According to the Federal Student Aid website:
To qualify for IBR, you must have a "partial financial hardship." You have a partial financial hardship if the monthly amount you would be required to pay on your IBR-eligible loans under a Standard Repayment plan with a 10-year repayment period (based on the amount you owed on those loans when they initially entered repayment) is higher than the monthly amount you would be required to pay under IBR.
Let's take a debt scenario between School A and School B. (For the purpose of calculating IBR payments, I am considering an unmarried individual, not in Hawaii or Alaska, with no dependents. I am also using this calculator: --LinkRemoved--)
Total IBR-eligible loan debt:$111,456
Monthly payment based on 10-year plan: $1,282
Highest yearly income (approx.) which would still be eligible for IBR based on the "partial financial hardship" requirement: $130,000
Total IBR-eligible loan debt: $150,336
Monthly payment based on 10-year plan: $1,730
Highest yearly income (approx.) which would still be eligible for IBR based on the "partial financial hardship" requirement: $150,000
The higher debt from School B would make you eligible for IBR up to a higher yearly income threshold than the lower debt from School A. (Bear in mind that your total debt only determines at what income level you no longer qualify for IBR. Your monthly payment is determined based on your yearly income, not debt level. Meaning if you earn $35k/year coming out with either $123k in debt or $150k in debt, your payment would only be $234 either way.)
Does this negate any negative impact of choosing a school which requires higher debt? Isn't this especially the case if you choose to use public service loan forgiveness? Granted, the chances that you would earn more than $150k, let alone $130k, doing PI/gov't work is slim to none but nonetheless. And even if you don't go the PI/gov't route, wouldn't the higher threshold be a positive given that after 25 years your federal loans are forgiven?
Edit: I'm awful with financial stuff (but clearly I'm trying) so feel free to tell me this is incorrect.