Student loan payments: get advice and actual numbers here Forum

[Young Marino]

So is relatively easy to qualify for IBR? From what I've researched, the answer seems to be yes so long as the amount you owe is greater than your income. Is this true? Also, why would someone not have all their loans from the federal government (I'm assuming Grad PLUS loans are federally backed?) unless they have an "adverse credit history"

[Bronx Bum]

So is relatively easy to qualify for IBR? From what I've researched, the answer seems to be yes so long as the amount you owe is greater than your income. Is this true? Also, why would someone not have all their loans from the federal government (I'm assuming Grad PLUS loans are federally backed?) unless they have an "adverse credit history"

Some people go for the interest rate. 7.9% is atrocious. If you have a lot of debt, your loans seem to be going up $80 every two days. It's insane. $200k isn't hard to pay back by itself. It's the interest that kills.

[Mavraides87]

Total debt load: 110k, including accrued interest
I worked for 2 years before law school and was able to save a decent amount of money. I had about 12k in grants in years 1 and 2. No parental assistance.
Income: 160k
Payment: 1100/month

On my grad plus loan, $70 of interest has accrued (and $35 of which was capitalized) since my last payment on 11/12/13.


I realized before even starting that biglaw was not sustainable for me, so I've been paying off as much as possible - I've paid about 14k into my loans since starting in September. I live in a crappy apartment with roommates in NYC, which runs me about 1500/month. I cook on Sunday evenings, so that I don't have to eat out during the week on the 1-2 nights I'm not seamless-ing. I work between 65-75 hours a week, and recently had a 6-week stretch where I did not take a day off. I briefly considered not going home for Christmas because my plane tickets would cost $500, but I decided that I'd rather spend the money than take the risk of going legit crazy.

I'm happy that I get to pay it off, but I'm under no illusion: I'm trading years of my life for the paycheck necessary to service my debt. My strategy is to trade the fewest years of my life, but it also means those years are extra unpleasant because I won't really enjoy my salary.

How long will it take to repay with this lifestyle? 3 years or so? Not too bad

[Mick Haller]

Debt: 70k including interest
Income: 75k midlaw + small bonuses
Monthly net income: $4300
Payments: $800 per month (10 yr plan)
Plan: Paid in full by year 3

Living frugally during law school is essential. My debt would have easily been 30k higher if I lived in San Fran rather than renting a room in the east bay for $500 per month. Living expenses are really the only thing you can control.

For perspective on that 30k saved - my after tax income is only $50k per year. Living frugally allowed me to cut my repayment by a year.

[Amity]

Your tuition debt reduce your taxes by how much? Going for the silver lining....

if you're in big law, by zero after your stub year.

So much for a silver lining. Gov’t only lets you deduct $2.5K of interest --- likely to be +8k during the first few years. Of course if your income is over $60K, you not eligible for any tax deduction assistance. Unbelievable.

(Someone plz tell me I have this wrong).

[Total Litigator]

Your tuition debt reduce your taxes by how much? Going for the silver lining....

if you're in big law, by zero after your stub year.

So much for a silver lining. Gov’t only lets you deduct $2.5K of interest --- likely to be +8k during the first few years. Of course if your income is over $60K, you not eligible for any tax deduction assistance. Unbelievable.

(Someone plz tell me I have this wrong).

Nope, you're not wrong.

The law was not designed with law school debt in mind.

For almost every recentish law grad the standard deduction is almost certainly going to exceed all other deductions, so the loan interest deduction is essentially pointless.

Yay.

[dixiecupdrinking]

You can take the standard deduction and still take the student loan interest deduction. The problem is the income cap.

[Amity]

The law was not designed with law school debt in mind. For almost every recentish law grad the standard deduction is almost certainly going to exceed all other deductions, so the loan interest deduction is essentially pointless. Yay.

You can take the standard deduction and still take the student loan interest deduction. The problem is the income cap.

Damn. For a number of posters ITT, say goodbye to $3K-$8K. Hard to understand why this irrational denial of a loan interest deduction is not a hot topic. Of course one could always take this to the ABA lobbyists because they are always so helpful.

[dixiecupdrinking]

The law was not designed with law school debt in mind. For almost every recentish law grad the standard deduction is almost certainly going to exceed all other deductions, so the loan interest deduction is essentially pointless. Yay.

You can take the standard deduction and still take the student loan interest deduction. The problem is the income cap.

