IBR and Loan Forgiveness

[Rx MPLS]

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Not true. One of my friends is doing IBR on a salary of about 60k and ~250k in loans and just bought a house with 150k mortgage. They do NOT count student loans for mortgage applications except for your *monthly* debt to income ratio. In this way, IBR actually will end up helping me or other people afford houses.

Total debt and total available credit is 30% of your FICO score, which will impact your rates on mortgages (FICO being the actual credit score used to determine your interest rates).

It's just a tidbit to keep in mind as a higher rate means you pay much more over the course of the loan for the same house than somebody with a lower interest rate. I don't think IBR is a bad thing, but it may not always be in the borrower's best interest.

(source: http://www.bills.com/fico-score-calculation/)

 

[PharmhopefulNC]

Not with public service loan forgiveness.

"Q3 Are loan amounts forgiven under PSLF considered taxable income?
A3 No. According to the IRS, student loan amounts forgiven under PSLF are not considered income for tax purposes. (February 3, 2010)"
http://studentaid.ed.gov/students/attachments/siteresources/PSLF_QAs_final_02%2012%2010.pdf

You are talking about something totally different. The IBR is new and the laws are different than the PSLF program... People with higher incomes qualify and the payments and term before forgiveness is lower/shorter. As of now though, the forgiveness is indeed taxable income. See this link:

http://www.ibrinfo.org/faq.vp.html#_Will_forgiven_loan

Will forgiven loan amounts be taxed as income?

The U.S. Department of the Treasury determined that debt forgiven through PSLF is not considered taxable income under current law. That means that when you qualify for PSLF, you won't get slapped with a huge tax bill.

Unfortunately, the same good news doesn't extend to debt forgiven through IBR. In response, Congressman Sandy Levin (D-MI) is leading a bipartisan effort to ensure that borrowers who qualify for loan forgiveness through IBR (and Income Contingent Repayment) get the same treatment. Responsible borrowers with modest incomes shouldn't have to pay potentially crippling taxes on forgiven student loans. We are hopeful that this issue will be resolved before any borrowers qualify for forgiveness through IBR. We'll continue to work on this issue and keep you informed. Urge your representatives to support H.R. 2492. Learn more about the bill.

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.

 

[pharm4312]

Pay as You Earn essentially accelerates the start date of the 2014 changes to help students who are in school today after they graduate. To qualify, you must have taken out your first federal student loan in 2008 or later and take out at least one more student loan in 2012 or later.


This is Obama's plan that he announced last October. On eligibility, the details seem unclear. Myself, I attended undergrad from 2005-2009, then pharmacy school from 2010-2014. I'm sure there are others like me here. Will we qualify?

 

[PharmhopefulNC]

Pay as You Earn essentially accelerates the start date of the 2014 changes to help students who are in school today after they graduate. To qualify, you must have taken out your first federal student loan in 2008 or later and take out at least one more student loan in 2012 or later.


This is Obama's plan that he announced last October. On eligibility, the details seem unclear. Myself, I attended undergrad from 2005-2009, then pharmacy school from 2010-2014. I'm sure there are others like me here. Will we qualify?

I have loans prior to 2008 that haven't come out of deferment yet as well, and I will start Pharmacy school in the fall. I have the same question, so I emailed the dean of financial aid at my school. The response is below. The word "may" always confuses me - it always leaves it up in the air.

[FONT=Calibri,sans-serif]The income based repayment plan was not available before July 1, 2009. Regardless of when you took out the loan, you may qualify for a reduced payment for loans going into repayment after that date. I have used the calculator at www.ibrinfo.org to calculate estimated monthly payments. You might try plugging in some estimates to see what your estimated payment will be. I have also used www.finaid.org/calculators to estimate 10 year and 25 year monthly payments. .
[FONT=Calibri,sans-serif]Duke University, like Creighton University, should have tax exempt status. So, if pharmacists are employed full time at the hospital, the balance would be forgiven after 10 years of satisfactory repayment, of which the income based repayment plan would be considered a satisfactory payment plan..
[FONT=Calibri,sans-serif]Let me know if you have other questions..

 

[drew0010]

I've run the numbers on IBR and I'm pretty sure I would end up paying more with that scheme than just paying my bills off right away when I graduate, even if I was able to work at a nonprofit for ten years and write some of the costs off. If you pop out a bunch of kids (you'd need more than 4 to really make a difference it seems), it might work in your favor, though...or if you stay single and have loan debts $250k+. Your mileage may vary, of course.

Yup. I've already thought about this situation. My gf at the moment will most likely be going to pharmacy school. If we're married, ibr would hurt us. I also talked to a recently married pharmacists and they actually had to pay more taxes together than separated. Their income puts them into a bad tax bracket. So For future thought, I will definitely need to review my situation, but seems I will not get married on paper.

 

[neopharma]

I'm having a hard time understanding what jobs will qualify under the Public Service Loan Forgiveness program since it's new and no one has actually been granted any forgiveness yet. I have done my research...for hours on end. I have read the definitions included in it a million times over and it seems to me that any pharmacist working for the Veteran's Administration hospitals or in a not-for-profit hospital would be eligible for forgiveness after 10 years. The problem is, I am not skilled in law interpretation in the least, and my school's financial aid department is less than helpful. I do not trust my own interpretation. I've thought about contacting my loan servicer for advice, but I feel as though there could be a conflict of interest there. If we could all get giant heaps of money forgiven after 10 years, I feel like everyone would be running for those jobs more than any others. Does anyone have any further insight about this program as it relates to pharmacy? Thanks in advance. Feel free to PM or reply on here.

 

[confettiflyer]

I'm having a hard time understanding what jobs will qualify under the Public Service Loan Forgiveness program since it's new and no one has actually been granted any forgiveness yet. I have done my research...for hours on end. I have read the definitions included in it a million times over and it seems to me that any pharmacist working for the Veteran's Administration hospitals or in a not-for-profit hospital would be eligible for forgiveness after 10 years. The problem is, I am not skilled in law interpretation in the least, and my school's financial aid department is less than helpful. I do not trust my own interpretation. I've thought about contacting my loan servicer for advice, but I feel as though there could be a conflict of interest there. If we could all get giant heaps of money forgiven after 10 years, I feel like everyone would be running for those jobs more than any others. Does anyone have any further insight about this program as it relates to pharmacy? Thanks in advance. Feel free to PM or reply on here.

I don't see why it's so difficult to interpret... any 501(c)(3) or gov't entity applies, end of story. Your interpretation is correct. Simpler information is at ibrinfo.org

 

[neopharma]

I don't see why it's so difficult to interpret... any 501(c)(3) or gov't entity applies, end of story. Your interpretation is correct. Simpler information is at ibrinfo.org

Would all "not for profit" hospitals fall under the 501(c)(3) heading?

 

[confettiflyer]

Would all "not for profit" hospitals fall under the 501(c)(3) heading?

501(c)(3) = non-profit

check their corporate structure, really easy to find out.

Not 100% sure if there's another tax entity that's non-profit, whether such a thing could count, or whatnot. There's also another provision that allows PSLF on a non-501(c)(3) entity but I just brain farted right now, it's pretty specific and i don't think it applies to pharmacy much.