Life as a pharmacist with heavy student loan debt

[Sparda29]

Ahhh it's all fun and games until you become a taxpayer. You guys pay state and city income tax in NYC right?

In NYC, yeah there is a city income tax as well but I live 3 miles outside of city limits.

---

Members don't see this ad.

 

[Old Timer]

2013
Death tax increases to 45% from 35
Investor surtax 3.8% new
Medical device tax 2.3% New
Self employment tax rises to 3.8% from 2.9%
Small business top tier goes to 39+% from 35%

Well.. so oldie isnt entirely wrong...these have not taken place yet and these tax increases wont affect many of you.... but tax increase nonetheless.

No, Old Timer is entirely correct. President Obama has not increased taxes as of now. Note, I did not say he was or was not doing a good job. It's just a factually correct statement. As of now there has been a net tax decrease while he has been President.

Now for my opinion:

Investor Surtax: This will only affect the very wealthy. You can't put your money under your bed. It will have no economic impact.

Death Tax: This is a no brainer. For the most part almost nobody will pay this. It applies to estates over $1,000,000.00. This is only because the rate and the exemption were altered as part of President Obama's tax decreases and they sunset in 2013.

Medical Device Tax: I generally don't like targeting specific industries with the tax code. However, with number of people entering the market, these manufacturers may be seeing more than enough sales to offset the tax.

Self Employment Tax: Again this is a tax that was reduced by President Obama with the 2010 Tax releief act that sunsets in 2013 and returns to the rate that was in effect before President Obama took office.

Small business top tier goes to 39+% from 35% Don't know about this so I can't comment.

Just be an informed voter. Forget the BS and follow the facts. In general. President Obama has decreased, not increased taxes for 99.99% of the public. Is that a good enough reason to vote for him? If you are voting on tax policy alone, maybe so, There is so much more to our economy than taxes.

The idea that more taxes are bad and less taxes are good is stupid. It's more like medical care. It's not too little of drug x or too much of drug x is what is the correct amount of drug x. The correct dosage will vary with the condition of the patient. President Clinton raised taxes and the economy soared, President Bush cut taxes and the economy did not soar. Correlation and causation?

 

[pezdispenser]

I don't think this is correct. If you are saying states with no income taxes don't have welfare, Medicaid, food stamps, etc. you are mistaken. The state I'm referring to is one of the poorest in the country and definitely has tons of people on public assistance. Most of those programs are state-administered, but federally funded anyway.

Public schools are mostly funded with property taxes, not state income tax.

I also don't know of any toll roads in that state, and I've travelled there extensively.

Ok. Split the taxes from the government services then.

And I was talking about the total taxes, the big ones being federal income tax, state income tax, sales tax and property tax. Here, there are already going to be big differences between states depending on one's personal situation like your income and whether you own a house. So on the taxation side, you may be able to pay less in a different state.

Then, I'm not specifically linking which tax (federal or state) funds which program. I don't even know which state you're talking about; they are all going to be very different. I'm merely pointing out that some states may choose not to have certain services run by the government where the cost will have to be shared by all the tax payers one way or another. Instead, these services will be provided by private enterprise so that only the users pay for the service, such as a private school or a toll road. So again, on this side you may be able to benefit if you don't use the government services.

 

[All4MyDaughter]

Then, I'm not specifically linking which tax (federal or state) funds which program. I don't even know which state you're talking about; they are all going to be very different. I'm merely pointing out that some states may choose not to have certain services run by the government where the cost will have to be shared by all the tax payers one way or another. Instead, these services will be provided by private enterprise so that only the users pay for the service, such as a private school or a toll road. So again, on this side you may be able to benefit if you don't use the government services.

Welfare and related programs are federally funded in all 50 states.
All 50 states have public schools, almost universally funded by property and/or municipal taxes.
Do you have evidence that states without income tax have more toll roads?
What other government services do you think you can opt out of?

Sure, you might save money by moving to a state with no income tax. Maybe. I still maintain that they will get you some other way.

