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Br3v wrote:If you are under a standard repayment plan, say for 5 years, and then switch to PAYE, do you get credit for those 5 years (and thus only have to do 15 years of PAYE) or do you still have to do 20 years of PAYE (thus 25 years of payment)?

34 CFR 685.209(c)(5)(iv) wrote:a qualifying monthly payment is -

(A) A monthly payment under the REPAYE plan, including a monthly payment amount of $0.00, as provided under paragraph (c)(2)(ii)(C) of this section;

(B) A monthly payment under the Pay As You Earn repayment plan described in paragraph (a) of this section, the income-contingent repayment plan described in paragraph (b) of this section, or the income-based repayment plan described in § 685.221, including a monthly payment amount of $0.00;

(C) A monthly payment made under -

(1) The Direct Loan standard repayment plan described in § 685.208(b);

(2) The alternative repayment plan described in paragraphs (c)(4)(v) of this section prior to changing to a repayment plan described in paragraph (a), (b), or (c) of this section or § 685.221;

(3) Any other Direct Loan repayment plan, if the amount of the payment was not less than the amount required under the Direct Loan standard repayment plan described in § 685.208(b); or

34 CFR 685.209(c)(5)(v) wrote:For a borrower who makes payments under the REPAYE plan, the beginning date for the 20-year or 25-year repayment period is -

(A) If the borrower made payments under the Pay As You Earn repayment plan described in paragraph (a) of this section, the income-contingent repayment plan described in paragraph (b) of this section, or the income-based repayment plan described in § 685.221, the earliest date the borrower made a payment on the loan under one of those plans; or

(B) If the borrower did not make payments under the Pay As You Earn repayment plan described in paragraph (a) of this section, the income-contingent repayment plan described in paragraph (b) of this section, or the income-based repayment plan described in § 685.221 -

(1) For a borrower who has an eligible Direct Consolidation Loan, the date the borrower made a qualifying monthly payment on the consolidation loan, before the date the borrower began repayment under the REPAYE plan;

(2) For a borrower who has one or more other eligible Direct Loans, the date the borrower made a qualifying monthly payment on that loan, before the date the borrower began repayment under the REPAYE plan;

(3) For a borrower who did not make a qualifying monthly payment on the loan under paragraph (c)(5)(v)(B)(1) or (2) of this section, the date the borrower made a payment on the loan under the REPAYE plan;

(4) If the borrower consolidates his or her eligible loans, the date the borrower made a qualifying monthly payment on the Direct Consolidation Loan; or

(5) If the borrower did not make a qualifying monthly payment on the loan under paragraph (c)(5)(v)(A) or (B) of this section, the date the borrower made a payment on the loan under the REPAYE plan.

34 CFR 685.209(a)(6)(iii) wrote:For a borrower who qualifies for the Pay As You Earn repayment plan, the beginning date for the 20-year period is -

(A) If the borrower made payments under the income-contingent repayment plan described in paragraph (b) of this section, the Revised Pay As You Earn repayment plan described in paragraph (c) of this section, or the income-based repayment plan described in § 685.221, the earliest date the borrower made a payment on the loan under one of those plans at any time after October 1, 2007; or

(B) If the borrower did not make payments under the income-contingent repayment plan described in paragraph (b) of this section, the Revised Pay As You Earn repayment plan described in paragraph (c) of this section, or the income-based repayment plan described in § 685.221 -

(1) For a borrower who has an eligible Direct Consolidation Loan, the date the borrower made a payment or received an economic hardship deferment on that loan, before the date the borrower qualified for the Pay As You Earn repayment plan. The beginning date is the date the borrower made the payment or received the deferment after October 1, 2007;

(2) For a borrower who has one or more other eligible Direct Loans, the date the borrower made a payment or received an economic hardship deferment on that loan. The beginning date is the date the borrower made that payment or received the deferment on that loan after October 1, 2007;

(3) For a borrower who did not make a payment or receive an economic hardship deferment on the loan under paragraph (a)(6)(iii)(B)(1) or (a)(6)(iii)(B)(2) of this section, the date the borrower made a payment on the loan under the Pay As You Earn repayment plan;

