For those that think doctors are overpayed

[dutchman]

This is a spinoff from another thread about financial aid.

If you owe 200K when you graduate, which a lot of you will, I have some news for you:

http://www.finaid.com/calculators/scripts/loanpayments.cgi

Loan Calculator

Loan Balance: $200,000.00
Loan Interest Rate: 6.80%
Loan Term: 10 years
Minimum Payment: $50.00


Monthly Loan Payment: $2,301.61
Number of Payments: 120


Cumulative Payments: $276,192.62
Total Interest Paid: $76,192.62


"It is estimated that you will need an annual salary of at least $276,193.20 to be able to afford to repay this loan"

276K huh? You know most of us will not make anything close to that right. And if you don't make that much, they say you can expect some "financial difficulties", so you guys might as well go ahead and start expecting exactly that.

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[deleted128318]

Riiiight. You need to make 276k to avoid the dire "financial difficulties"

I currently pay 750/mo toward my UG loans on my 40k salary. Nothing dire, though I do drink more Hamm's than I want to talk about.

 

[badasshairday]

I don't get it. Why would you need an annual salary equal to the amount you need to repay to live without financial difficulties? What are you trying to say? We should be able to pay off the loan after one year of work or we are going to have headaches over finances? Why can't one make 175K a year and pay off the loan in a few years like 6 years?

 

[dochoov]

"It is estimated that you will need an annual salary of at least $276,193.20 to be able to afford to repay this loan"

That's...errr...umm.. quite the estimate.

 

[pennybridge]

If you make 275,000 a year, take out say 25% for taxes, that's 200,000 a year taken home.

thats 17,250 a month.

so yeah, after that $2300 student loan payment, whatever will you do with the left over $15,000?


edit// say you get 50% raped away for taxes. That's still 11,458 a month. I don't know about you people, but I can live on 9,000 a month.

 

[dutchman]

I don't get it. Why would you need an annual salary equal to the amount you need to repay to live without financial difficulties? What are you trying to say? We should be able to pay off the loan after one year of work or we are going to have headaches over finances? Why can't one make 175K a year and pay off the loan in a few years like 6 years?

Are you in denial or what? If you make 175K you take home about 83K, which is 7K a month. To payoff 200K in six years, you need to pay ~3K a month just in student loans, and I am going to assume no one is depending on you and that you plan on living with your mama, or you will in fact experience financial difficulties.

 

[dutchman]

If you make 275,000 a year, take out say 25% for taxes, that's 200,000 a year taken home.
thats 17,250 a month.

so yeah, after that $2300 student loan payment, whatever will you do with the left over $15,000?


edit// say you get 50% raped away for taxes. That's still 11,458 a month. I don't know about you people, but I can live on 9,000 a month.

What? I know this is the world wide web, so I will have to ask if you are talking about North America.

 

[gotmeds?]

This is a spinoff from another thread about financial aid.

If you owe 200K when you graduate, which a lot of you will, I have some news for you:

http://www.finaid.com/calculators/scripts/loanpayments.cgi

Loan Calculator

Loan Balance: $200,000.00
Loan Interest Rate: 6.80%
Loan Term: 10 years
Minimum Payment: $50.00


Monthly Loan Payment: $2,301.61
Number of Payments: 120


Cumulative Payments: $276,192.62
Total Interest Paid: $76,192.62


"It is estimated that you will need an annual salary of at least $276,193.20 to be able to afford to repay this loan"

276K huh? You know most of us will not make anything close to that right. And if you don't make that much, they say you can expect some "financial difficulties", so you guys might as well go ahead and start expecting exactly that.

Thank you for bringing this to my attention. I shall relinquish my acceptances, post haste! Off to investment banking school I go!

 

[pennybridge]

What? I know this is the world wide web, so I will have to ask if you are talking about North America.

you quoted my edit with the 50% figures, maybe try reading it?

I'm not sure what your point is. If your goal is to park that ferrari in the garage on teh same day you hang your shingle, I think you're in the wrong line of work. Paying off student loans, however, is cake.

 

[alwaysaangel]

This is a spinoff from another thread about financial aid.