 

[Old Timer]

Ok. Split the taxes from the government services then.

And I was talking about the total taxes, the big ones being federal income tax, state income tax, sales tax and property tax. Here, there are already going to be big differences between states depending on one's personal situation like your income and whether you own a house. So on the taxation side, you may be able to pay less in a different state.

Then, I'm not specifically linking which tax (federal or state) funds which program. I don't even know which state you're talking about; they are all going to be very different. I'm merely pointing out that some states may choose not to have certain services run by the government where the cost will have to be shared by all the tax payers one way or another. Instead, these services will be provided by private enterprise so that only the users pay for the service, such as a private school or a toll road. So again, on this side you may be able to benefit if you don't use the government services.

Would you like to tell me where that is and what services you are speaking about?

 

[pezdispenser]

Do you have evidence that states without income tax have more toll roads?

Well just anecdotally, Florida, especially Orlando and Miami, and I think Texas as well, but I don't live there so maybe other people can chime in, don't have state income taxes but do have a lot of toll roads.

 

[pezdispenser]

Sure, you might save money by moving to a state with no income tax. Maybe. I still maintain that they will get you some other way.

All of the state taxes should be listed here in this Census Bureau publication: State Tax Collections Summary Report

The 2005 data happens to have a convenient per capita column: 2005 Ranking Table

Even if you try to account for age distribution and household makeup differences, that's quite a large difference in total state taxes per capita between Vermont $3,600 and Texas and South Dakota $1,400.

So I don't think all states tax the same, or that all states provide the same level of government services.

 

[All4MyDaughter]

All of the state taxes should be listed here in this Census Bureau publication: State Tax Collections Summary Report

The 2005 data happens to have a convenient per capita column: 2005 Ranking Table

Even if you try to account for age distribution and household makeup differences, that's quite a large difference in total state taxes per capita between Vermont $3,600 and Texas and South Dakota $1,400.

So I don't think all states tax the same, or that all states provide the same level of government services.

Who said all states tax the same? My point was that all states need revenue, and they will get it one way or another. Sure, there are states with more onerous tax burdens... duh.

But you have not yet adequately addressed what government services you think you can opt out of, or what services might not be provided in states with no income taxes. Roads might be a possibly decent answer, although there are toll roads in states that have income taxes. Schools? Not so much. Every state has public schools. Welfare? Nope - federal. So what are you talking about?

 

[pezdispenser]

Welfare and related programs are federally funded in all 50 states.

Right. So you can't avoid those. But programs like unemployment benefits and disability insurance, and the taxes for them, differ from state to state. Sure, they don't cost that much, but that's what I meant when I said welfare programs.

 

[All4MyDaughter]

Right. So you can't avoid those. But programs like unemployment benefits and disability insurance, and the taxes for them, differ from state to state. Sure, they don't cost that much, but that's what I meant when I said welfare programs.

What? Disability insurance? You mean Social Security Disability? Federal.

You should familiarize yourself with how unemployment benefits are financed. Hint: it's not from state income taxes. It's from payroll taxes paid by employers. This program is also jointly administered by the states and federal government. And it exists in all 50 states.

 

[pezdispenser]

All 50 states have public schools, almost universally funded by property and/or municipal taxes.

Of course all states have public schools, but that's why I said you need to look at the actual proportion of people who go to public and private schools. Hypothetically, a district may have a really good public school system, so let's say 100% of the kids go to the public schools. This sounds like a really desirable place to live so people will move there pushing property values up, and the district can easily collect what it needs in property taxes to fund the schools.

Or, there may be a place where the public school system is not so good, so maybe 50% of the kids go to private schools. I don't think this district should collect the same total budget as the district with 100% enrolment. Total tax should be 50% because there simply aren't as many students. However, it's still spread out and paid on all properties, so you still get dinged somewhat if you send your kids to a private school.

 

[pezdispenser]

What? Disability insurance? You mean Social Security Disability? Federal.

No. Some states have their own disability insurance programs.