(4) If the borrower consolidates his or her eligible loans, the date the borrower made a payment on the Direct Consolidation Loan that met the requirements of paragraph (a)(6)(i) of this section; or

(5) If the borrower did not make a payment or receive an economic hardship deferment on the loan under paragraph (a)(6)(iii)(A) or (a)(6)(iii)(B) of this section, the date the borrower made a payment on the loan under the Pay As You Earn repayment plan.

bk1 wrote:

Br3v wrote:If you are under a standard repayment plan, say for 5 years, and then switch to PAYE, do you get credit for those 5 years (and thus only have to do 15 years of PAYE) or do you still have to do 20 years of PAYE (thus 25 years of payment)?

Based on my cursory reading of the regs, I believe that standard repayments count.

For REPAYE:

34 CFR 685.209(c)(5)(iv) wrote:a qualifying monthly payment is -

(A) A monthly payment under the REPAYE plan, including a monthly payment amount of $0.00, as provided under paragraph (c)(2)(ii)(C) of this section;

(B) A monthly payment under the Pay As You Earn repayment plan described in paragraph (a) of this section, the income-contingent repayment plan described in paragraph (b) of this section, or the income-based repayment plan described in § 685.221, including a monthly payment amount of $0.00;

(C) A monthly payment made under -

(1) The Direct Loan standard repayment plan described in § 685.208(b);

(2) The alternative repayment plan described in paragraphs (c)(4)(v) of this section prior to changing to a repayment plan described in paragraph (a), (b), or (c) of this section or § 685.221;

(3) Any other Direct Loan repayment plan, if the amount of the payment was not less than the amount required under the Direct Loan standard repayment plan described in § 685.208(b); or

and

34 CFR 685.209(c)(5)(v) wrote:For a borrower who makes payments under the REPAYE plan, the beginning date for the 20-year or 25-year repayment period is -

(A) If the borrower made payments under the Pay As You Earn repayment plan described in paragraph (a) of this section, the income-contingent repayment plan described in paragraph (b) of this section, or the income-based repayment plan described in § 685.221, the earliest date the borrower made a payment on the loan under one of those plans; or

(B) If the borrower did not make payments under the Pay As You Earn repayment plan described in paragraph (a) of this section, the income-contingent repayment plan described in paragraph (b) of this section, or the income-based repayment plan described in § 685.221 -

(1) For a borrower who has an eligible Direct Consolidation Loan, the date the borrower made a qualifying monthly payment on the consolidation loan, before the date the borrower began repayment under the REPAYE plan;

(2) For a borrower who has one or more other eligible Direct Loans, the date the borrower made a qualifying monthly payment on that loan, before the date the borrower began repayment under the REPAYE plan;

(3) For a borrower who did not make a qualifying monthly payment on the loan under paragraph (c)(5)(v)(B)(1) or (2) of this section, the date the borrower made a payment on the loan under the REPAYE plan;

(4) If the borrower consolidates his or her eligible loans, the date the borrower made a qualifying monthly payment on the Direct Consolidation Loan; or

(5) If the borrower did not make a qualifying monthly payment on the loan under paragraph (c)(5)(v)(A) or (B) of this section, the date the borrower made a payment on the loan under the REPAYE plan.

For PAYE:

34 CFR 685.209(a)(6)(iii) wrote:For a borrower who qualifies for the Pay As You Earn repayment plan, the beginning date for the 20-year period is -

(A) If the borrower made payments under the income-contingent repayment plan described in paragraph (b) of this section, the Revised Pay As You Earn repayment plan described in paragraph (c) of this section, or the income-based repayment plan described in § 685.221, the earliest date the borrower made a payment on the loan under one of those plans at any time after October 1, 2007; or

(B) If the borrower did not make payments under the income-contingent repayment plan described in paragraph (b) of this section, the Revised Pay As You Earn repayment plan described in paragraph (c) of this section, or the income-based repayment plan described in § 685.221 -

