IBR Program Forum

[nowinGA]

Perhaps this has been asked here, but as we all know, posts disappear fast.

With the new IBR program, I guess I don't understand why one wouldn't take the max loans if I am already going to be in deep debt. I already have some debt from MFA and PhD programs...so, I am trying to decide if I should go to a T40 school with partial scholarship, or a t14 (if I get in) with no scholarship (or tier 3 with almost full scholarship) With IBR, part of me thinks...what's the difference?!? $100K vs. $200k vs. $300k!?! It's all just going to be whatever percentage of my income that I will be paying for 25 years...

The question is: is there a point where, with IBR, it really doesn't make a difference what the number is?

Hope that makes sense. And no, I am not planning on going into public service to LRAP is not an option...

[vanwinkle]

Well, if you're not going into public service, then the repayment window is 25 years. Over that extended timeframe, the more you make, the closer you get to actually repaying your debt.

This is totally unrealistic since you would not just stay at this salary for all 10 years, but if you made $160K/yr and had $180K in debt at 8.5% you'd end up paying back all your loans in 11.4 years. If you had $250K in debt you'd pay it back in 17 years.

The thing is that if you go into BigLaw at least to start, you'll make the most money in your earliest years and make the biggest dent in your loans then. Given that you should actually plan on trying to repay your debts as quickly as possible if you can. Otherwise you're just flushing that money down the toilet for no reason.

[nowinGA]

Well, if you're not going into public service, then the repayment window is 25 years. Over that extended timeframe, the more you make, the closer you get to actually repaying your debt.

This is totally unrealistic since you would not just stay at this salary for all 10 years, but if you made $160K/yr and had $180K in debt at 8.5% you'd end up paying back all your loans in 11.4 years. If you had $250K in debt you'd pay it back in 17 years.

The thing is that if you go into BigLaw at least to start, you'll make the most money in your earliest years and make the biggest dent in your loans then. Given that you should actually plan on trying to repay your debts as quickly as possible if you can. Otherwise you're just flushing that money down the toilet for no reason.

That is great perspective, thanks. The IBR thing is new info to me and I think it is fantastic. What you are basically telling me is that there IS a difference between starting my super duper cool job in BigLaw with $180K in debt vs. $250k in debt, and that difference is the amount of time in months I will be paying said $1300/month in student loans...

That said, does it then still make it worth it for me to take the offer of the t14 school that will give me higher potential earnings, since either way I am going to have a crap ton of loans (whether that crap ton is $180k or $250k)....? Or do I shoot for the lesser school, for the lesser debt (but still lots of debt, that is unavoidable given my previous grad school trips)...and potentially not start my career making $160K, but know that whatever it is I make, only 10% of it will go to my loans...

(that may be rhetorical, but I never mind comments)

[vanwinkle]

My personal advice is that if you're going into BigLaw you should do that and just pay your loans off as quickly as possible. If you're making $160K/yr and put $40K/yr into paying off your loans you can pay them off in 4-5 years. That means you're living more frugally than your fellow associates those four years, but once those four years are over you're totally free of all debt obligations.

You'd still be living off of more than $100K/yr even paying your loans off that rapidly, which is what I would consider "doable".

[nowinGA]

My personal advice is that if you're going into BigLaw you should do that and just pay your loans off as quickly as possible. If you're making $160K/yr and put $40K/yr into paying off your loans you can pay them off in 4-5 years. That means you're living more frugally than your fellow associates those four years, but once those four years are over you're totally free of all debt obligations.

You'd still be living off of more than $100K/yr even paying your loans off that rapidly, which is what I would consider "doable".

Thank you, sincerely, for taking the time to respond with useful information.

I am 31 and have already had a little career w/student loans on the side...and yes, to me, that sounds "doable."

[vanwinkle]

I am 31 and have already had a little career w/student loans on the side...and yes, to me, that sounds "doable."

In that case, if you're dead set on BigLaw, I'd recommend just taking the best school you can get into, T14 if possible. You want to increase your chances of getting a BigLaw job as much as possible, jobs are still hard to come by right now even though the economy is gradually improving, and as noted, you can afford to repay those loans over a few years if you're responsible about it.