Like California. I think they pay about 1% in an extra tax.

And I think NY has one too.

You should familiarize yourself with how unemployment benefits are financed. Hint: it's not from state income taxes. It's from payroll taxes paid by employers. This program is also jointly administered by the states and federal government. And it exists in all 50 states.

I didn't say unemployment is financed from state income taxes. Yes it is from payroll tax, but the rate is different from state to state and the benefit is different as well:

http://www.workforcesecurity.doleta.gov/unemploy/content/sigpros/2010-2019/January2012.pdf

 

[All4MyDaughter]

No. Some states have their own disability insurance programs.

Like California. I think they pay about 1% in an extra tax.

And I think NY has one too.

I didn't say unemployment is financed from state income taxes. Yes it is from payroll tax, but the rate is different from state to state and the benefit is different as well:

http://www.workforcesecurity.doleta.gov/unemploy/content/sigpros/2010-2019/January2012.pdf

So it seems you are not going to be able to avoid those taxes, no matter what state you live in?

 

[pezdispenser]

Who said all states tax the same? My point was that all states need revenue, and they will get it one way or another. Sure, there are states with more onerous tax burdens... duh.

But you have not yet adequately addressed what government services you think you can opt out of, or what services might not be provided in states with no income taxes. Roads might be a possibly decent answer, although there are toll roads in states that have income taxes. Schools? Not so much. Every state has public schools. Welfare? Nope - federal. So what are you talking about?

Yes, the states get their revenue one way or another, so I want to ask you to stop questioning me on state income taxes. If that's what I said, I'm sorry, it's not what I meant. I'm only focusing on overall taxes from now on.

Since you seem to agree that some states have more onerous tax burdens, then what is this extra tax spent on? I'd say more services for their residents. Also, wouldn't you want to live in a state that has less tax burden?

 

[All4MyDaughter]

Of course all states have public schools, but that's why I said you need to look at the actual proportion of people who go to public and private schools. Hypothetically, a district may have a really good public school system, so let's say 100% of the kids go to the public schools. This sounds like a really desirable place to live so people will move there pushing property values up, and the district can easily collect what it needs in property taxes to fund the schools.

Or, there may be a place where the public school system is not so good, so maybe 50% of the kids go to private schools. I don't think this district should collect the same total budget as the district with 100% enrolment. Total tax should be 50% because there simply aren't as many students. However, it's still spread out and paid on all properties, so you still get dinged somewhat if you send your kids to a private school.

Areas with high public school enrollment tend to be either 1) poor areas where people can't afford private school and thus, areas that have low tax bases to begin with or 2) rural areas where the population can't support private schools.

Funding for schools is already based on per pupil enrollment. So the budget wouldn't be the same for both of your hypothetical districts. But it's more complicated because it's based both on enrollment numbers and property tax collections, not simply on the % of school-aged children enrolled. It can actually be more expensive to operate a school that has low enrollment, which is why you see many small districts and rural schools consolidating.

 

[pezdispenser]

So it seems you are not going to be able to avoid those taxes, no matter what state you live in?

Well a state may have a 'Cadillac' unemployment plan, like maybe Massachusetts, but of course, they will have to pay higher taxes to fund it. Or it could be the bare minimum like Arizona maybe, but then the taxes are lower as well.

 

[pezdispenser]

Areas with high public school enrollment tend to be either 1) poor areas where people can't afford private school and thus, areas that have low tax bases to begin with or 2) rural areas where the population can't support private schools.

Funding for schools is already based on per pupil enrollment. So the budget wouldn't be the same for both of your hypothetical districts. But it's more complicated because it's based both on enrollment numbers and property tax collections, not simply on the % of school-aged children enrolled. It can actually be more expensive to operate a school that has low enrollment, which is why you see many small districts and rural schools consolidating.

