SLS' LRAP rules.
Veil of Ignorance wrote:
Nebby wrote: It is adjusted gross income (adjustments dependent on the specifics of each LRAP details). I don't quite know what your second question is asking. Can you elaborate?
Well let's assume you've got 300k in loans and a 100k salary. According to Yale and Stanford's LRAP rules, you would be expected to pay 60% of the 20k you earned passed 80k, which would come to 12k. But you are also paying taxes on that 20k of income. And isn't 80k+ around a 40% tax bracket? So after taxes and Stanford and Yale's 60% rule, would someone making 100k actual take home more than someone making 80k?
Assume you have 300k in debt. The average monthly repayment on $300k under a 10 year plan would be $3300/month or $39600/year. SLS LRAP repayments are based on a 10 year repayment schedule. Therefore, the annual benefits for this hypothetical student is $39600/year for 10 years. The benefit is not contingent upon whether the student remains in standard repayment or opts to go on PAYE. So the student can go on PAYE and will still get $39600/year, but that student can't pocket it and must still pay the $39600/year to their loans.
Now, lets assume 100k salary.
For graduates whose adjusted incomes will exceed $80,000, LRAP will provide a loan covering the need-based monthly payments for the year less a base contribution of $9,750 plus 60% of the income over $80,000.
So the calculation starts with $39600 - $9750 - (0.6 x 20k*) = $18,150/year ($1512.50/month) in LRAP benefits. Therefore, if you made 100k a year, LRAP would cover 45% (1512.50/3300) of the monthly standard repayment and you'd be responsible for 55% or $1815/month (3300 x 0.55)
This is all before your income is adjusted depending no SLS program.
In California, your take home pay on $100k would be $68,015/year (before any deductions/credits/adjustments).
For SLS, your adjusted gross income is whatever it was on the previous year's tax returns.
Federal tax brackets:
$37,450 - $90,750 25.00%
$90,750 - $189,300 28.00%
$40,773 - $51,530 8.00%
$51,530 - $263,222 9.30%According to this calculator, the monthly payment under PAYE on an AGI of 100k is $684.83.The best bet to maximize SLS benefits with 300k debt is to go under PAYE and cop PSLF forgiveness. They'll never pay a cent out of pocket until their income gets closer to $120k.
I'm not gonna do anymore of the work for you. Run the math and answer your own questions that can be answered with this data.