Thoughts on Income Based Repayment program

[dyavrom]

So i did some math and realized that if I go to USC and take out 60k in loans, and assuming I get a job at $60,000 salary, I will be paying around $600 monthly.  Oddly enough, if I go to SAIS and take out 120k in loans, and get that same job, under the income based repayment program I will be still paying $600 monthly since the payments will be capped at 15% of your income.  

 

Is anyone else considering to rely on the IBR program for post grad loan payments or does anyone advise against it?  

[Kadisha]

200 months versus 100 months of payments.... is that supposed to be a question?

Edited March 31, 2013 by Kadisha

[PrattIAFF]

Plug in the numbers... look at the total amount paid over the life of the loan with $60k vs $120k in loans

 

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

[cunninlynguist]

A few months ago, I read in the NYT that approximately 2 million borrowers had applied for IBR, and 1.3 million had qualified. So, while it's never 100% certain the federal government won't pull the rug out from under us, it's been established that many Americans need IBR.

 

To me, IBR + PSLF sounds like a sweet ass deal. 10 years of government and non-profit work? Cool. Plenty of time for the private sector afterward!

[anthropologygeek]

This is only for government loans and not private. And currently after ten years of not missing a payment your good with government loans. Private loans screw people. They are resold and resold and you can pay upwards of 20% interest. Crazy and seems illegal

[DaniCM]

Man, that calculator kind of freaks me out. If I take out $100,000 to go to SAIS or SIPA, and IF I qualify for BOTH the IBR plan and the PLSF, I will only pay $2000 more than if I only take out $60,000 to go to Fletcher and get both IBR and PLSF.

 

That makes it very tempting to take out more loans, and go where I want to go...b/c not only will my monthly payments be the same, but my loans will be forgiven in 10 years either way with only a $2000 difference. Essentially, it seems like the only price differntial between my three choices (in the long run), regardless of my substantial scholarship from Fletcher, is 2 grand.

 

However, I am very wary of the PLSF. I've heard that for your payments to qualify, you have to be paying a lot. I'm not even sure if the IBR plan qualifies. Additionally, since the program hasn't been in place 10 years, there's no hard evidence of its success or ease of use. What if the thing falls apart well before I would qualify? I have at least 12 years.

 

Arghh. I should just commit to Fletcher and stop dicking around with all this. I don't even think I want to attend SAIS, and I only really like SIPA bc of the brand name and location. I'm just torturing myself with hypotheticals.  

[ZacharyObama]

I'm liking the sound of IBR/PLSF. In my case though it's really only a partial solution thanks to Parent PLUS Loans from undergrad (thanks California housing bubble).

 

I still think our best solution to the student loan debt crisis in this country after looking at my interest projections is for the bankers to be uprooted from their boardrooms and vacation houses and sent en masse to reeducation camps in remote regions until they renounce their past lives and capitalism in general. I think it's fair to say that perhaps next to their shameful practices in the housing and health insurance markets, that the usurious interest rates they're charging are a massive drag on our economy and our national interest. My parents can't get a home-equity loan despite having stable income and sufficient equity several times over and having never missed or even been late on a payment of any mortgage. Bankers are thieves or worse.

 

 

 

Edited April 1, 2013 by ZacharyObama

[Tupacalypse]

Do Grad Plus loans still count as government loans?  Will that debt also be forgiven after 10 years if I qualify?  Otherwise it looks like I might not make enough to pay off interest....ever.

[ZacharyObama]

Yes. Grad Plus loans do qualify, Parent PLUS loans from undergrad do not and if you consolidate them with loans that do qualify the consolidated loan will not qualify. Qualifying loans: http://studentaid.ed.gov/repay-loans/understand/plans/income-based

 

Edit: In short the Federal Government (taxpayers), underwrote (subsidized) the Federal Family Educational Loan Program for decades under which Parent PLUS loans were made so that parents could send their kids to college, but the loans cannot be considered for IBR or PLSF which is designed to help the American public and encourage good citizenship. Go figure. Fortunately at least now they can't gamble with new student debts because the US Dept. of Ed. is now the loan originator for future loans created under the FFELP. Estimated savings to tax-payers - $68 billion over 11 years: http://thecaucus.blogs.nytimes.com/2010/03/30/obama-signs-bill-on-student-loans-health-care/

Edited April 1, 2013 by ZacharyObama