140k in loans @ 8%...worth it?

[KRC]

The only good reason why you shouldn't do that is because at 8% I assume that is a private loan (Federal loans are capped at 6.8% I believe). If it is a private loan, that 8% won't stay 8% forever. It could go to 4 or 3... or 15... Private loans are never a good idea, especially when they're 140k. If you want to go, I think the gov't. caps federal loans at 250k so you should be able to get federal loans, and as someone mentioned if you work for a 501c3 or govt agency, combined with IBR, you'll pay about $420/month for 10 years and then be absolved of your loans. Some quick math:

Let's say you have 75k of half subsidized, half unsubsidized federal loans. If you don't enroll in IBR, you'll pay close to $800/month. If you do enroll while working for a qualifiying institution and make all your payments on time, you could pay $358/month have 72k forgiven after 120 payments (provided you are your only dependent and you make 45k). SEVENTY TWO THOUSAND ... FORGIVEN.

The IBR and forgiveness plans were designed for people wanting to go into this kind of work. Let them work for you. 140k is a scary number for someone who might only have ever had part time jobs at the dining hall in college (don't know the OP's personal history), but given these programs it's not as overwhelming as people think.

Edited May 2, 2011 by KRC

[MPPplusDebt]

The only good reason why you shouldn't do that is because at 8% I assume that is a private loan (Federal loans are capped at 6.8% I believe). If it is a private loan, that 8% won't stay 8% forever. It could go to 4 or 3... or 15... Private loans are never a good idea, especially when they're 140k. If you want to go, I think the gov't. caps federal loans at 250k so you should be able to get federal loans, and as someone mentioned if you work for a 501c3 or govt agency, combined with IBR, you'll pay about $420/month for 10 years and then be absolved of your loans. Some quick math:

Let's say you have 75k of half subsidized, half unsubsidized federal loans. If you don't enroll in IBR, you'll pay close to $800/month. If you do enroll while working for a qualifiying institution and make all your payments on time, you could pay $358/month have 72k forgiven after 120 payments (provided you are your only dependent and you make 45k). SEVENTY TWO THOUSAND ... FORGIVEN.

The IBR and forgiveness plans were designed for people wanting to go into this kind of work. Let them work for you. 140k is a scary number for someone who might only have ever had part time jobs at the dining hall in college (don't know the OP's personal history), but given these programs it's not as overwhelming as people think.

Sure but I thought you could only take out $20,500 per year in Federal loans? That means less than $41,000 of the $140k would be forgivable right?

http://studentaid.ed...tudentloans.jsp

Am I mistaken? (hope so).

Edited May 2, 2011 by MPPplusDebt

[cckrspnl56]

The only good reason why you shouldn't do that is because at 8% I assume that is a private loan (Federal loans are capped at 6.8% I believe). If it is a private loan, that 8% won't stay 8% forever. It could go to 4 or 3... or 15... Private loans are never a good idea, especially when they're 140k. If you want to go, I think the gov't. caps federal loans at 250k so you should be able to get federal loans, and as someone mentioned if you work for a 501c3 or govt agency, combined with IBR, you'll pay about $420/month for 10 years and then be absolved of your loans. Some quick math:

Let's say you have 75k of half subsidized, half unsubsidized federal loans. If you don't enroll in IBR, you'll pay close to $800/month. If you do enroll while working for a qualifiying institution and make all your payments on time, you could pay $358/month have 72k forgiven after 120 payments (provided you are your only dependent and you make 45k). SEVENTY TWO THOUSAND ... FORGIVEN.

The IBR and forgiveness plans were designed for people wanting to go into this kind of work. Let them work for you. 140k is a scary number for someone who might only have ever had part time jobs at the dining hall in college (don't know the OP's personal history), but given these programs it's not as overwhelming as people think.

With interest, it'd be closer to 175k forgiven . I called the Dept of Education today and they said that you are "locked in" to your payment plans once you begin payment, so as long as the Public Service Loan Forgiveness plan is there in 2 years, I should be fine.

[LCAlum]

Sure but I thought you could only take out $20,500 per year in Federal loans? That means less than $41,000 of the $140k would be forgivable right?

http://studentaid.ed...tudentloans.jsp

Am I mistaken? (hope so).

Grad plus loans also count under the Loan Forgiveness for Public Service Employees, although I believe the interest is a bit higher. I'm in a similar situation to the OP, in that I didn't get any financial aid anywhere. I talked to the fin aid office at SAIS and they told me that 80% of students receive some kind of assistance in their second year (given out based on grades). I think the numbers are similar at Georgetown, and probably other schools as well. While nothing is guaranteed, you at least have a shot at some money your second year. I would still make your decision based on not getting any money, but keep in mind that's more of a worst case scenario.

[flyers29]

Grad PLUS loans are federally-backed and have an 8.5% interest rate. The Stafford loans (6.8%) are indeed limited to $20,500. Mine together have a 7.3% rate.

[cckrspnl56]

I did my "loan counseling" today on the Direct Loan site and it informed me that any loans that are forgiven can be used as taxable income. Does anyone know how that works?

If, 12 years from now, I'm forgiven 200k and the IRS takes that to mean that I "earned" 200k more that year, I'm not sure how I'll be able to pay that off. Throws my IBR/PSLF plan into a loop.

Edit: Turns out that the taxable income only applies to those who have the remainder of their 25 year plan balance forgiven. It does not apply to the public service forigveness plan.

Edited May 3, 2011 by cckrspnl56

[undecided11]

Grad plus loans also count under the Loan Forgiveness for Public Service Employees, although I believe the interest is a bit higher. I'm in a similar situation to the OP, in that I didn't get any financial aid anywhere. I talked to the fin aid office at SAIS and they told me that 80% of students receive some kind of assistance in their second year (given out based on grades). I think the numbers are similar at Georgetown, and probably other schools as well. While nothing is guaranteed, you at least have a shot at some money your second year. I would still make your decision based on not getting any money, but keep in mind that's more of a worst case scenario.

People at the SAIS finaid office told me that the average aid package is only 8k. That's almost nothing compared to the full cost of tuition!

[carpecc]

It's not worth it. There's a lot of people getting great jobs coming out of lesser schools then SIPA and SAIS. lbjane is right, there's less to a name in this field and it's more about your individual credentials. I think the only way to justify it is if you plan to move to a developing country after graduation then the load burden might be more manageable, but definitley not in NYC and DC.

Reapply next year to the less competitive schools. If SIPA and SAIS are letting you in then you can for sure get some decent funding elsewhere. During that time you can do other stuff to make your app more competitive and get even more funding. In the end you'll have more job flexibility and more of your income will be going to your pocket and not the school. This isn't something to get too obsessed about in this field.