan. I greatly benefit when you default. Yes, my posts are that powerful.

 

[SHC1984]

It just gets so frustrating when people try to make some kind of ethical argument about it. .

even so, as someone who paid off all their loans, it's in your best interest to keep me from handing a chunk of my balance off to taxpayers at large.
.

And you guys don't think you are being unethical about this?

how is this different from STEALING? I don't get it.

So you guy also think it's okay to rob the bank and shoplift too? I mean why not right?

People that use IBR are just like the people that would Max out all their credit cards on purpose and then file for bankruptcy or leave the country to avoid the debt or eat and leave the restaurant QUICKLY to avoid the check. You guys are just NOT very classy people. Yes, you can benefit from ripping people off and stealing...but I don't think it is something I would be bragging about on a public forum. STEALING is something you should be very ashamed of.

 

[Pojman]

And you guys don't think you are being unethical about this?

how is this different from STEALING? I don't get it.

So you guy also think it's okay to rob the bank and shoplift too? I mean why not right?

People that use IBR are just like the people that would Max out all their credit cards on purpose and then file for bankruptcy or leave the country to avoid the debt or eat and leave the restaurant QUICKLY to avoid the check. You guys are just NOT very classy people. Yes, you can benefit from ripping people off and stealing...but I don't think it is something I would be bragging about on a public forum. STEALING is something you should be very ashamed of.

It is much different than stealing or bankruptcy. IBR is an acceptable repayment method which the lender is 100% comfortable with considering the fact that the program is official. If you pay a lender back according to reasonable terms which the lender has set - then you have fulfilled your obligation and have repaid your debt. Who are you to say how the lender wants, or should, get paid back. That decision is up to the lender.

I would agree that bankruptcy is a very shady move, except in the case of crushing necessary medical debt. Maxing out credit cards and then claiming bankruptcy is just dirty, and could be comparable to stealing I guess. But there is a huge difference between bankruptcy and IBR. In one case, you did not fulfill the terms of repayment. In the other case, you did fulfill the terms of repayment.

 

[type b pharmD]

And you guys don't think you are being unethical about this?

how is this different from STEALING? I don't get it.

So you guy also think it's okay to rob the bank and shoplift too? I mean why not right?

People that use IBR are just like the people that would Max out all their credit cards on purpose and then file for bankruptcy or leave the country to avoid the debt or eat and leave the restaurant QUICKLY to avoid the check. You guys are just NOT very classy people. Yes, you can benefit from ripping people off and stealing...but I don't think it is something I would be bragging about on a public forum. STEALING is something you should be very ashamed of.

If taking something that has been allocated to you (ie a sandwich at a lecture with free food) is stealing, then yeah, I love stealing. Not ashamed!

Dont forget to vote!

Society voted to allocate resources to increase education and the supply of healthcare providers.

Yes you can benefit from government subsidies. We're all doing it every day we live our lives in society.

Dine and dash, tax evasion, these things are illegal because society has deemed them to be immoral. Participating in a financial contract that is beneficial to you is practically the american dream. Every financial instrument benefits someone at a cost to someone else. Lenders and governments support these types of loan programs because they are on the winning end 95% of the time. It just so happens that IBR can be used to the borrower's financial advantage in rare cases. You can't blame the borrower for wanting to benefit in those 5% of cases where they can. In these cases, paying back with the regular repayment would be akin to throwing your money out your window into the street.

Are you suggesting that I basically donate my money to the US government, my lender, and my school? No thanks. I'll pay back what I am obligated to pay. I am not paying an extra $100k simply because it makes other people feel good about their loans. Funny how that sounds similar to the conservative ideology you espouse. I will pay back an extra 100k (ie standard repayment plan) if you donate $100k of your money to the government, after all, it is so ETHICAL!

 

[All4MyDaughter]

And you guys don't think you are being unethical about this?

how is this different from STEALING? I don't get it.

So you guy also think it's okay to rob the bank and shoplift too? I mean why not right?

People that use IBR are just like the people that would Max out all their credit cards on purpose and then file for bankruptcy or leave the country to avoid the debt or eat and leave the restaurant QUICKLY to avoid the check. You guys are just NOT very classy people. Yes, you can benefit from ripping people off and stealing...but I don't think it is something I would be bragging about on a public forum. STEALING is something you should be very ashamed of.

I have been on IBR since I graduated. Thanks for insulting me and calling me a criminal!

 

[BMBiology]

You haven't shown us the math on how you will "save" 100 k (by 2037, this is probably worth 50 k the most). I am guessing either you have a ton of student loans (btw, private student loans are seperate and you can't use IBR) or you have some shaddy scheme in mind. Based on your previous posts, I wouldn't be surprise if you are basing your scheme on misinformation.

 

[type b pharmD]

I have been on IBR since I graduated. Thanks for insulting me and calling me a criminal!

A4MD .. we are just not very classy people!

Maybe we'd be considered hot **** if we volunteered to pay more than we owe. .. wait.. wouldn't that make us SOCIALISTS?!