If you owe 200K when you graduate, which a lot of you will, I have some news for you:

http://www.finaid.com/calculators/scripts/loanpayments.cgi

Loan Calculator

Loan Balance: $200,000.00
Loan Interest Rate: 6.80%
Loan Term: 10 years
Minimum Payment: $50.00


Monthly Loan Payment: $2,301.61
Number of Payments: 120


Cumulative Payments: $276,192.62
Total Interest Paid: $76,192.62


"It is estimated that you will need an annual salary of at least $276,193.20 to be able to afford to repay this loan"

276K huh? You know most of us will not make anything close to that right. And if you don't make that much, they say you can expect some "financial difficulties", so you guys might as well go ahead and start expecting exactly that.

A couple of things.

1) Most people will refinance their loans when they hit repayment. Most put it to a 30 year repayment plan decreasing the monthly payment.

2) According to AAMC the average medical school graduate debt was 130,500 in 2006 (including undergrad debt) so thats probably a better numbre to use that 200k.

3) So with the new numbers:

It is estimated that you will need an annual salary of at least $102,091.20 to be able to afford to repay this loan. This estimate assumes that 10% of your gross monthly income will be devoted to repaying your student loans. If you use 15% of your gross monthly income to repay the loan, you will need an annual salary of only $68,060.80 , but you may experience some financial difficulty.

The monthly loan payment is $850.76. This is 10% of your gross income so you are making 8507.60/month. Then you take out taxes and health insurance costs and you have maybe 4500/month. If you don't have to drive a BMW and own a mansion this will more than suffice. If you are fiscally responsible and intelligent it will be perfectly fine.

I don't think doctors are overpaid - but I don't think they're necessarily underpaid either. Some are, some that make 400k are overpaid. It really depends on the doctor. But thats true for every field. If loans really freak you out then get rid of them fast - live cheaply in med school and take out less loans than the actual budget, keep living cheaply during residency and start repayment then. Continue paying off a lot the first few years of your career and you'll be done in no time.

 

[dutchman]

A couple of things.

1) Most people will refinance their loans when they hit repayment. Most put it to a 30 year repayment plan decreasing the monthly payment.

2) According to AAMC the average medical school graduate debt was 130,500 in 2006 (including undergrad debt) so thats probably a better numbre to use that 200k.

3) So with the new numbers:

The monthly loan payment is $850.76. This is 10% of your gross income so you are making 8507.60/month. Then you take out taxes and health insurance costs and you have maybe 4500/month. If you don't have to drive a BMW and own a mansion this will more than suffice. If you are fiscally responsible and intelligent it will be perfectly fine.

I don't think doctors are overpaid - but I don't think they're necessarily underpaid either. Some are, some that make 400k are overpaid. It really depends on the doctor. But thats true for every field. If loans really freak you out then get rid of them fast - live cheaply in med school and take out less loans than the actual budget, keep living cheaply during residency and start repayment then. Continue paying off a lot the first few years of your career and you'll be done in no time.

Why you guys are determined to tweak the truth to a point that makes you happy, beats the crap out of me. I did not mention that the calculator does not take residency into account, which should add to the interest.

 

[alwaysaangel]

Why you guys are determined to tweak the truth to a point that makes you happy, beats the crap out of me. I did not mention that the calculator does not take residency into account, which should add to the interest.

I'm stating facts. You tweaked and pulled 200k out of thin air - I used a real average. I used realistic numbers and realistic payback times. No one keeps a 10 year payment plan - pretty much every med school graduate will refinance to a 30 year plan. You were dramatic, I stated facts. So who's trying to fit the numbers to their personal desires?

There are a lot of premeds on this site and they don't need to be terrified by some idiotic drama king who is claiming they will never pay back their debt unless they make 300k/year.

 

[hawkeyepeirce]

is the personal attack factual as well?

 

[TMP-SMX]

None of this takes into account that today in this country households have a two person income.

Oh yeah... And you should marry rich.

 

[freetheyaz]

Who on this board would complain that doctors are overpaid??

 

[patrickd223]

This is a spinoff from another thread about financial aid.