Ok, I'll give you this one, because you're the Mommystrator and I don't even have any kids so I know nothing lol

 

[All4MyDaughter]

Yes, the states get their revenue one way or another, so I want to ask you to stop questioning me on state income taxes. If that's what I said, I'm sorry, it's not what I meant. I'm only focusing on overall taxes from now on.

Since you seem to agree that some states have more onerous tax burdens, then what is this extra tax spent on? I'd say more services for their residents. Also, wouldn't you want to live in a state that has less tax burden?

Well, think about it. A state with a larger population and hundreds of thousand miles of roads (more people driving = more wear and tear) to maintain is going to need more tax revenue (maybe California) than a state with low population and relatively fewer miles of roads (maybe like South Dakota).

Other differences - states do not all fund their public universities at the same rate. That's why you have state pharmacy schools that are still affordable and state pharmacy schools that are as expensive as private schools.

There will be differences in state government infrastructure and salaries that could account for differences in tax revenue.

I looked at your tax chart more in depth. I noticed that sales tax revenue alone in my neighboring state (the one with no income tax) is greater than sales tax + income tax revenue in my home state. Populations and standard of living/public services are pretty similar. So I think my theory that states lacking income tax make up for it other ways is at least partially true.

 

[pezdispenser]

Well, think about it. A state with a larger population and hundreds of thousand miles of roads (more people driving = more wear and tear) to maintain is going to need more tax revenue (maybe California) than a state with low population and relatively fewer miles of roads (maybe like South Dakota).

Other differences - states do not all fund their public universities at the same rate. That's why you have state pharmacy schools that are still affordable and state pharmacy schools that are as expensive as private schools.

There will be differences in state government infrastructure and salaries that could account for differences in tax revenue.

I looked at your tax chart more in depth. I noticed that sales tax revenue alone in my neighboring state (the one with no income tax) is greater than sales tax + income tax revenue in my home state. Populations and standard of living/public services are pretty similar. So I think my theory that states lacking income tax make up for it other ways is at least partially true.

I think we might be on the same page now. That's exactly what I meant when I said some states provide more government services for their residents. In turn, those states will probably have a higher overall tax burden.

Like California has a huge highway network and two highly regarded state university systems -- UC and CSU. They also have high state income tax and sales tax. Their total state tax per capita in 2005 was #10.

SCHIP is another welfare program that is designed and funded by the states with matching funds from the feds. Arizona opted out of SCHIP. Their total state tax per capita in 2005 was #40, so I would infer that, besides SCHIP, Arizona probably provides fewer services overall for their residents. They do have a state income tax, but their overall state tax burden is still low.

In the two states you are comparing, if one makes up for no income tax with higher sales taxes so that the overall tax burden is similar, then I agree with you there. Their public services are probably going to be similar as well as you said, and you won't receive much benefit from moving to that state.

 

[All4MyDaughter]

I think we might be on the same page now. That's exactly what I meant when I said some states provide more government services for their residents. In turn, those states will probably have a higher overall tax burden.

Like California has a huge highway network and two highly regarded state university systems -- UC and CSU. They also have high state income tax and sales tax. Their total state tax per capita in 2005 was #10.

SCHIP is another welfare program that is designed and funded by the states with matching funds from the feds. Arizona opted out of SCHIP. Their total state tax per capita in 2005 was #40, so I would infer that, besides SCHIP, Arizona probably provides fewer services overall for their residents. They do have a state income tax, but their overall state tax burden is still low.

In the two states you are comparing, if one makes up for no income tax with higher sales taxes so that the overall tax burden is similar, then I agree with you there. Their public services are probably going to be similar as well as you said, and you won't receive much benefit from moving to that state.

To answer your question from an earlier post, I don't think I'd move just to avoid taxes. I also don't think many people (average individuals) make that a huge part of their decision making. I mean, why does everyone (except me!) want to live in California? I wouldn't live there for anything, but it's not because of taxes.

 

[Sparda29]

To answer your question from an earlier post, I don't think I'd move just to avoid taxes. I also don't think many people (average individuals) make that a huge part of their decision making. I mean, why does everyone (except me!) want to live in California? I wouldn't live there for anything, but it's not because of taxes.