 

[All4MyDaughter]

You haven't shown us the math on how you will "save" 100 k (by 2037, this is probably worth 50 k the most). I am guessing either you have a ton of student loans (btw, private student loans are seperate and you can't use IBR) or you have some shaddy scheme in mind. Based on your previous posts, I wouldn't be surprise if you are basing your scheme on misinformation.

Who are you talking to?

 

[confettiflyer]

^^yes, it is my best interest to prevent you from paying back your student loan. I greatly benefit when you default. Yes, my posts are that powerful.

I think you misread, try it again.

 

[confettiflyer]

And you guys don't think you are being unethical about this?

how is this different from STEALING? I don't get it.

So you guy also think it's okay to rob the bank and shoplift too? I mean why not right?

People that use IBR are just like the people that would Max out all their credit cards on purpose and then file for bankruptcy or leave the country to avoid the debt or eat and leave the restaurant QUICKLY to avoid the check. You guys are just NOT very classy people. Yes, you can benefit from ripping people off and stealing...but I don't think it is something I would be bragging about on a public forum. STEALING is something you should be very ashamed of.

I'm fulfilling the contract that I signed years ago...how is that criminal?

 

[type b pharmD]

You haven't shown us the math on how you will "save" 100 k (by 2037, this is probably worth 50 k the most). I am guessing either you have a ton of student loans (btw, private student loans are seperate and you can't use IBR) or you have some shaddy scheme in mind. Based on your previous posts, I wouldn't be surprise if you are basing your scheme on misinformation.

A simple IBR calculator could show you this.

Without going into a detailed example, you can just plug in AGI of 75,000, family size of 2 filing separately (married). On 250k of loans, you end up paying NPV of 120k, with an NPV forgiveness of 130k and a total forgiveness of 438k. Even in a WORST case scenario in which you actually paid taxes on the forgiveness , youd be paying NPV of 25k. Adding up taxes and loan payments, you end up paying about 150k and saving 100k off face value, which ends up being 140k NPV savings. (140k savings vs paying the 10 year plan and its interest)

http://www.finaid.org/calculators/ibr.phtml

Now, that is a conservative situation.

If you go on to factor in tax shields, zero or reduced repayment years, you can achieve more savings even while making a higher AGI. 100-150k savings is a reasonable expectation with a moderate amount of these on a pharmacist's AGI .. but if you are truly aggressive, you could see that 150-200k in savings is definitely potentially possible.

By zero repayment years, I mean for example , year one after graduation, in which your prior year's income is too low to put you into repayment. Also these could occur during years in which you took business losses, went back to school, made certain types of investments, started a company, or taking some years off of work and living off of investments/assets. Even if not 0, borrower could still experience years with reduced payments due to reduced income.

Assuming just one or two of these scenarios + some creative and legal tax accounting, and there is virtually no limit on how beneficial IBR can be.

Edit (chose 75,000 because that was the number I used to crunch the financials of a pharmacy career about 8 years ago when I started planning . also it is a fair number for working part time and contributing to raising a family, and represents the effects of reducing taxable income -- a typical full time pharmacist probably has around a 105k AGI.. reducing that 15% is not hard, either year by year or by taking some significantly reduced payment years)

2nd edit: This is assuming spouses AGI is 0 , either stay-at-home , working off-the-books, or is a partner in your small business or has their own small business. (relevant to my situation but probably not most)

3rd edit: Add two kids into the equation and assume minimal assets during forgiveness year. ...on 250k of loans, NPV paid is 56k . You just saved $194,000 NPV ($275,000 in absolute dollars) versus the standard repayment.

 

[SoylentGreen]

I looked at them. What do you think is going to happen? Legislatively, what mechanism will be used to exclude pharmacists?

The same one that excludes us from getting tax deductions for our student loan interest - forgiveness only for people who make less than $x/year, where x is less than our salaries.

 

[type b pharmD]

The same one that excludes us from getting tax deductions for our student loan interest - forgiveness only for people who make less than $x/year, where x is less than our salaries.

Except that a rule like that is a significantly perverse incentive. I know *I* certainly wouldn't be wanting to work full time and pay off my loans when I could work part time, pay less, enjoy more of life, and get forgiveness.


It's one thing to disincentivize high earning by increasing small bits of marginal tax rates ie not allowing interest deductions. But to disincentivize it to the tune of hundreds of thousands of dollars of loan payments and forgiveness? It would introduce significant instability into the financial system. In the current system, lenders are literally banking on the fact that graduates will be hoping and trying to be employed at the highest possible pay. If that assumption no longer holds true, all bets are off in general.

 

[type b pharmD]

The same one that excludes us from getting tax deductions for our student loan interest - forgiveness only for people who make less than $x/year, where x is less than our salaries.

This is already in place .. You must have partial financial hardship to qualify for IBR . If your income is too high relative to your loans, you cannot get forgiveness.

Unfortunately for the naysayers in the thread .. the definition of financial hardship is expanding, and the limit for income to qualify for IBR is thus rising. Now given the economy, the push for education, and the ascension of the democrats, it is not likely that it would become more restrictive in coming years.