Damn. For a number of posters ITT, say goodbye to $3K-$8K. Hard to understand why this irrational denial of a loan interest deduction is not a hot topic. Of course one could always take this to the ABA lobbyists because they are always so helpful.

because all it is is a back door marginal tax rate hike on people making over $80,000 (and in this case often twice as much) -- people who, to boot, are lawyers. This is not the most politically sympathetic group of people.

[Old Gregg]

The law was not designed with law school debt in mind. For almost every recentish law grad the standard deduction is almost certainly going to exceed all other deductions, so the loan interest deduction is essentially pointless. Yay.

You can take the standard deduction and still take the student loan interest deduction. The problem is the income cap.

Damn. For a number of posters ITT, say goodbye to $3K-$8K. Hard to understand why this irrational denial of a loan interest deduction is not a hot topic. Of course one could always take this to the ABA lobbyists because they are always so helpful.

because all it is is a back door marginal tax rate hike on people making over $80,000 (and in this case often twice as much) -- people who, to boot, are lawyers. This is not the most politically sympathetic group of people.

But folks with two homes are.

Not meant as a sarcastic remark toward you. Just a grumble about the tax code.

[Anonymous User]

I thought this info may be helpful for someone who falls in love in a Law School. The below numbers are combined numbers between my wife and me.

Debt: ~$235k (~$223k + interest at graduation in 2013)
Payments: $2455/mo (Minimum). Hoping to pay off in 2-3 years.
Income: $320k
Plan: 10 year standard plan (although thinking of moving to 25 and paying of that 7.9 interest)
Important info: these numbers include a 75k and 55k scholarship to the T14 we attended and saving all of our summer associate money to pay off tuition.

[Anonymous User]

So is relatively easy to qualify for IBR? From what I've researched, the answer seems to be yes so long as the amount you owe is greater than your income. Is this true? Also, why would someone not have all their loans from the federal government (I'm assuming Grad PLUS loans are federally backed?) unless they have an "adverse credit history"

Because I have very good credit, my interest rate of non-federal loans is substantially better than the federal loans. I end up saving a lot of money by taking private loans (also have no origination fees and some bonuses that further increase the savings) instead (though I understand that if I have a very low paying job, this logic might not actually work). I thought there were limits on the kinds of jobs for assistance programs, but I'm not sure - I researched it a while ago.

[drmguy]

Where are all the people with a true mountain of debt?

[09042014]

Where are all the people with a true mountain of debt?

265k

[Anonymous User]

Total debt load: 110k, including accrued interest
I worked for 2 years before law school and was able to save a decent amount of money. I had about 12k in grants in years 1 and 2. No parental assistance.
Income: 160k
Payment: 1100/month

On my grad plus loan, $70 of interest has accrued (and $35 of which was capitalized) since my last payment on 11/12/13.


I realized before even starting that biglaw was not sustainable for me, so I've been paying off as much as possible - I've paid about 14k into my loans since starting in September. I live in a crappy apartment with roommates in NYC, which runs me about 1500/month. I cook on Sunday evenings, so that I don't have to eat out during the week on the 1-2 nights I'm not seamless-ing. I work between 65-75 hours a week, and recently had a 6-week stretch where I did not take a day off. I briefly considered not going home for Christmas because my plane tickets would cost $500, but I decided that I'd rather spend the money than take the risk of going legit crazy.

I'm happy that I get to pay it off, but I'm under no illusion: I'm trading years of my life for the paycheck necessary to service my debt. My strategy is to trade the fewest years of my life, but it also means those years are extra unpleasant because I won't really enjoy my salary.

How long will it take to repay with this lifestyle? 3 years or so? Not too bad

It's going to be a rough 3 years, though.

[A. Nony Mouse]

Because I have very good credit, my interest rate of non-federal loans is substantially better than the federal loans. I end up saving a lot of money by taking private loans (also have no origination fees and some bonuses that further increase the savings) instead (though I understand that if I have a very low paying job, this logic might not actually work). I thought there were limits on the kinds of jobs for assistance programs, but I'm not sure - I researched it a while ago.

IBR and PAYE are open to anyone regardless of employer - you just need the financial hardship. PSLF has employer requirements (generally non-profit/government), and requires you to be on either IBR, PAYE, Income-Contingent Repayment, or the standard 10 year plan (although the latter would be dumb since you'd pay off your loans at the same time you'd be eligible for forgiveness, of course).

[Young Marino]

Because I have very good credit, my interest rate of non-federal loans is substantially better than the federal loans. I end up saving a lot of money by taking private loans (also have no origination fees and some bonuses that further increase the savings) instead (though I understand that if I have a very low paying job, this logic might not actually work). I thought there were limits on the kinds of jobs for assistance programs, but I'm not sure - I researched it a while ago.

