Student Loans

[tmac01]

I have a few questions about student loans and unable to pay.
If loans go into repayment after the end of 6 months grace then I can apply for possibly another 6 month deferment

If after that 6 month deferment and I cannot pay the loans due to not having a job then what will happen.

What will happen if I can get a full time job but not comparable to a 100k salary....would I be able to qualify for a Income based repayment plan and still have enough money to function?

If I can manage to get an IBR plan will that loan be forgiven after 20 years of paying?

Will loans going into default affect my chances of finding a job?

What is the worse that can happen to me when loans go into default?

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[rxlea]

Defaulting on your loans will screw up your credit I think. Some employers do a credit check but I'm not sure if it's regular hiring practice.

 

[tmac01]

Are the public service loan forgiveness programs (If goverment/non profit job) based on income based repayment and forgiven after 120 payments?

While the IBR are forgiven after 20 years?


So theoretically I could possibly get a full time job (joining military) and all my loans will be paid back at IBR rate and forgiven after 120 payments?

 

[FlavyFlav]

Or, get a job in an unrelated field making $7.50 an hour, go into IBR repayment plan with a payment of roughly $50 a month, if the field you're in is public service you get the loan paid off in 10 years. At the 10 year mark make sure you have no hard assets so you won't owe the full tax amount on the forgiveness of the half a million you accrued in interest. Enjoy the rest of your life

Or, just budget and work hard at your job and do it the intended way. I think IBR can apply to more than just public jobs. There's a limit, but I don't think you quite reach it as a pharmacist.

 

[SoylentGreen]

You can get IBR if your payments on the 10 year plan are more than 15% of your income above the poverty line. I don't know how big your loans are but most new grads should be able to qualify for IBR if they're underemployed. You should definitely apply for it if you qualify even if you can afford to pay your loans because if you're on IBR they pay your interest on Stafford Subsidized loans. There's nothing stopping you from making payments anyway - I'm on IBR with $0 required payment and still paying about 25% more than I would be on the 10 year plan.

You shouldn't get a deferment because at the end of the deferment, the interest you owe rolls into principal, which doesn't happen with IBR.

IBR is forgiven after 20 (or is it 25?) years, and public service forgiveness is after 10 years. Yes, if you go military for 10 years you won't end up paying much.

 

[tmac01]

But that IBR is based on an AGI so I would technically have to pay a little more than 50 dollars a month.

 

[Lisochka]

Or, get a job in an unrelated field making $7.50 an hour, go into IBR repayment plan with a payment of roughly $50 a month, if the field you're in is public service you get the loan paid off in 10 years. At the 10 year mark make sure you have no hard assets so you won't owe the full tax amount on the forgiveness of the half a million you accrued in interest. Enjoy the rest of your life

Or, just budget and work hard at your job and do it the intended way. I think IBR can apply to more than just public jobs. There's a limit, but I don't think you quite reach it as a pharmacist.

What do you mean by hard assets?
My friend works for a nonprofit organization, he also invests into real estate.
does it mean that at the end of ten year period the Government will go after his rental houses?

 

[CUninja]

Or, get a job in an unrelated field making $7.50 an hour, go into IBR repayment plan with a payment of roughly $50 a month, if the field you're in is public service you get the loan paid off in 10 years. At the 10 year mark make sure you have no hard assets so you won't owe the full tax amount on the forgiveness of the half a million you accrued in interest. Enjoy the rest of your life

Or, just budget and work hard at your job and do it the intended way. I think IBR can apply to more than just public jobs. There's a limit, but I don't think you quite reach it as a pharmacist.

Or read the rules.... the forgiveness with PSLF is tax free...

 

[koercive]

This calculator will determine if IBR will actually be a financially sound decision for you which accounts for discount rate, income growth rate, inflation.

For me, even with boatloads of debt, I gain no financial benefit from IBR (ends up costing me more due to interest). Of course, the financial flexibility is nice, but paying more in the long run is not.. This will depend on your specific situation e.g. job (private or public sector),

http://www.finaid.org/calculators/ibr.phtml



http://www.finaid.org/calculators/ibr10.phtml (the newer ibr10 version if the administration allows us older students starting before june 2014 to qualify - i believe this is still pending)

 

[TAMallick]

Without proper security usually a company don't disburse loan. Yet you are defaulter, in-future you will fall in problem for managing loan.

 

[MindOverMatter]

I feel like I should have done IBR from the start. First year out you pay basically nothing, and even the 2nd year (assuming you work full-time half of the year after getting licensed) you still only pay around $600/month. After that it's ~$1200/month. That's a pretty considerable amount less than if you do standard repayment, and you can always apply the extra money to your principal whenever you want.

 

[All4MyDaughter]

I feel like I should have done IBR from the start. First year out you pay basically nothing, and even the 2nd year (assuming you work full-time half of the year after getting licensed) you still only pay around $600/month. After that it's ~$1200/month. That's a pretty considerable amount less than if you do standard repayment, and you can always apply the extra money to your principal whenever you want.

This is how I did it. IBR during residency and the 2nd half of this year while I'm starting my own business and working part time on various projects. The monthly payment is very low but I still made an extra payment of 10K that I saved up from various sources. I'll make another lump sum payment before the end of the year.

 

[SoylentGreen]

This calculator will determine if IBR will actually be a financially sound decision for you which accounts for discount rate, income growth rate, inflation.