Perfect weather year round, California girls are hot, and marijuana is decriminalized.

 

[Momus]

Perfect weather year round, California girls are hot, and marijuana is decriminalized.

I wouldn't argue with that + huge diversity, no matter what you are you can find a lot of your own here but COL and taxes are prohibitive.

 

[pharm B]

but COL and taxes are prohibitive.

This is exactly why I've never considered it.

 

[Momus]

This is exactly why I've never considered it.

Effective tax rate paid =
Fed : 22.84%
CA : 9.3%
SS 2012 : 4.2% (6.2% next year T_T)
Medicare : 1.45%

Total taxes paid 37.79%... (39.79% in 2013)

I need to buy $1M house to get $30k tax deduction, get married, and have many children! I will be like a normal spender American, a slave to my bank and to my wife, just so I can save 30 cents on $1! Then, when economy tanks, I get laid off, divorced... Paying tons of child supports and bringing the whole world down with me the second time! Sound like a smart plan!

HARROWING...

 

[Dysgenics]

The key is to live and work in a low cost of living area. $80,000 in rural Wisconsin is equivalent to $121,000 in urban California. http://www.bestplaces.net/col/?salary=80000&city1=69915887&city2=50644000

 

[Momus]

The key is to live and work in a low cost of living area. $80,000 in rural Wisconsin is equivalent to $121,000 in urban California. http://www.bestplaces.net/col/?salary=80000&city1=69915887&city2=50644000

Of course, you'd have known I already knew that if you were a regular poster here

 

[Sparda29]

The key is to live and work in a low cost of living area. $80,000 in rural Wisconsin is equivalent to $121,000 in urban California. http://www.bestplaces.net/col/?salary=80000&city1=69915887&city2=50644000

Yeah, but what's there to do in rural Wisconsin?

 

[Dysgenics]

Yeah, but what's there to do in rural Wisconsin?

Nothing, because traffic stops you in your path, parking costs insane amounts, restaurants and recreational activities are overpriced because of overpopulation (high supply of customers), ghetto people glare at you and start yelling, people are short tempered and arrogant, courtesy on the road will keep you behind, there is no real nature for hiking, camping, horseback riding, stargazing just parks and light, air, water and noise pollution and people come here because they are usually socially ousted from their local communities.

O wait, I just described most major cities my bad.

 

[hye345]

Nothing, because traffic stops you in your path, parking costs insane amounts, restaurants and recreational activities are overpriced because of overpopulation (high supply of customers), ghetto people glare at you and start yelling, people are short tempered and arrogant, courtesy on the road will keep you behind, there is no real nature for hiking, camping, horseback riding, stargazing just parks and light, air, water and noise pollution and people come here because they are usually socially ousted from their local communities.

O wait, I just described most major cities my bad.

 

[pezdispenser]

Effective tax rate paid =
Fed : 22.84%
CA : 9.3%
SS 2012 : 4.2% (6.2% next year T_T)
Medicare : 1.45%

Total taxes paid 37.79%... (39.79% in 2013)

Here's mine:
Fed: 18%
FL: 0%
SS 4.2% (but maxes out at $110,100)
Medicare 1.45%

Total 23.65%

14% difference! I do own a house so that's why my fed taxes are lower, but at least nice houses are affordable here! Is it still worth it for you to live in CA??

 

[Digsbe]

I really appreciate some of the posts in this thread. I will be similar to the OP when it comes to student loan debt. I calculated everything out and when I graduate (once 4 years of interest gets tacked on) I'll have about 230k in student loan debt (28k for 4 years of undergrad and 175k for pharmacy school). I live in a state where there is no income tax and the cost of living is moderate.

I wish during this election season they would discuss graduate school loans and how to make interest rates lower and more affordable like they do for all the bachelors degrees

 

[Momus]

14% difference! I do own a house so that's why my fed taxes are lower, but at least nice houses are affordable here! Is it still worth it for you to live in CA??