 

[BMBiology]

Let me get this right: you are married but will file separately (hence, will give up the tax benefits of filing together when you do your taxes), have 1 child, owe 250 k in student loans, will work part-time making 75 k a year. What is the interest rate? 6.8%?

 

[type b pharmD]

Let me get this right: you are married but will file separately (hence, will give up the tax benefits of filing together when you do your taxes), have 1 child, owe 250 k in student loans, will work part-time making 75 k a year. What is the interest rate? 6.8%?

First of all, married filing jointly gives the same #'s . I merely chose separately because I believe that in my specific situation, it may be more valuable for us to do our taxes separately.

Loans of 265k, interest rate of 7.4% , no kids, working full time making 115k gross, 75k averaged (year over year) AGI. The numbers come out the same by the way if you are just working 32 hrs/week and grossing 90k and being less aggressive w/ AGI.

Hope this helps.

 

[BMBiology]

First of all, married filing jointly gives the same #'s . I merely chose separately because I believe that in my specific situation, it may be more valuable for us to do our taxes separately.

Loans of 265k, interest rate of 7.4% , no kids, working full time making 115k gross, 75k averaged (year over year) AGI. The numbers come out the same by the way if you are just working 32 hrs/week and grossing 90k and being less aggressive w/ AGI.

Hope this helps.

I am going to crunch the numbers later but you keep on changing your situation. Just answer the following:

(1) income per year: full time or part time?
(2) file jointly or separately. What is spouse yearly income
(3) children?
(4) loan amount and interest

Don't give us your estimated AGI or whatever scheme you are planning to do to reduce your AGI:

2nd edit: This is assuming spouses AGI is 0 , either stay-at-home , working off-the-books, or is a partner in your small business or has their own small business. (relevant to my situation but probably not most)

Having your spouse work off the book to reduce your AGI is not only tax evasion but it will land you and your spouse in prison. Maybe then you wouldn't have to pay back your student loan and you may actually "save" $100,000.

 

[type b pharmD]

I am going to crunch the numbers later but you keep on changing your situation. Just answer the following:

(1) income per year
(2) file jointly or separately. What is spouse yearly income
(3) children?
(4) loan amount and interest

1) $75,000 - AGI .. you cant calculate IBR payments without an AGI. Let's just assume a 90k gross income, which is pretty much 75k AGI after usual and customary deductions (ie HSA, IRA,).

2) Separately, spouse's income is $0

3) No children , family size of 2

4) 265k , 7.4% interest.

Try it out for yourself ! And let me know what income growth rate you used. I was generous and used the expected COLA/CPI growth rate.

Edit: Just ran these numbers for you. NPV paid is 71k .. NPV savings is 215k .. Total Savings is 275k versus standard repayment.

 

[BMBiology]

Working full time of part time? If part time and you cant get certain number of hours per week to qualify for benefits such as medical, are you planning to buy it?

 

[type b pharmD]

Working full time of part time? If part time and you cant get certain number of hours per week to qualify for benefits such as medical, are you planning to buy it?

Let's say minimum amount to get benefits .. Either a full time 90k/year job or a part time 90k/year job , it doesnt change the fact that IBR saves you $200,000 in todays dollars in this scenario.

 

[type b pharmD]

Working full time of part time? If part time and you cant get certain number of hours per week to qualify for benefits such as medical, are you planning to buy it?

Another tidbit: assuming no medical benefits and paying out of pocket, (spouse covered under federal plan), paying >7.5% of your income toward purchasing healthcare gets you to the point where you can deduct your insurance premiums, reducing your AGI by another $10k/year , making your student loan payments even lower! . ($500/month payment with IBR and 55k NPV paid versus $3,000/month payment with standard plan and 286k NPV paid)

 

[pezdispenser]

1) $75,000 - AGI .. you cant calculate IBR payments without an AGI. Let's just assume a 90k gross income, which is pretty much 75k AGI after usual and customary deductions (ie HSA, IRA,).

2) Separately, spouse's income is $0

3) No children , family size of 2

4) 265k , 7.4% interest.

Try it out for yourself ! And let me know what income growth rate you used. I was generous and used the expected COLA/CPI growth rate.

Edit: Just ran these numbers for you. NPV paid is 71k .. NPV savings is 215k .. Total Savings is 275k versus standard repayment.

What discount rate are you using in your NPV calculations?

 

[confettiflyer]

AGI is the secret of life. Know dat.

 

[All4MyDaughter]

AGI is the secret of life. Know dat.

So true! We are good at keeping ours down, but I'm not giving away my secrets!

 

[type b pharmD]

What discount rate are you using in your NPV calculations?

Was using the default finaid.org discount rate of 5.8% .. which all things considered seems like a reasonable 'wash' given an expected increased future rate of inflation, current treasury 30 year rate, and risk premium.

I would hope that someone smart and motivated enough to become a PharmD, could generate a 2-2.5% return over inflation with some elbow grease and some investment capital saved by not paying full loan repayment.

If you are only expecting to break even on inflation, then saving the money up front and delaying loan payback doesnt make as much sense. Personally I am hoping to start/expand a business and buy a home with the money saved from IBR