why it's best to take out as much loan as possible

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user00

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so i been reading about income based repayment (ibr) and stuff and have come to the conclusion that it is best to have as much debt as possible. basically, lets say you somehow end up with 500k in loans and 7% interest in loans by the time you become an attending. lets assume you make 200k. under ibr, u have to only pay 15% of your income above 150% of poverty level so it comes out to around 30-40k in loan payment per year (or whatever would be proportionate due to inflation over the years). after 20-25 yrs of paying, your loans are forgiven, but whatever is remaining is currently considered taxable, but if you borrow enough, your total debt should be close to 700k since the minimum ibr payment is less than interest, therefore even if you make 350k in 20-25 yrs due to inflation, your taxable income would be like a million bucks, and your salary of 350k woudlnt even be enough to pay taxes, so you would not be responsible according to: http://www.finaid.org/loans/forgivenesstaxability.phtml

"There are proposals to make other forms of student loan forgiveness non-taxable, such as the forgiveness of income-contingent repayment balances after 25 years, but none have become law yet. The general public policy trend is toward excluding from income any forgiveness for individuals who would be unable to pay the taxes on the forgiveness."

at least for me, i can live a luxurious lifestyle while still paying 30-40k or the equivalent in loans for 25 yrs, it might not be good for you if you wanna have like 5 kids and live in a million dollar home, so finally correct me if im wrong with anything above
 
No, no, no. Borrowing less is always better. Surely nobody believes this is a good idea.
 
I spent way too long tying to decipher that post. Bottom line: bad idea. Take out as little as possible, pay it off as soon as you can, and then start dumping money into an IRA.
 
http://www.ibrinfo.org/faq.vp.html#takenaway

"Will IBR and Public Service Loan Forgiveness remain available in the future, or could these programs be somehow taken away?
IBR and Public Service Loan Forgiveness were passed into law through the College Cost Reduction and Access Act of 2007, and any major changes to these programs would require new legislation to be passed by Congress and signed by the president. This is highly unlikely to occur in the foreseeable future, and we recommend that borrowers proceed with confidence. "


looks like good chance it will exist by the time you start residency in 4-5 years when you could start ibr, and even if this gets repealed they usually have grandfather rules so if you were in ibr you should be able to stay with it
 
I absolutely agree, surely the Government doesn't expect me to suffer through Medical School without a Harley Sportster. Models and bottles baby.
 
Even with IBR, every dollar you take out in loans is about $3 you have to pay back. Always, always, always borrow the least amount possible.

I'm thinking OP must work for a lending company. 😛
 
i guess it may seem bad for those who want to retire early, but i have no intentions to retire, only lessen workload as i get real old
 
Presidents change, Congress changes. I'm sure that subsidized loans were taken for granted a few years ago but now they're gone.

Taking out as much loan $$ as possible is a terrible idea no matter how you look at it
 
user00 said:
i guess it may seem bad for those who want to retire early, but i have no intentions to retire, only lessen workload as i get real old
Click to expand...

Have you ever even taken out a loan? Or even better, have you ever had to pay back a loan? It really, really, really sucks.
 
user00 said:
im not seein any problems yet
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How about the fact that you're are racking up a huge debt, and assuming that the government will pay your tab? Selfish, self-entitled individuals like yourself are what is ruining this country.
 
sector9 said:
Presidents change, Congress changes. I'm sure that subsidized loans were taken for granted a few years ago but now they're gone.

Taking out as much loan $$ as possible is a terrible idea no matter how you look at it
Click to expand...

I think it might be prudent to lock this thread before some young silly premed reads it and actually takes OP's advice...
 
Despite being terribly written, the OP's statement has some kernel of truth to it. Your ability to get more and better loans depend on how much loan a student has. I didn't the loans for my undergraduate school, but my private financial aid adviser told me to take it anyways for the reason mentioned previously. :shrug:

How about the fact that you're are racking up a huge debt, and assuming that the government will pay your tab? Selfish, self-entitled individuals like yourself are what is ruining this country.
Click to expand...
👍👍
 
blub1212 said:
How about the fact that you're are racking up a huge debt, and assuming that the government will pay your tab? Selfish, self-entitled individuals like yourself are what is ruining this country.
Click to expand...

lol dont hate the player, hate the game
 
It's still a bad deal since public sector usually doesn't pay as much as private.

Honestly, the best way to beat medical school debt is to take out as little as possible, go on IBR during residency, specialize in something lucrative (eg not family medicine) and go into private practice. Everything else is either playing with fire or sacrifices long-term potential for short-term gain (eg MD/PhD).
 
Amateur hour.

People in the know do the following:

1. Take max amount of loans
2. Use it to buy MegaMillions tickets
3. Profit
 
user00 said:
lol dont hate the player, hate the game
Click to expand...

The "game" was designed for people that actually need help. People taking advantage of the system are bankrupting it. Where do you think the money comes from? The money comes from taxes. Which means after I am done working my ***** off, paying off my student loans, I get to pay off your loans. So, by all means take advantage of the system and screw the rest if us. Just understand that the money isn't "free." You are hurting everyone around you.
 
blub1212 said:
The "game" was designed for people that actually need help. People taking advantage of the system are bankrupting it. Where do you think the money comes from? The money comes from taxes. Which means after I am done working my ***** off, paying off my student loans, I get to pay off your loans. So, by all means take advantage of the system and screw the rest if us. Just understand that the money isn't "free." You are hurting everyone around you.
Click to expand...