For me, even with boatloads of debt, I gain no financial benefit from IBR (ends up costing me more due to interest). Of course, the financial flexibility is nice, but paying more in the long run is not.. This will depend on your specific situation e.g. job (private or public sector),

http://www.finaid.org/calculators/ibr.phtml



http://www.finaid.org/calculators/ibr10.phtml (the newer ibr10 version if the administration allows us older students starting before june 2014 to qualify - i believe this is still pending)

Remember that IBR doesn't mean you have to pay only the minimum - it means you can pay only what you're required to pay on the lower interest loans and focus on the higher interest loans, while not paying any interest at all on Stafford Subsidized Loans for the first three years. That's worth it for anyone. You don't take a hit on interest unless you choose not to pay as much as you would have without IBR (I'm paying what I would have to pay on the ten year plan plus 18% minimum plus whatever extra I can afford from a particular paycheck). The only reason I can imagine NOT to do IBR is if you know you don't have the self-discipline to make the payments without the semi-immediate threat of defaulting on your loans.

 

[koercive]

good points. you're right, I'll sign up for IBR, but pay the standard 10 yr repayment amount (+ more if I can afford it)

Remember that IBR doesn't mean you have to pay only the minimum - it means you can pay only what you're required to pay on the lower interest loans and focus on the higher interest loans, while not paying any interest at all on Stafford Subsidized Loans for the first three years. That's worth it for anyone. You don't take a hit on interest unless you choose not to pay as much as you would have without IBR (I'm paying what I would have to pay on the ten year plan plus 18% minimum plus whatever extra I can afford from a particular paycheck). The only reason I can imagine NOT to do IBR is if you know you don't have the self-discipline to make the payments without the semi-immediate threat of defaulting on your loans.

 

[Sparda29]

Does any of this IBR stuff apply to private loans?

 

[Orbit314]

Mostly, IBR applies to Public Health Service positions like the VA or other government non-profit organizations.

I forget how but people use Public Service Loan Forgiveness program along with IBR to pay of low rate loans after about 20 years.

IBR also applies to those whose payments reasonably exceed their income by a certain percentage in which case they would be able to apply for IBR.

I don't think you can just ask to be put on the IBR if you make enough to pay off your 10 year standard repayment plan. I do not think that this is allowed.

 

[universalcynic]

Does any of this IBR stuff apply to private loans?

no

 

[SoylentGreen]

IBR applies to federal loans such as the Stafford Loans and Grad Plus loans that most of us newish grads are saddled with, regardless of where you work, but not to private loans. If you work for IHS or a nonprofit hospital or a few other employers your loan is forgiven after 10 years instead of 25 years, but you can get it even if you work for a chain.

It's true that most pharmacists make too much for IBR, but they count your income based on last year's tax returns - that means your first year as a pharmacist, they're going by how much you made from spring P3-fall P4, and the second year, they're going by how much you made Spring P4 and the half year you worked as a real pharmacist (hopefully, if you found a job right away). That's two years after your grace period ends that most pharmacists should be able to qualify, which means not paying interest on (probably, for most of you) $30K-ish of Stafford loans for two years, which is worth maybe $4K right there (in addition to the benefit that you can focus your payments on high-interest loans). Well worth spending half an hour filling out paperwork.

Personally, as a 2011 grad, I will be getting it until next November, despite the fact that I'm making way too much to qualify this year. That's not as good as getting loans forgiven but certainly worth doing.

 

[Farmercyst]

This calculator will determine if IBR will actually be a financially sound decision for you which accounts for discount rate, income growth rate, inflation.

For me, even with boatloads of debt, I gain no financial benefit from IBR (ends up costing me more due to interest). Of course, the financial flexibility is nice, but paying more in the long run is not.. This will depend on your specific situation e.g. job (private or public sector),

http://www.finaid.org/calculators/ibr.phtml



http://www.finaid.org/calculators/ibr10.phtml (the newer ibr10 version if the administration allows us older students starting before june 2014 to qualify - i believe this is still pending)

I'm using IBR to lower the amount spread over the total balance of my loans so I can concentrate the difference on my higher rate loans first. I'm averaging roughly the same monthly payment, but my grad plus loans will now be paid off.first, rather than all loans being paid down evenly. Just a thought.

Sent from my LG-MS910 using SDN Mobile

 

[BMBiology]

Here's something for you to consider: you won't be able to get a mortgage if your debt to income ratio is high.

 

[BMBiology]

Thinking about taking advantage of the new 10% of your income for 20 years income based repayment plan? Not so fast:

Recent college graduates, for example, will not benefit. Instead, the new income-based repayment plan will be available to new borrowers since 2008 who have at least one loan that originated in 2012 or later. Borrowers with loans from 2007 and earlier will not be eligible. Likewise, borrowers who don't have at least one loan from 2012 or later, like students who graduated in 2011 or earlier, also won't be eligible. Borrowers who are already in repayment will not be eligible.

http://thechoice.blogs.nytimes.com/2011/10/26/student-loan/

Most pharmacists take home only 50-65% of their salary depending on if there's a state income tax (e.g., if there's none then the state will probably tax you more on something else like property tax) and how much you put into your 401 K. That's why I said 15% based on your adjusted gross income (for most, it is your pre-taxed income - 401 k) for 25 years is a pretty crappy deal.

 

[BMBiology]

Does any of this IBR stuff apply to private loans?

IBR doesn't apply to private student loans. It only applies to federal student loans.