Are private loans really lower? It seems like Federal loans are all under 8% from what I've seen so far.
Also, from the IBR website (http://www.finaid.org/loans/ibr.phtml
"Interest on unsubsidized loans and interest that accrues on subsidized Stafford loans after the first three years will be capitalized upon status changes (e.g., a borrower is no longer eligible for IBR or chooses to switch to a different repayment plan). Borrowers who are concerned about the potential for negative amortization, where the amount owed grows because the payments are less than the interest that accrues, always have the option of increasing the payment to at least the interest since federal education loans do not have prepayment penalties."
I started thinking. Alright, I'm working at 80k a year, or something like that, I'm doing pretty well because of my IBR plan, waiting for my 25 year cap. Interest is probably growing like crazy on my loans, but who cares?
Great, I just got some awesome promotion or find a better job, and I start doing well enough that I push past the IBR limit and no longer qualify. Ten years, up to 24 years (can you imagine!) of accrued interest falls on my head. Unless it's a massive pay increase, I'm screwed. One toe over the line, and the party's over. I mean 25 years is a long time.
So I guess you would factor in an appropriate interest repayment each month on top of your monthly IBR amount. I need to find out a little more about specific goverment loans, and I think I can give a pretty good loan repayment calculation for let's say $150,000 this time.
Edit: People were talking about gov't/PI work, which seems to make sense with a 10 year tax-free cap. I thought we should consider the private sector route.
Oh that reminds me. Everything that's discharged after 25 years; don't think we're not paying income tax on that. Lump sum as if you received a bonus that year.