He isn't abusing the system though. He's putting 10 years of public service in and taking advantage of an incentive program to help pay down his loans. It's in no way abusive.
 
notbobtrustme said:
He isn't abusing the system though. He's putting 10 years of public service in and taking advantage of an incentive program to help pay down his loans. It's in no way abusive.
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User isn't talking about the public service loan forgiveness program. That is different than paying income based repayment for 20 years and then having the remaining debt discharged. The public service loan forgiveness program is a great thing, and I have no problem with people taking advantage of that. I do however, have an issue with taking out as much loans as possible, then using a program that is meant to help people who are not making enough money to live on, to pay off your loans. All the while making far more than the average American, while expecting their tax dollars to pay for your student loans.
 
Why not just leave the country? 😀
 
This plan does make financial sense somewhat, your loan payments would be much lower on a BIG loan (450K) if you just stick to IBR over 25 years (including residency) the problem is the tax bill. If you do IBR that loan is going to BALLOON and be Gigantic by the time you are forgiven. That means your tax bill will be astronomical when you get the forgiveness. Owing to government is bad business. They can put a tax lien on your house, your income your salary. Youll lose your life savings. If they change the law to allow that forgiveness to be tax free, then every single person in here will switch to it. 15% maybe even 10% (pay as you earn) is much lower than the 10 year standard repayment plan.

It may feel slightly unethical, and it probably is to borrow with no intention of returning the loan. But an Interest rate of 7.9% is pretty unethical if you ask me (double the home mortgage rate)

Again this only makes sense if your taking out a BIG time loan for school 250k or more. If your loan burden is more manageable then its still better to do the 10 year repayment.
 
The problem is forgiveness on 25 year discharched loans still is taxable. Do you want to carry 700k in loans ballooning over your head only to hope for a law to exist 25 years from now?
 
Bad, bad plan.

Do you have any idea how much $700,000 is?

You don't?

Well, you will when you feel it hanging over your head every day for the next twenty-five years hoping that it's not going to crash down on your and your family.
 
Itsame said:
Bad, bad plan.

Do you have any idea how much $700,000 is?

You don't?

Well, you will when you feel it hanging over your head every day for the next twenty-five years hoping that it's not going to crash down on your and your family.
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This would be a pretty accurate representation of the situation. That being said:
:troll:
 
poohbear12345 said:
The problem is forgiveness on 25 year discharched loans still is taxable. Do you want to carry 700k in loans ballooning over your head only to hope for a law to exist 25 years from now?
Click to expand...

I honestly think the tax bomb will get fixed. There are a lot of people in grad school (not medicine) going into public service and using IBR. I don't think they will be stuck with a huge tax bill after 25 years of paying their dues. There is actually a bill in Congress committee to fix that.
 
Looks like someone passed his ethics class with flying colors...
 
SunsFun said:
I honestly think the tax bomb will get fixed. There are a lot of people in grad school (not medicine) going into public service and using IBR. I don't think they will be stuck with a huge tax bill after 25 years of paying their dues. There is actually a bill in Congress committee to fix that.
Click to expand...

Do you have a link to a source? Not doubting you, simply curious.
 
This plan does make financial sense somewhat, your loan payments would be much lower on a BIG loan (450K) if you just stick to IBR over 25 years (including residency) the problem is the tax bill. If you do IBR that loan is going to BALLOON and be Gigantic by the time you are forgiven. That means your tax bill will be astronomical when you get the forgiveness. Owing to government is bad business. They can put a tax lien on your house, your income your salary. Youll lose your life savings. If they change the law to allow that forgiveness to be tax free, then every single person in here will switch to it. 15% maybe even 10% (pay as you earn) is much lower than the 10 year standard repayment plan.
Click to expand...
If you borrow a total of 450k (not including interest) you would have to have an AGI less than 120k for this to work out. Otherwise, after 25 years (assuming this forgiveness policy still exits) you will have actually paid more than 450k. If you're content with 120k pre-tax you might as well do a public service spot for 10 years and have it forgiven without the tax bill at the end.

450000/25 = 18000
100/15 X 18000 = 120000
 
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tpraolm said:
If you borrow a total of 450k (not including interest) you would have to have an AGI less than 180k for this to work out. Otherwise, after 25 years (assuming this forgiveness policy still exits) you will have actually paid more than 450k. If you're content with 180k pre-tax you might as well do a public service spot for 10 years and have it forgiven without the tax bill at the end.
Click to expand...


Its a Loan if you Borrow 450k your going to pay back more than 450k no matter what. You will pay may pay back less under under the 10 year repayment plan, (thought not always). But its all about cash flow, freeing up the money earlier on allows you to invest it.

Still without the forgiveness this plan is not sound. and its douchey.
 
Its a Loan if you Borrow 450k your going to pay back more than 450k no matter what.
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Right. I was thinking about this plan compared to borrowing modestly. Most will prob pay close to 450k once all is paid off (going the modest route) while the avg. salaried doc will pay between 700k and a million after 25 years of IBR. I didn't think about having that extra cash to invest though. I had always assumed that was against the financial aid policy but according to google it isn't
 
tpraolm said:
Right. I was thinking about this plan compared to borrowing modestly. Most will prob pay close to 450k once all is paid off (going the modest route) while the avg. salaried doc will pay between 700k and a million after 25 years of IBR. I didn't think about having that extra cash to invest though. I had always assumed that was against the financial aid policy but according to google it isn't
Click to expand...

ha im not talking about when your in school, im talking about when your attending, 30ish and have to start planning for the future
 
pkwraith said:
Amateur hour.

People in the know do the following:

1. Take max amount of loans
2. Use it to buy MegaMillions tickets
3. Profit
Click to expand...

It looks more like this:

1. Take max amount of loans
2. ?????
3. Profit
 
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