If you owe 200K when you graduate, which a lot of you will, I have some news for you:

http://www.finaid.com/calculators/scripts/loanpayments.cgi

Loan Calculator

Loan Balance: $200,000.00
Loan Interest Rate: 6.80%
Loan Term: 10 years
Minimum Payment: $50.00


Monthly Loan Payment: $2,301.61
Number of Payments: 120


Cumulative Payments: $276,192.62
Total Interest Paid: $76,192.62


"It is estimated that you will need an annual salary of at least $276,193.20 to be able to afford to repay this loan"

276K huh? You know most of us will not make anything close to that right. And if you don't make that much, they say you can expect some "financial difficulties", so you guys might as well go ahead and start expecting exactly that.

A salary of 276,193? Are you planning on paying if off in one year dummy? A monthly payment of 2300 will not break you. Lets say you take the least lucrative field which is prob. pediatrics. 100k/12months=8333 per month. 8333-2300 =~$6000 a month in take home pay. Keep in mind interest is tax deductable also.

 

[lonewolf99]

Yeah, doctors are horribly off financially. I am always lending my doctor friends money. You ever see the old beat up cars they all drive?

 

[Eric Lindros]

I'm stating facts. You tweaked and pulled 200k out of thin air - I used a real average. I used realistic numbers and realistic payback times. No one keeps a 10 year payment plan - pretty much every med school graduate will refinance to a 30 year plan. You were dramatic, I stated facts. So who's trying to fit the numbers to their personal desires?

There are a lot of premeds on this site and they don't need to be terrified by some idiotic drama king who is claiming they will never pay back their debt unless they make 300k/year.

Actually, you are stating bs. There are a lot of people who will be even more than 200k in debt. Thank you so much for making us all aware of the average debt. Unfortunately, you don't seem to understand what an average means. Average does not mean that EVERYONE will have the same amount of money to pay back

I am planning on being 250K in debt. No, I am not near the average. No, spouting statistics about the average debt does not make me feel better because guess what, I am not going to have average debt.

Seriously..

 

[Depakote]

If you make 275,000 a year, take out say 25% for taxes, that's 200,000 a year taken home.

thats 17,250 a month.

so yeah, after that $2300 student loan payment, whatever will you do with the left over $15,000?


edit// say you get 50% raped away for taxes. That's still 11,458 a month. I don't know about you people, but I can live on 9,000 a month.

I don't even know what I'd do with 9k a month if I managed to pull that in... but I would be thrilled.

 

[Towelie]

dutchman, why not just spread out the repayment over 20 or 30 years? You may pay more in the long run, but it makes the payback much easier to manage.

FYI: the word is spelled overpaid, not overpayed.

 

[alwaysaangel]

Actually, you are stating bs. There are a lot of people who will be even more than 200k in debt. Thank you so much for making us all aware of the average debt. Unfortunately, you don't seem to understand what an average means. Average does not mean that EVERYONE will have the same amount of money to pay back

I am planning on being 250K in debt. No, I am not near the average. No, spouting statistics about the average debt does not make me feel better because guess what, I am not going to have average debt.

Seriously..

It still doesn't mean you have to make 300k/year to pay off your debt. Of course some people are going to be higher than the average. But at least by using a quoted average its a meaningful number and not something I pulled out of my ass.

And still you will refinance to 30 years (the other thing I didn't mention is that a lot of times if you're lucky you can get lower interest rates when you refinance). But do your own numbers in the Calculator and use 30 years - then look realistically at what you're making a month and you'll see that a doctor can live quite comfortably (especially if you are married with a second income) and still pay off their debt.

is the personal attack factual as well?

If it was horrendously cruel then I appologize, but frankly yes, as far as I can tell it is factual. In this thread he has stated a bunch of incorrect facts, and shown he knows absolutely nothing about the loan process. Add to that his dramatic tone and grandiose statements and you have exactly what I called him.

But I appologize - it was probably unnecessary. However, hopefully when a young pre-med who doesn't know anything about the loan process reads this it will help them decide to look into it themselves instead of just trusting the word of some guy on SDN.

 

[Eric Lindros]

It still doesn't mean you have to make 300k/year to pay off your debt. Of course some people are going to be higher than the average. But at least by using a quoted average its a meaningful number and not something I pulled out of my ass.

How is it not a meaningful number? That's the frikin point. Did you ever think that maybe the OP got the number from his own estimation of his debt?

If my debt is going to be 250K, then your "quoted average" is the equivalent of pulling a number out of your ass to me. I don't care about the average because I am not going to be at the average. You have to understand, the average means nothing to most people.