(1) For a borrower who has an eligible Direct Consolidation Loan, the date the borrower made a payment or received an economic hardship deferment on that loan, before the date the borrower qualified for the Pay As You Earn repayment plan. The beginning date is the date the borrower made the payment or received the deferment after October 1, 2007;

(2) For a borrower who has one or more other eligible Direct Loans, the date the borrower made a payment or received an economic hardship deferment on that loan. The beginning date is the date the borrower made that payment or received the deferment on that loan after October 1, 2007;

(3) For a borrower who did not make a payment or receive an economic hardship deferment on the loan under paragraph (a)(6)(iii)(B)(1) or (a)(6)(iii)(B)(2) of this section, the date the borrower made a payment on the loan under the Pay As You Earn repayment plan;

(4) If the borrower consolidates his or her eligible loans, the date the borrower made a payment on the Direct Consolidation Loan that met the requirements of paragraph (a)(6)(i) of this section; or

(5) If the borrower did not make a payment or receive an economic hardship deferment on the loan under paragraph (a)(6)(iii)(A) or (a)(6)(iii)(B) of this section, the date the borrower made a payment on the loan under the Pay As You Earn repayment plan.

see https://www.law.cornell.edu/cfr/text/34/685.209

But if I understand it right, you get fucked if you make both PAYE and REPAYE payments after making standard payments. This is because if you make a PAYE payment, that payment's date becomes the new start date for REPAYE regardless of whether you made prior standard payments (see 34 CFR 685.209(c)(5)(v)(A)); and if you make a REPAYE payment, that payment's date becomes the new start date for PAYE regardless of whether you made prior standard payments (see 34 CFR 685.209(a)(6)(iii)(A)). Note that consolidation also restarts the clock (see 34 CFR 685.209(a)(6)(iii)(B)(1), (c)(5)(v)(B)(1)).

Someone feel free to correct me if I got this wrong.

That said, I don't understand why you wouldn't just do PAYE/REPAYE and then overpay (to what the standard repayment would be) if you wanted to make standard sized payments.

Anonymous User wrote:With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Anonymous User wrote:With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Tiago Splitter wrote:

Anonymous User wrote:With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

Danger Zone wrote:

Tiago Splitter wrote:

Anonymous User wrote:With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

This is contrary to the link brev posted above, which says that if the cancellation of debt income renders you insolvent, you can exclude it entirely.

Danger Zone wrote:

Tiago Splitter wrote:

Anonymous User wrote:With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

This is contrary to the link brev posted above, which says that if the cancellation of debt income renders you insolvent, you can exclude it entirely.

Winter is Coming wrote:

Danger Zone wrote:

Tiago Splitter wrote:

Anonymous User wrote:With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

This is contrary to the link brev posted above, which says that if the cancellation of debt income renders you insolvent, you can exclude it entirely.

I think it's really dangerous to use current, vague Treasury Department guidance to try to predict exactly what will happen in almost 20 years. All of this can be changed by statute or even Treasury regulations. I would be comfortable saying that the insolvency calculation will likely always be there, but the specifics likely won't be set in stone for some time.

Tiago Splitter wrote:

Winter is Coming wrote:

Danger Zone wrote:

Tiago Splitter wrote:

Anonymous User wrote:With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

This is contrary to the link brev posted above, which says that if the cancellation of debt income renders you insolvent, you can exclude it entirely.

I think it's really dangerous to use current, vague Treasury Department guidance to try to predict exactly what will happen in almost 20 years. All of this can be changed by statute or even Treasury regulations. I would be comfortable saying that the insolvency calculation will likely always be there, but the specifics likely won't be set in stone for some time.

It's hard to predict but this insolvency stuff comes from the rules about cancelled debt which have been around for a long time.

Tiago Splitter wrote:

Danger Zone wrote:

Tiago Splitter wrote:

Anonymous User wrote:With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

This is contrary to the link brev posted above, which says that if the cancellation of debt income renders you insolvent, you can exclude it entirely.

Seems like it's in line with Bob in example two.

