How is IBR Calculated?

[pharmacy7424]

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What year's AGI do they use to calculate the repayment amount under IBR?

I graduate this May. My AGI for 2013 was $6500.

Using the online calculators, it indicates that my payment under IBR is $0/month. Can this be accurate? If so, would that be my rate until I file my taxes for 2014?

 

[confettiflyer]

Not necessarily - when you initially enter repayment (December 2014, you get a 6 month grace period), there's a required alternative documentation form that asks for your current income and requires a copy of your paycheck. They'll extrapolate your AGI from that and so from December 2014 to December 2015, they'll use that as a basis for repayment.

When you re-up your IBR in December 2015, they'll instead ask for the most recent tax return, which would be your 2014 tax return.

 

[pharm B]

Is the grace period mandatory, or is there a way to formally start the repayment process earlier?

 

[BMBiology]

If you can afford paying off your student loans in 10 years, then I would do it. It's like paying your mortgage 3 k a month x 15 years vs. 2 k a month x 30 years. You will end up paying a lot more interest on the 30 year plan.

Don't be a fool and pay 6.8% interest rate for the next 25 years.

 

[pharm B]

I'm considering working for the government for ten years (at least) and pairing IBR with PSLF. If I get a year of low payments under my belt during residency, then that's one down and nine to go...

 

[BMBiology]

The obama administration is already thinking about capping PSLF to just 57 k. Search for the thread on this forum.

 

[type b pharmD]

Is the grace period mandatory, or is there a way to formally start the repayment process earlier?

There is. By applying for consolidation, you forfeit the grace period and repayment begins immediately. Its a nice trick to use if you are trying to force a specific income lookback timeframe. Im currently enjoying my 12-14 months with $0 ibr payment because I consolidated literally the day after graduation.

Just remember consolidation takes a few weeks, you cannot have "in school status" and you need to be able to sign a sworn affadavit that youre broke , basically, for it to work. Its fairly straightforward though.

 

[pharm B]

That's what I thought. I'll have to look into the changes being made to PSLF, though.

 

[type b pharmD]

That's what I thought. I'll have to look into the changes being made to PSLF, though.

So far, changes to PSLF (as outlined in the proposed budget) do not apply to borrowers with loans disbursement dates earlier than 01/01/15 .. which follows the historical convention that no changes are made that would forcibly alter a previously existing MPN. According to obama, the new limited PSLF would be "opt-in" for existing borrowers (the incentive being 10% of discretionary income ibr payments for anyone regardless of loan disbursement year).

 

[BMBiology]

Is there anything that would prevent this administration or the next administration from capping the PSLF?

 

[type b pharmD]

Is there anything that would prevent this administration or the next administration from capping the PSLF?

Political and macroeconomic factors. Other than that, no not technically. But even the most conservative politicians have left outstanding MPNs alone , *so far*

 

[BMBiology]

Because the program has not forgiven any loan yet. There is no political advantage to forgiving 6 figure student loan debt to people who are perceived to be financially well off.

 

[FlavyFlav]

I applied for IBR the November after I graduated and was approved literally a week before I would have to start repayment on the 10 year plan. All I sent in were my 2012 tax forms and I am currently on $0 repayment until Feb, 2015. The online application will give you the alternate income form, but you don't actually have to send it in. They require a proof of income, and will accept the most recent tax returns you possess as evidence. I called the customer service line several times to verify this.

 

[pharmacy7424]

I applied for IBR the November after I graduated and was approved literally a week before I would have to start repayment on the 10 year plan. All I sent in were my 2012 tax forms and I am currently on $0 repayment until Feb, 2015. The online application will give you the alternate income form, but you don't actually have to send it in. They require a proof of income, and will accept the most recent tax returns you possess as evidence. I called the customer service line several times to verify this.

Once your IBR level is set, how long is it valid for until you need to submit new proof of income?

 

[FlavyFlav]

1 year, I will reapply this December for a new payment starting February, I've calculated this one to only be $150 a month thanks to the half year of work I had.

 

[pharmacy7424]

There is. By applying for consolidation, you forfeit the grace period and repayment begins immediately. Its a nice trick to use if you are trying to force a specific income lookback timeframe. Im currently enjoying my 12-14 months with $0 ibr payment because I consolidated literally the day after graduation.

Just remember consolidation takes a few weeks, you cannot have "in school status" and you need to be able to sign a sworn affadavit that youre broke , basically, for it to work. Its fairly straightforward though.

Could you elaborate on what the 'sworn affidavit is that you are broke?'