No, not worth it paying $20k more every year and only be able to afford a shack for $500k... I am stuck as a indentured servant to my employer.

 

[pasofinab]

just got my first paycheck today. $3000 pre-tax. Only $2100 take home. What the flying ****? How do they calculate that they gotta withhold that much?

sparda how is it possible to repay your student loans with only $4200/month living in nyc.

Is this the same for everyone. How much is left after every paycheck for rent/car/etc?

This worries me tremendously. Im about to enter 1 of 3 accepted programs, but my loan are looking to be $150k or more

 

[Pojman]

.

 

[BMBiology]

..but you will be paying a lot more interest in the long run.

 

[Trankuil]

The key is to live and work in a low cost of living area. $80,000 in rural Wisconsin is equivalent to $121,000 in urban California. http://www.bestplaces.net/col/?salary=80000&city1=69915887&city2=50644000

The trick with that is your not going to be making 120K$ in rural wisconsin, most employers match wages based on cost of living. Sure there are places where this is not true, but from what little experience I have and have seen so far in the job offers I have, salaries are adjusted to cost of living.

I have what I feel like is a great offer in northern cali that I will probably accept. I also take into account the benifits the company is giving, not just the dollar amount they are paying me. Just as a general reference, what I would be making in cali would be equal to my cost of living with the decreased salary in utah, infact it might actually be a little bit more in cali.

 

[type b pharmD]

The trick with that is your not going to be making 120K$ in rural wisconsin, most employers match wages based on cost of living. Sure there are places where this is not true, but from what little experience I have and have seen so far in the job offers I have, salaries are adjusted to cost of living.

I have what I feel like is a great offer in northern cali that I will probably accept. I also take into account the benifits the company is giving, not just the dollar amount they are paying me. Just as a general reference, what I would be making in cali would be equal to my cost of living with the decreased salary in utah, infact it might actually be a little bit more in cali.

Opposite usually holds true for healthcare professionals. More rural = more pay.

 

[Momus]

Opposite usually holds true for healthcare professionals. More rural = more pay.

NYC/ So-Nor Cal is actually getting location tax and getting lower pay then the rest of the country if you consider tax rates and COLA (e.g., housing is at least 2-3X more than the rest of the country). The more undesirable, the more pay. Not the other way around.

 

[Trankuil]

NYC/ So-Nor Cal is actually getting location tax and getting lower pay then the rest of the country if you consider tax rates and COLA (e.g., housing is at least 2-3X more than the rest of the country). The more undesirable, the more pay. Not the other way around.

Im not disagreeing with that. Maybe I wasnt clear. For a similar population area in utah vs nor-cal area according to COLA i will actually be making a little more in cali than in utah. I agree that more rural usually = more money, but COLA factors into that alot. people dont understand that moving from SF making 120K to say po-dunk missour for 85-90K$ is actually a raise because of cost of living.

 

[Momus]

Im not disagreeing with that. Maybe I wasnt clear. For a similar population area in utah vs nor-cal area according to COLA i will actually be making a little more in cali than in utah. I agree that more rural usually = more money, but COLA factors into that alot. people dont understand that moving from SF making 120K to say po-dunk missour for 85-90K$ is actually a raise because of cost of living.

Please show me average pharmacist's salary in UTAH is 90k luls... gimme a link from Salary.com. COLA doesn't appropriately adjust in SF or any desirable area, if it were, you'd be making $180k. So you are taking a pay cut after if you happen to live in high cost cities, you just don't know it.

 

[accordman83]

Im not disagreeing with that. Maybe I wasnt clear. For a similar population area in utah vs nor-cal area according to COLA i will actually be making a little more in cali than in utah. I agree that more rural usually = more money, but COLA factors into that alot. people dont understand that moving from SF making 120K to say po-dunk missour for 85-90K$ is actually a raise because of cost of living.

I actually had an offer right out of school for over 133K in "po-dunk" missouri - imagine how much you could save taking that job!

