taking out as much loan as possible

[user00]

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so asked this on premed forum but it seems more applicable here:

so i been reading about income based repayment (ibr) and stuff and have come to the conclusion that it is best to have as much debt as possible. basically, lets say you somehow end up with 500k in loans and 7% interest in loans by the time you become an attending. lets assume you make 200k. under ibr, u have to only pay 15% of your income above 150% of poverty level so it comes out to around 30-40k in loan payment per year (or whatever would be proportionate due to inflation over the years). after 20-25 yrs of paying, your loans are forgiven, but whatever is remaining is currently considered taxable, but if you borrow enough, your total debt should be close to 700k since the minimum ibr payment is less than interest, therefore even if you make 350k in 20-25 yrs due to inflation, your taxable income would be like a million bucks, and your salary of 350k woudlnt even be enough to pay taxes, so you would not be responsible according to: http://www.finaid.org/loans/forgivenesstaxability.phtml

"There are proposals to make other forms of student loan forgiveness non-taxable, such as the forgiveness of income-contingent repayment balances after 25 years, but none have become law yet. The general public policy trend is toward excluding from income any forgiveness for individuals who would be unable to pay the taxes on the forgiveness."

at least for me, i can live a luxurious lifestyle while still paying 30-40k or the equivalent in loans for 25 yrs, it might not be good for you if you wanna have like 5 kids and live in a million dollar home, so finally correct me if im wrong with anything above

 

[plauto]

You are playing with fire. You are assuming that a lot if things will be the same many years from now. Look at how much changed in the last couple of years and you will realize you will be taking a big risk. Plus, with that kinda debt, how do you expect your lifestyle to be luxurious? Who is going to want to give you money for a car or for a house?!
Last but not least, that is not what PSLF was meant for. Abusing it makes it hard for anyone else to take advantage of it. Be responsible, live within your means, and your financial rewards will be even greater.

 

[JacobMcCandles]

That's a terrible way to go about it. I more logical way to "take out as much loan money as possible" would be to take it out so you know you'll have enough money for expenses then pay it back at the end of each semester. Do it this way is cheap insurance (you'll have to pay origination fees plus a little bit of interest) to make sure you don't run out.

If you (and anyone else) think the government is going to just forgive the loans of a 'wealthy' physician, you're being awfully ignorant. There's no way this program even comes to fruition for high earners, such as physicians.

 

[MT Headed]

You are playing with fire. You are assuming that a lot if things will be the same many years from now. Look at how much changed in the last couple of years and you will realize you will be taking a big risk. Plus, with that kinda debt, how do you expect your lifestyle to be luxurious? Who is going to want to give you money for a car or for a house?!
Last but not least, that is not what PSLF was meant for. Abusing it makes it hard for anyone else to take advantage of it. Be responsible, live within your means, and your financial rewards will be even greater.

The OP's plan has nothing to do with PSLF. PSLF is a program that forgives student loans after 10 years of public service. The OP is talking about the other plan where after making 25 years of payments (even while not working in public service) the loan is forgiven. Totally different.

Also, the OP would only have to pay a maximum 10% surtax on their income towards debt service. On an attendings salary yes it could lead to a very luxurious lifestyle.

 

[dotdash]

The OP is trying to game a system that was designed to provide relief to individuals with high debt -- at taxpayer expense. Whatever the legality of it, it's an ethical black hole. Good Lord! Why don't you use your powers for good instead of cheating taxpayers?

 

[TMP-SMX]

That's a terrible way to go about it. I more logical way to "take out as much loan money as possible" would be to take it out so you know you'll have enough money for expenses then pay it back at the end of each semester. Do it this way is cheap insurance (you'll have to pay origination fees plus a little bit of interest) to make sure you don't run out.

If you (and anyone else) think the government is going to just forgive the loans of a 'wealthy' physician, you're being awfully ignorant. There's no way this program even comes to fruition for high earners, such as physicians.

For public service loan forgiveness they will (supposedly) forgive the remaining balance of loans tax free after 10 years of working at least 30 hours a week at a nonprofit organization. Unless someone is in private practice most will qualify. The 25 year program is different and the forgiven balance is taxed.

 

[JacobMcCandles]

For public service loan forgiveness they will (supposedly) forgive the remaining balance of loans tax free after 10 years of working at least 30 hours a week at a nonprofit organization. Unless someone is in private practice most will qualify. The 25 year program is different and the forgiven balance is taxed.

Who said anything about taxes?

 

[MT Headed]

Who said anything about taxes?

Umm, the OP did in the third paragraph. It does affect the economics of the plan. If a loan is forgiven, but forgiveness means "we will replace this insurmountable student loan debt with an IRS debt 1/3 the size that is still insurmountable" then the plan is less attractive.

 

[JacobMcCandles]

Umm, the OP did in the third paragraph. It does affect the economics of the plan. If a loan is forgiven, but forgiveness means "we will replace this insurmountable student loan debt with an IRS debt 1/3 the size that is still insurmountable" then the plan is less attractive.

I guess I should have said "I never said anything about taxes". My response to the OP's had nothing to do about taxes. My response still stands to the OP regardless of what loan forgiveness is taxed and what isn't. I was just confused why his explanation of which forgiveness is taxed and which isn't had my reply quoted.

 

[TMP-SMX]

You claimed the government will not end up forgiving the debt. The number of years in to residency, fellowship, etc. at low incomes then some people still doing academics rather than private practice means they should be eligible for the forgiveness.

 

[JacobMcCandles]

My claim was meant to be that I don't believe the program will end up coming to fruition. Based on your previous post where you state the government will "supposedly" pay the loans, I'm thinking we agree on that.

 

[Dirt]

You know what else you could do, just open a credit card, max it out, and then open another one and transfer the balance. When they catch on, just open cards in other peoples names like your friends and family. You could just keep doing that until you die. You will have lived like a king, and they would have no recourse!

 

[MrCheetah]

You are playing with fire. You are assuming that a lot if things will be the same many years from now. Look at how much changed in the last couple of years and you will realize you will be taking a big risk. Plus, with that kinda debt, how do you expect your lifestyle to be luxurious? Who is going to want to give you money for a car or for a house?!
Last but not least, that is not what PSLF was meant for. Abusing it makes it hard for anyone else to take advantage of it. Be responsible, live within your means, and your financial rewards will be even greater.

It worked for the banks. Who are you to say it won't work for the OP?