Why does everyone on TLS disregard IBR? Forum

[firemed]

This is not true. You are right about the AMA restrictions, but med students who miss out on residencies are often times screwed into being stuck with 70k starting salaries as general treating physicians. Med school loans can be just as substantial as law school loans.

\


This doesn't exist anymore in 46 (or maybe more these days) states. No residency = not a licensed physician. This is why going to the Caribbean is such a risky move for medical school.

[Anonymous Loser]

It's sort of ridiculous to assume that forgiveness under the 25-year repayment program will remain taxable. The CCRAA has gone (and will continue to go) through the same growing pains that any new legislation undergoes. As the result of subsequent regulatory and legislative changes, tax liability for forgiveness under the the 10-year repayment program was removed, and significant changes have been made to the eligibility assessment for married borrowers. I honestly don't understand why TLS posters seem to think that the CCRAA is sui generis, and will not develop in the same manner as every other piece of legislation dealing with lending.

Really dude? This is actually one of the dumber serious post I've seen on here.

I don't think anyone is making the case that, it will 100% without a doubt remain taxable. But in care you're not paying attention there will be serious cuts to social programs in the next few years. (whether people think it's wise or necessary, it's going to happen) Honestly, and I'll probably get killed for this, I think IBR is one of the most expendable programs we have. We're taking about transferring a benefit to people who already got AT LEAST 3 years of subsidized education and probably 7 or more. These are people with law degrees, and I'm finding it really difficult to believe many of them are really in the segment of the population that needs a government benefit. Not to mention that IBR creates an incentive to borrow irresponsibly, which is the exact thing we DON'T want in a government program. If we're gonna subsidize graduate education we should be funneling future public defenders or small firm lawyers into cheaper state schools and not into places Cardozo at 50k a year. But that rant besides the point here, the point is, if I have to cut middle school lunches, Medicare for grandma, funding for community college, or the forgiveness on loans that some 27 year old with a JD has. I'll cut IBR every single time. I'm not saying that the forgiveness over the 25 year plan will remain taxable (though I hope it does) but when you're taking out loans right now you HAVE TO ASSUME it's staying the way it is or getting rolled back. You don't plan for the best case scenario.

There is already broad bipartisan support for reforming the Internal Revenue Code, and eliminating the tax on forgiveness merely requires altering or deleting language in § 108(f)(1). Members of Congress are willing and able to take the steps required to correct this problem. For example, S.518, introduced in the Senate less than one month ago, is a bipartisan effort to alter the Internal Revenue Code to insure that certain loan forgiveness programs for veterinarians are not considered taxable. The bill's cosponsors include fiscally conservative Republicans.

You might want to consider skimming through the Congressional Record now and then; I think it would really help you develop a better understanding of the current political climate.

[D. H2Oman]

There is already broad bipartisan support for reforming the Internal Revenue Code, and eliminating the tax on forgiveness merely requires altering or deleting language in § 108(f)(1). Members of Congress are willing and able to take the steps required to correct this problem. For example, S.518, introduced in the Senate less than one month ago, is a bipartisan effort to alter the Internal Revenue Code to insure that certain loan forgiveness programs for veterinarians are not considered taxable. The bill's cosponsors include fiscally conservative Republicans.

You might want to consider skimming through the Congressional Record now and then; I think it would really help you develop a better understanding of the current political climate.

You missed the point entirely my anonymous friend. I'm taking issue with you calling it a "ridiculous assumption" to not assume that program is going to change in a way beneficial to borrowers and then remain that way for the next few decades. I think I pretty clear stated it could happen. My point is that it's not only not ridiculous, but is intelligent to plan for a more pessimistic scenario when taking out hundreds of thousands of dollars in non dischargeable debt. Way too much uncertainty.

And don't cite me some unpassed bill with a small provision included and then use that not only to determine that all sponsors support that specific thing, but also conclude that since this narrow loan forgiveness could possibly happen that therefore the much wider forgiveness will eventually pass and will stay that way.

[Anonymous Loser]

Your comments about planning for a more pessimistic scenario seem like the educational-lending equivalent of a Californian stocking up on potassium iodide following the tsunami.

[Tanicius]

Your comments about planning for a more pessimistic scenario seem like the educational-lending equivalent of a Californian stocking up on potassium iodide following the tsunami.

Dude, seriously? Even as someone who's probably going to resign 160k+ of non-dischargeable loans to the hope that IBR sticks around, I'm not going to rest easy until my tenth year passes.

[D. H2Oman]

Your comments about planning for a more pessimistic scenario seem like the educational-lending equivalent of a Californian stocking up on potassium iodide following the tsunami.

That's kind of funny cause I would call yours the educational lending equivalent of planting your garden on Fukushima's front lawn.

[Anonymous Loser]

I just don't see this program--a very popular program that came in under a Republican administration with broad bipartisan support--as something that has any significant political vulnerability. Indeed, the only serious opposition to the bill was raised by those members of Congress who had been swayed by the private lending lobby, who wanted to ensure that profitable FFELP subsidies continued to be paid to their constituency.