Yeah, obviously people who have less debt to worry about aren't going to be posting things like this. So what is the point of all of this "Oh hush people, stop blowing things out or proportion, the average debt is only this, etc" Honestly, what is the point of that?

The reality is that the OP very well could be facing 200K debt. I know I WILL (baring a miracle) be facing even more. So those numbers ARE relevant to us.

 

[alwaysaangel]

How is it not a meaningful number? That's the frikin point. Did you ever think that maybe the OP got the number from his own estimation of his debt?

If my debt is going to be 250K, then your "quoted average" is the equivalent of pulling a number out of your ass to me. I don't care about the average because I am not going to be at the average. You have to understand, the average means nothing to most people.

Yeah, obviously people who have less debt to worry about aren't going to be posting things like this. So what is the point of all of this "Oh hush people, stop blowing things out or proportion, the average debt is only this, etc" Honestly, what is the point of that?

The reality is that the OP very well could be facing 200K debt. I know I WILL (baring a miracle) be facing even more. So those numbers ARE relevant to us.

Wow. I don't even have to write a new post I can just cut and paste.

It still doesn't mean you have to make 300k/year to pay off your debt.
And still you will refinance to 30 years (the other thing I didn't mention is that a lot of times if you're lucky you can get lower interest rates when you refinance). But do your own numbers in the Calculator and use 30 years - then look realistically at what you're making a month and you'll see that a doctor can live quite comfortably (especially if you are married with a second income) and still pay off their debt.

If he used his numbers then great - they're meaningful to him but its pretty meaningless to most of us since he was trying to argue that the "average" doctor is underpaid. For what he was saying an average debt was more useful. But really thats irrelevant. Whatever your debt is going to be it ALSO doesn't change that he used 10 years to calculate his monthly payment. NO ONE does that. EVERYONE refinances to 20 or 30 years, making his calculation meaningless.

I don't know how much more I can explain...if you're still not getting it or if you really believe you have to make 300k/year to pay off your debt, then please by all means believe that. I'm just trying to make sure undergrad premeds don't go in thinking that.

 

[Eric Lindros]

Wow. I don't even have to write a new post I can just cut and paste.


If he used his numbers then great - they're meaningful to him but its pretty meaningless to most of us since he was trying to argue that the "average" doctor is underpaid. For what he was saying an average debt was more useful. But really thats irrelevant. Whatever your debt is going to be it ALSO doesn't change that he used 10 years to calculate his monthly payment. NO ONE does that. EVERYONE refinances to 20 or 30 years, making his calculation meaningless.

I don't know how much more I can explain...if you're still not getting it or if you really believe you have to make 300k/year to pay off your debt, then please by all means believe that. I'm just trying to make sure undergrad premeds don't go in thinking that.

I'm not talking about paying it back, I never was, I am specifically referring to your "pulling the number of of his ass" and average debt arguments, which quite frankly are annoying.

 

[lilnoelle]

The reality is that the OP very well could be facing 200K debt. I know I WILL (baring a miracle) be facing even more. So those numbers ARE relevant to us.

I'm gonna be facing $280K which will turn into nearly $400K during residency. Finances really do matter when your interest is accumulating at nearly $30K every year. I'm sure that I will end up going after a more lucrative field in order to be able to pay that off post haste. With that kind of debt, I think it would be stupid to not pay it off as fast as possible. (Who wants to waste $30K a year in interest?) I'm used to living on relatively little, so I hope to pull in >150K (hopefully closer to $200K) and have it paid off in 5-10 years.
I think the Op's post is relevant, especially to people who have greater than average debt.
(Other than the portion that says an individual needs to make nearly $300K to pay off their large loan in a relatively short period of time)

If I were going to graduate with around $100K in debt, I wouldn't feel the dire need to get rid of it as fast as possible so in a way I agree with both the Op and alwaysangel.

 

[alwaysaangel]

I'm not talking about paying it back, I never was, I am specifically referring to your "pulling the number of of his ass" and average debt arguments, which quite frankly are annoying.

Ok. So basically you're arguing about nothing for the sake of arguing? Cool.

So we agree - his number is useful to him, but an average is useful for a discussion on whether or not doctors are typically underpaid.

