A sample of my entire PAYE payment plan.

[Magyarzorag]

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I just wanted to share my calculations for payment plan and what I end up paying over time using PAYE.
My findings:

PAYE is equivalent to a 1%-2% APR loan, an interest rate lower than many bonds and CDs

 

[Magyarzorag]

Assumptions I made:

*Enter immediately after graduation
*Potentially declare insolvency to avoid taxes on forgiveness
*Starting income of $250k, increase $5k a year
*Deductions from total income by $40k a year. ($30k Poverty limit for family and $10k 401k contributions)

 

[PorcupineDoc]

Assumptions I made:

*Enter immediately after graduation
*Potentially declare insolvency to avoid taxes on forgiveness
*Starting income of $250k, increase $5k a year
*Deductions from total income by $40k a year. ($30k Poverty limit for family and $10k 401k contributions)

You have the green totals on the right for insolvent and with tax, but whats the larger number on the right under 10 year repayment? Can you explain how or why you made some of the differences between these totals?

 

[Cornfed101]

*Potentially declare insolvency to avoid taxes on forgiveness

There has also been a lot of talk about eliminating the tax bomb on student loan forgiveness. I wouldn't count on it, but it may be a reality in the next 10 years.

 

[Magyarzorag]

You have the green totals on the right for insolvent and with tax, but whats the larger number on the right under 10 year repayment? Can you explain how or why you made some of the differences between these totals?

Total Repayment: 360k or 499k depending on tax bomb
Total Loan (since I’m not ever even going to cover the interest, I just added 6.5% each year to my loans): 790k.
Forgiveness: 430k