 

[diagonal]

Why on earth is the OP not doing IBR?

 

[BMBiology]

Why on earth is the OP not doing IBR?

Based on her number: 210 k with 6.8% and assume she is making 125 k a year, she will be paying 1350 a month for 25 years = 405 k and amount forgiven will be taxed.

 

[diagonal]

Based on her number: 210 k with 6.8% and assume she is making 125 k a year, she will be paying 1350 a month for 25 years = 405 k and amount forgiven will be taxed.

A) I think his payments will be lower as it's 15% if discretionary income.

B) You don't have to pay more on your loans than you would originally owe. I'm not sure how interest factors into that final number.

C) An extra $1500/mo would be nice.

 

[SHC1984]

B) You don't have to pay more on your loans than you would originally owe. I'm not sure how interest factors into that final number.

LOL...I don't think so....you PAY MORE the longer you drag out the loans. If what you are saying is true than there would be no interest at all.

If you NEVER pay more than what you owe...then I could borrow 100K with 6.8% interest and only pay 100K total without paying a cent in interest? I don't think so....

You pay MORE the longer you drag your loans out. Why? b/c you are obligated to pay the interest that accrues on your loans on top of what you owe.

You will always owe your principle amount + interest. How much interest do you owe depends on how long you drag out your loans.

 

[diagonal]

LOL...I don't think so....you PAY MORE the longer you drag out the loans. If what you are saying is true than there would be no interest at all.

If you NEVER pay more than what you owe...then I could borrow 100K with 6.8% interest and only pay 100K total without paying a cent in interest? I don't think so....

You pay MORE the longer you drag your loans out. Why? b/c you are obligated to pay the interest that accrues on your loans on top of what you owe.

You will always owe your principle amount + interest. How much interest do you owe depends on how long you drag out your loans.

What I'm saying is you're not locked into paying for 25 years. Once the loan is payed off, with interest, it's paid off. That may happen before the 25 yr mark.

Actual numbers aside, there is something to be said for having that much more disposable income (relative to your take-home pay) for a good chunk of your youth. Also note that 200k today is much less valuable than 200k in 20 years, which is one financial benefit of drawing out loan repayment. The inflation effect.

 

[BMBiology]

Actual numbers aside, there is something to be said for having that much more disposable income (relative to your take-home pay) for a good chunk of your youth. Also note that 200k today is much less valuable than 200k in 20 years, which is one financial benefit of drawing out loan repayment. The inflation effect.

You are making the wrong assumption here. You will be making monthly payment for 25 years and your monthly payment will be based on your salary. Therefore, if you salary increases, then your monthly payment will also increase. Assuming your salary increases as the same rate as inflation, then there's no financial benefit.

 

[All4MyDaughter]

A) I think his payments will be lower as it's 15% if discretionary income.

B) You don't have to pay more on your loans than you would originally owe. I'm not sure how interest factors into that final number.

C) An extra $1500/mo would be nice.

To determine his payment, we need to know his AGI. All we know is that his gross salary is 125K.

I also think the payment will be lower.

 

[diagonal]

You are making the wrong assumption here. You will be making monthly payment for 25 years and your monthly payment will be based on your salary. Therefore, if you salary increases, then your monthly payment will also increase. Assuming your salary increases as the same rate as inflation, then there's no financial benefit.

My point is this isn't necessarily true. You max out at 25 years. If you end up paying off the loan before those 25 years, even while making the minimum IBR payments, your obligations end.

Also one could invest the money they're saving everything month. But that's not even my argument. I'm of the opinion that even if you pay more in the long run, your quality of life over the intervening years will be higher.

 

[BMBiology]

To determine his payment, we need to know his AGI. All we know is that his gross salary is 125K.

I also think the payment will be lower.

405 k total payment is already based on an adjusted AGI for someone who makes 125 K a year. Even if she's able to significantly lower her AGI, her total amount will be much greater than the 220 K she borrowed. In addition, she will have to pay tax on any amount that is forgiven.