I read an article today about an orthodontist that borrowed over $600k and currently owes over $1m in student loans. As it turns out, he is only paying about $1400 per month on IBR (income based repayment), which is not even enough to cover the interest. So his balance will continue to grow (capitalizing unpaid interest) until he makes 240 payments (20 years) and then the entire balance will be forgiven.
Is he being smart? In the end, he will pay less than he ever borrowed; and his IBR calculated payment will never be more than 10% of his gross income minus 150% if the poverty level for his family size.
He will, however, have to pay income taxes on the forgiven amount when that happens.
What do you think?
Is he being smart? In the end, he will pay less than he ever borrowed; and his IBR calculated payment will never be more than 10% of his gross income minus 150% if the poverty level for his family size.
He will, however, have to pay income taxes on the forgiven amount when that happens.
What do you think?