End of discussion.

 

[Eric Lindros]

If he used his numbers then great - they're meaningful to him but its pretty meaningless to most of us since he was trying to argue that the "average" doctor is underpaid.

Again, (this is me not caring about paying back (because I agree with some of your points there) so please don't try to insult me) this is a pretty arrogant comment. If those numbers are meaningless to you, hey, congratu-freakin-lations. But they do mean a lot to some people.

I think people are smart enough to realize whether they will be in debt or not. We don't need your posts claiming that we are "blowing our numbers out of proportion" or "pulling them out of our ass"

 

[Eric Lindros]

Ok. So basically you're arguing about nothing for the sake of arguing? Cool.

So we agree - his number is useful to him, but an average is useful for a discussion on whether or not doctors are typically underpaid.

End of discussion.

FYI, the OP is arguing against the fact that doctors are overpaid, not for the fact that they are underpaid.

 

[alwaysaangel]

I'm gonna be facing $280K which will turn into nearly $400K during residency. Finances really do matter when your interest is accumulating at nearly $30K every year. I'm sure that I will end up going after a more lucrative field in order to be able to pay that off post haste. With that kind of debt, I think it would be stupid to not pay it off as fast as possible. (Who wants to waste $30K a year in interest?) I'm used to living on relatively little, so I hope to pull in >150K (hopefully closer to $200K) and have it paid off in 5-10 years. (Other than the portion that says an individual needs to make nearly $300K to pay off their large loan in a relatively short period of time)
I think the Op's post is relevant, especially to people who have greater than average debt.
If I were going to graduate with around $100K in debt, I wouldn't feel the dire need to get rid of it as fast as possible so in a way I agree with both the Op and alwaysangel.

Well exactly. Paying off the loans is a completely personal choice. But if you want to live well and pay off only a little of the loans over a long period of time then you refinance and pay very little every month for 30 years. If you want to get rid of it really bad then you live cheaply for a while and pay off more than the monthly minimum every month and you get it paid off.

I'm planning on marrying my fiance right after medical school and he's going to pay for both of our living expenses while I'm in residency so I can enter repayment right away and get rid of a good portion of my debt. I'm probably going to go to the most expensive school in the nation (GWU) so I know about owing 250k when you're done - its still doable.

 

[notdeadyet]

Are you in denial or what? If you make 175K you take home about 83K, which is 7K a month.

If you make $175K and you take home $83K, you really need to get a new accountant. My top salary in a year was about $150K and I never paid more than 30% taxes. And most of my colleagues who made a lot laughed at me for being so conservative.

To payoff 200K in six years, you need to pay ~3K a month just in student loans, and I am going to assume no one is depending on you and that you plan on living with your mama, or you will in fact experience financial difficulties.

Talk to your parents and ask them if they paid off the mortgage of their house in six years. Probably not. No one expects to pay off a $200K loan in six years. This is a really wack vision of money. That's more than most people's mortgage, which they usually pay off in 20 or 30 years. Doctors are fortunate in that they get paid a lot more and can pay off their education a lot sooner. You can pay off a loan in six years, but it will pinch.

These sort of threads don't accomplish much more than showing the very limited worldview of money for most folks on these boards.

 

[lilnoelle]

The problem with the average debt being around $130K is that that number is pulled down by people who do not have to take out loans to cover the entirety of their education either to parents paying a large portion or military/primary care programs.
For people attending their state school, perhaps $130K is a reasonable estimate, though that seems low to me ($38.5K x 4 = $154K). So, for the person who is taking out enough loans to pay for school and to live on, their loans are likely to be higher than $130K. (I'm guessing $20K tuition and $18.5K living expenses in the above numbers).
For individuals attending a private school, most likely their loans will be higher than the above.

 

[notdeadyet]

I currently pay 750/mo toward my UG loans on my 40k salary. Nothing dire, though I do drink more Hamm's than I want to talk about.

That's why those calculators crack me up. If you look under the hood for how any of them work, they operate under the principal that you should pay 10% of your education loans.

The logic is that education loans tend to be lower interest than the rest of your debt, so paying them off first is foolhardy. But on a doctor's salary, you can afford to pay a lot more than 10%, if your priorities are to pay off your student loans.