Danger Zone wrote:

Tiago Splitter wrote:

Danger Zone wrote:

Tiago Splitter wrote:

Anonymous User wrote:With PAYE, you could end up paying no tax bomb if you are insolvent and your liabilities are equal/higher than your assets, right?

Yes, forgiven debt is excluded to the extent of your insolvency right before forgiveness.

So if your assets are 150k and your debt is 250k, and you get 250k forgiven, you exclude 100k from the forgiven amount.

This is contrary to the link brev posted above, which says that if the cancellation of debt income renders you insolvent, you can exclude it entirely.

Seems like it's in line with Bob in example two.

You're right, I misread the examples

Winter is Coming wrote:Quick question, and I know this has probably been asked already so sorry in advance:

I'm starting at a big firm this fall, planning on signing up for PAYE but probably going to pay the standard payment on top of that until I can figure out how long I can survive in Biglaw and then maybe target my debt more aggressively. I'm going to use my 2016 (summer associate tax return) for the PAYE calculations and my repayment is slated to start in November after my grace period.

When can I actually send in the PAYE paper work? Will it be processed in time for my first payment due?

Nebby wrote:

Winter is Coming wrote:Quick question, and I know this has probably been asked already so sorry in advance:

I'm starting at a big firm this fall, planning on signing up for PAYE but probably going to pay the standard payment on top of that until I can figure out how long I can survive in Biglaw and then maybe target my debt more aggressively. I'm going to use my 2016 (summer associate tax return) for the PAYE calculations and my repayment is slated to start in November after my grace period.

When can I actually send in the PAYE paper work? Will it be processed in time for my first payment due?

You can send it in 90 days before repayment begins (so like late August). Yes it will be processed in time.

Nebby wrote:

ballouttacontrol wrote:

Nebby wrote:

Anonymous User wrote:Pretty basic question, but I'm starting to look into my repayment options following graduation in May. What is the difference/pros and cons of PAYE and REPAYE?

A little background:
Loan Balance: $250k
Income: $63k
I am PSLF eligible
Single right now but will be getting married in the next few years

It looks like I'm eligible for PAYE and REPAYE and when I do a repayment estimator on on the FSA website, the payments are calculated to be the same. Is there any significant advantage to choosing one plan over the other?

REPAYE is only for people with federal student loans before 2008. If that doesn't apply to you, then you'll do PAYE. They are calculated the same because they are the same in that regard.

just wanted to point out, this reply is completely wrong in every way.

everyone is eligible for REPAYE, repaye has a longer repayment period to loan forgiveness, on repaye you pay a lower $ amt per month, and under repaye the govt will pay 50% of your excess interest every month that it exceeds your monthly payment

Uh both are calculated at 10 percent, and I said REPAYE and PAYE are both "calculated the same in that regard." Nice try

Also, on this subject, REPAYE is garbage for most people and that's why I said it's only for those with loans before 2008 (actually 2007 after checking myself).

Anonymous User wrote:https://www.nytimes.com/2017/03/30/busi ... p=cur&_r=0

Can anyone else confirm. This news is only referring to people working in the public sector for non-profits which are not 501(c)(3)s?

Nebby wrote:

Anonymous User wrote:https://www.nytimes.com/2017/03/30/busi ... p=cur&_r=0

Can anyone else confirm. This news is only referring to people working in the public sector for non-profits which are not 501(c)(3)s?

I believe so. We discussed this previously, and the plaintiffs in that suit all worked in non 501c3 nonprofits.

Anonymous User wrote:

Nebby wrote:

Anonymous User wrote:https://www.nytimes.com/2017/03/30/busi ... p=cur&_r=0

Can anyone else confirm. This news is only referring to people working in the public sector for non-profits which are not 501(c)(3)s?

I believe so. We discussed this previously, and the plaintiffs in that suit all worked in non 501c3 nonprofits.

Thanks! I have since found that thread and have read the complaint, because, you know, obsessive when we're dealing with $250k+

ballouttacontrol wrote:Weren't the complainants working for the ABA or something?