IBR and PAYE are open to anyone regardless of employer - you just need the financial hardship. PSLF has employer requirements (generally non-profit/government), and requires you to be on either IBR, PAYE, Income-Contingent Repayment, or the standard 10 year plan (although the latter would be dumb since you'd pay off your loans at the same time you'd be eligible for forgiveness, of course).

And financial hardsip is defined as "your monthly payments on ibr would be lower than on the standard 10 year payment plan"- quoting studentaid.ed.gov. So basically if you owe a shit load and make less than that you should qualify?

[Anonymous User]

Also, remember that your spouse's income counts for PAYE or IBR qualification unless you file your taxes separately (which often eliminates a lot of credits). A LOT of people do not understand that bit. Or, they don't consider it because they aren't currently married. But, considering the payback timeframes...it's gonna matter eventually for a lot of people.

Also, my school's LRAP considers spouse income, so I can't qualify for that even if my income and my debt and my job do. So, make sure you really look into all of those factors before you get married

[Young Marino]

Good point. Now to qualify for PSLF do you need to be on IBR?

[mr. wednesday]

Good point. Now to qualify for PSLF do you need to be on IBR?

No but sort of. Technically you can qualify as long as you are on IBR, PAYE, or the 10 year plan, but if you are making payments on the 10 year plan you won't have anything left to forgive making PSLF useless.

[Young Marino]

Good point. Now to qualify for PSLF do you need to be on IBR?

No but sort of. Technically you can qualify as long as you are on IBR, PAYE, or the 10 year plan, but if you are making payments on the 10 year plan you won't have anything left to forgive making PSLF useless.

Ah I see. But pretty much if you work in the public sector and make my 120 payments in 10 years, you should be debt free regardless of what avenue you take after a decade. Correct me if I'm wrong.

[mr. wednesday]

Good point. Now to qualify for PSLF do you need to be on IBR?

No but sort of. Technically you can qualify as long as you are on IBR, PAYE, or the 10 year plan, but if you are making payments on the 10 year plan you won't have anything left to forgive making PSLF useless.

Ah I see. But pretty much if you work in the public sector and make my 120 payments in 10 years, you should be debt free regardless of what avenue you take after a decade. Correct me if I'm wrong.

yup, that's about the long and the short of it. except I'm quite well paid for PSLF-eligible jobs and there is still no way I could make my 10 year plan payments.

[Young Marino]

Btw, all of you have been a tremendous help and I can't thank you guys enough. I was literally having nightmares about getting deep into debt but knowing that there are people out there that are making it work, especially in the public sector puts me a little more at peace. Thanks again. All of you.

[dixiecupdrinking]

The law was not designed with law school debt in mind. For almost every recentish law grad the standard deduction is almost certainly going to exceed all other deductions, so the loan interest deduction is essentially pointless. Yay.

You can take the standard deduction and still take the student loan interest deduction. The problem is the income cap.

Damn. For a number of posters ITT, say goodbye to $3K-$8K. Hard to understand why this irrational denial of a loan interest deduction is not a hot topic. Of course one could always take this to the ABA lobbyists because they are always so helpful.

because all it is is a back door marginal tax rate hike on people making over $80,000 (and in this case often twice as much) -- people who, to boot, are lawyers. This is not the most politically sympathetic group of people.

But folks with two homes are.

Not meant as a sarcastic remark toward you. Just a grumble about the tax code.

Agreed. It's B.S. Both the $2,500 interest cap and the $80k income cap should be abolished, and I don't see any principled reason to have either. I just don't have any illusions about it happening. These are provisions that hit people who have huge student loan debt and relatively high incomes, and to the extent there's any movement toward student loan relief it seems to be targeted at people with lower incomes and/or who are typically attending public schools to get associates or bachelors degrees. (Which makes sense.)

[Summerz]

Agreed. It's B.S. Both the $2,500 interest cap and the $80k income cap should be abolished, and I don't see any principled reason to have either. I just don't have any illusions about it happening. These are provisions that hit people who have huge student loan debt and relatively high incomes, and to the extent there's any movement toward student loan relief it seems to be targeted at people with lower incomes and/or who are typically attending public schools to get associates or bachelors degrees. (Which makes sense.)

If I understand this right…for clarity. In '14 we can take a $2.5K interest deduction since our '14 income will be limited (figure that most will only be on payroll under six months). After that we cannot write off any of our school debt (tuition or interest). That’s just not right fair.