 

[lilnoelle]

That's why those calculators crack me up. If you look under the hood for how any of them work, they operate under the principal that you should pay 10% of your education loans.

The logic is that education loans tend to be lower interest than the rest of your debt, so paying them off first is foolhardy. But on a doctor's salary, you can afford to pay a lot more than 10%, if your priorities are to pay off your student loans.

But at 6.8 and 8.5%, they really aren't lower interest than the rest of an individual's debt (unless they have credit card debt). Back when loans were 3.0% I think you had a case, not so much now.

 

[deleted128318]

A salary of 276,193? Are you planning on paying if off in one year dummy? A monthly payment of 2300 will not break you. Lets say you take the least lucrative field which is prob. pediatrics. 100k/12months=8333 per month. 8333-2300 =~$6000 a month in take home pay. Keep in mind interest is tax deductable also.

Interest is not deductible if you make over 65k a year.

 

[BeanerMD]

I'm gonna be facing $280K which will turn into nearly $400K during residency. Finances really do matter when your interest is accumulating at nearly $30K every year. I'm sure that I will end up going after a more lucrative field in order to be able to pay that off post haste. With that kind of debt, I think it would be stupid to not pay it off as fast as possible. (Who wants to waste $30K a year in interest?) I'm used to living on relatively little, so I hope to pull in >150K (hopefully closer to $200K) and have it paid off in 5-10 years. (Other than the portion that says an individual needs to make nearly $300K to pay off their large loan in a relatively short period of time)
I think the Op's post is relevant, especially to people who have greater than average debt.
If I were going to graduate with around $100K in debt, I wouldn't feel the dire need to get rid of it as fast as possible so in a way I agree with both the Op and alwaysangel.

Especially when that interest might otherwise be money applied toward a 529 for each of your lil ones

 

[etf]

if i could knock that interest rate down to like 4.5-5%, i'd make the minimum payment, and have it go for 20 years instead of 10. why waste that money on a stupid loan payment when you can invest it?

 

[Sartre79]

Are you in denial or what? If you make 175K you take home about 83K, which is 7K a month. To payoff 200K in six years, you need to pay ~3K a month just in student loans, and I am going to assume no one is depending on you and that you plan on living with your mama, or you will in fact experience financial difficulties.

Who pays over 50% of their income in taxes?

 

[lilnoelle]

if i could knock that interest rate down to like 4.5-5%, i'd make the minimum payment, and have it go for 20 years instead of 10. why waste that money on a stupid loan payment when you can invest it?

Does anyone have any conclusive evidence that it is likely to knock an interest rate down at consolidation? When I consolidated my undergrad loans they basically averaged my interest amounts and added an extra 0.5% to it. (and then I guess they also knock it down variable amounts with automatic withdrawal and on time payments for a period of time, but the best I saw was to decrease payments by 1.5%, that still won't take my loans below 6%)

 

[Depakote]

Who pays over 50% of their income in taxes?

Well, I barely see 2/3 of my paycheck and I'd guess I'm in the lowest tax bracket.

Once you hit that couple hundred thousand dollar mark, I would expect 50% to sound about right.

 

[Depakote]

Does anyone have any conclusive evidence that it is likely to knock an interest rate down at consolidation? When I consolidated my undergrad loans they basically averaged my interest amounts and added an extra 0.5% to it. (and then I guess they also knock it down variable amounts with automatic withdrawal and on time payments for a period of time.)

It does matter when you consolidate... I consolidated my undergrad loans a few years ago when the interest rates were a LOT better, I locked in a great rate (2.5-3%, something like that). I haven't been offered anything even close since then. (hasn't stopped them from mailing/calling)

 

[lilnoelle]

It does matter when you consolidate... I consolidated my undergrad loans a few years ago when the interest rates were a LOT better, I locked in a great rate (2.5-3%, something like that). I haven't been offered anything even close since then. (hasn't stopped them from mailing/calling)

Thats what I'm trying to say though. The stafford loan is currently locked in at 6.8% and
Federal plus loans are locked in at 8.5%. Perhaps current residents are enjoying low interest rates on their med school loans, but we will not. (unless the government changes the interest rate)

 

[IceMan0824]

Well, I barely see 2/3 of my paycheck and I'd guess I'm in the lowest tax bracket.

Once you hit that couple hundred thousand dollar mark, I would expect 50% to sound about right.

Hire an accountant. If you are actually paying 50% of your paycheck to the government, you are either
1. Really, really bad at math
2. Someone is playing a joke on you

Schedule X — Single
If taxable income is over-- But not over-- The tax is:
$0 $7,550 10% of the amount over $0
$7,550 $30,650 $755 plus 15% of the amount over 7,550
$30,650 $74,200 $4,220.00 plus 25% of the amount over 30,650
$74,200 $154,800 $15,107.50 plus 28% of the amount over 74,200
$154,800 $336,550 $37,675.50 plus 33% of the amount over 154,800
$336,550 no limit $97,653.00 plus 35% of the amount over 336,550

The highest federal bracket you can hit is 35% of the amount over 336,550, add in some state tax and local tax and you might be around 43% (using aggressive numbers and by aggressive, I mean drive you off the road, spit in your face and curse at your grandma aggressive), then pay about $15,000 to an accountant and watch that magically number drop faster than [insert funny reference to whatever drops fast here].

And to dutchman....
Watch out, the sky is falling, the sky is falling.

 

[JohnMadden]

Does anyone have any conclusive evidence that it is likely to knock an interest rate down at consolidation? When I consolidated my undergrad loans they basically averaged my interest amounts and added an extra 0.5% to it. (and then I guess they also knock it down variable amounts with automatic withdrawal and on time payments for a period of time, but the best I saw was to decrease payments by 1.5%, that still won't take my loans below 6%)

This is a misconception. Through consolidation alone, you actually increase your interest rate on the loans you've already borrowed. Federal laws mandate that consolidation loans rates be the weighted average of all your loans interest rates plus a premium (I can't remember the exact figure, but I think it's .25%; someone can look this up tho). The government likes consolidation because they get their money faster, lenders like the program because they get a slightly higher interest rate and hope you never cash in on those rate reductions for on time payments.

Consolidation is a hedge against future interest rate increases. For example, people who consolidated Federal loans before last year's increase from 4.7 to 6.8% saved from having their loan rates increase. So they saved from having an extra 210 basis points added to the rate, but they still are paying the original rate plus the premium.

 

[lilnoelle]

This is a misconception. Through consolidation alone, you actually increase your interest rate on the loans you've already borrowed. Federal laws mandate that consolidation loans rates be the weighted average of all your loans interest rates plus a premium (I can't remember the exact figure, but I think it's .25%; someone can look this up tho). The government likes consolidation because they get their money faster, lenders like the program because they get a slightly higher interest rate and hope you never cash in on those rate reductions for on time payments.

Consolidation is a hedge against future interest rate increases. For example, people who consolidated Federal loans before last year's increase from 4.7 to 6.8% saved from having their loan rates increase. So they saved from having an extra 210 basis points added to the rate, but they still are paying the original rate plus the premium.

Thats what I thought.

 

[notdeadyet]

But at 6.8 and 8.5%, they really aren't lower interest than the rest of an individual's debt (unless they have credit card debt). Back when loans were 3.0% I think you had a case, not so much now.

I totally agree. I think those calculators were written back when student loans were the ones to drag your fee on paying off. Now, not so much.

I actually paid $17K of my student loan off with my credit card because the interest was less. That's a head scratcher.

 

[Doctor~Detroit]

so are we locked in at 6.8% for the next four years of borrowing?

 

[lilnoelle]

I actually paid $17K of my student loan off with my credit card because the interest was less. That's a head scratcher.

Nice.
Just don't miss a payment.

 

[lilnoelle]

so are we locked in at 6.8% for the next four years of borrowing?

I don't know for certain. I think that the only way that the interest rate will be changed is if the federal government decides to change it. I don't think thats likely.

 

[notdeadyet]

Nice.
Just don't miss a payment.

Nah, I can miss payments and I'm still tied in to 3.9%. I could have gotten 0%, but then I'm obligated to pay 18% and a pint of blood if I'm late so much as one payment. I'm not responsible enough to go that route.

 

[sirus_virus]

There are 5 threads about money on pre-allo. Is this the time of the year where people realize this S**t actually costs big time $$?