And I certainly don't see any serious opposition to future proposals to correct an obvious drafting oversight in the tax code. Seriously, who is going to oppose such legislation? Who is the constituency that is going to favor hitting someone who has suffered a partial financial hardship for a quarter of a century with a six-figure tax bill on their education? Moreover, by the time this tax bill hits, most borrowers would have already paid nearly twice as much in repayment as borrowers utilizing the standard repayment plan. You can't seriously suggest that conservatives are going to argue for the imposition of such a ludicrous tax. Most previous proposed amendments to the tax code targeted at this problem have sailed through Congress without even the slightest bit of political debate, and no media attention whatsoever. Those that haven't passed have quietly died in committee while more pressing matters were addressed: after all, it will be over two decades before anyone even faces the possibility of becoming subject to this tax.

To characterize loan forgiveness under the CCRAA as anything but stable and secure is to completely ignore the legislation's past history and the current political climate. Educational lending has been radically restructured over the past 5 years, and the only people who have raised even the slightest argument against it are the financial institutions that have lost government subsidies. No legislation has been proposed to eliminate the program. No politicians are talking about eliminating the program. Outside of TLS, no commentators are talking about eliminating the program. It makes no sense to make decisions based upon the possibility that the program will be eliminated, when there are so many other potential risks that are much more likely to actually occur.

[D. H2Oman]

Moreover, by the time this tax bill hits, most borrowers would have already paid nearly twice as much in repayment as borrowers utilizing the standard repayment plan.

Please, please, please show me your math on this. I'm pretty excited.

[MrAnon]

Government can and will pull the rug out from underneath this program the moment the country is forced to take up austerity programs necessary to pay down the debt.

[firemed]

Government can and will pull the rug out from underneath this program the moment the country is forced to take up austerity programs necessary to pay down the debt.

Yeah... but hopefully inflation will make my debt totally pointless.

[Anonymous Loser]

Moreover, by the time this tax bill hits, most borrowers would have already paid nearly twice as much in repayment as borrowers utilizing the standard repayment plan.

Please, please, please show me your math on this. I'm pretty excited.

Total Graduating Debt: $120,000.00
Initial AGI: $60,000.00
Income Growth Rate: 4.00%
Interest Rate: 6.80%
Discount Rate: 5.80%
Family Size: 1
Poverty Line: $10,830.00
Tax Filing Status: Single


Income-Based Repayment Fixed Monthly Repayment
(25 years) (10 years)
Minimum Payment: $10.00 $50.00

Monthly Payments
First Payment: $546.94 $1,380.96
10th Year Payment: $802.53 $1,380.96
Max Monthly Payment:$1,380.96 $1,380.96

Total Amount Paid: $275,465.08 $165,715.8

[DeeCee]

Moreover, by the time this tax bill hits, most borrowers would have already paid nearly twice as much in repayment as borrowers utilizing the standard repayment plan.

Please, please, please show me your math on this. I'm pretty excited.

Total Graduating Debt: $120,000.00
Initial AGI: $60,000.00
Income Growth Rate: 4.00%
Interest Rate: 6.80%
Discount Rate: 5.80%
Family Size: 1
Poverty Line: $10,830.00
Tax Filing Status: Single


Income-Based Repayment Fixed Monthly Repayment
(25 years) (10 years)
Minimum Payment: $10.00 $50.00

Monthly Payments
First Payment: $546.94 $1,380.96
10th Year Payment: $802.53 $1,380.96
Max Monthly Payment:$1,380.96 $1,380.96

Total Amount Paid: $275,465.08 $165,715.8

Maybe someone can explain this to me as I'm not good at math, but how is this possible that you could pay in more, when in the fixed monthly payment plan you always pay $1,380 a month, whereas you never pay that much a month in the IBR plan?

[firemed]

Moreover, by the time this tax bill hits, most borrowers would have already paid nearly twice as much in repayment as borrowers utilizing the standard repayment plan.

Please, please, please show me your math on this. I'm pretty excited.

Total Graduating Debt: $120,000.00
Initial AGI: $60,000.00
Income Growth Rate: 4.00%
Interest Rate: 6.80%
Discount Rate: 5.80%
Family Size: 1
Poverty Line: $10,830.00
Tax Filing Status: Single


Income-Based Repayment Fixed Monthly Repayment
(25 years) (10 years)
Minimum Payment: $10.00 $50.00

Monthly Payments
First Payment: $546.94 $1,380.96
10th Year Payment: $802.53 $1,380.96
Max Monthly Payment:$1,380.96 $1,380.96

Total Amount Paid: $275,465.08 $165,715.8

Maybe someone can explain this to me as I'm not good at math, but how is this possible that you could pay in more, when in fixed monthly payment you always pay $1,380 a month, whereas you never pay that much a month in the IBR plan?

Because you are going to make two and a half times the payments.

[DeeCee]

Maybe someone can explain this to me as I'm not good at math, but how is this possible that you could pay in more, when in fixed monthly payment you always pay $1,380 a month, whereas you never pay that much a month in the IBR plan?

Because you are going to make two and a half as many payments.

my bad, I just realized the 25 years versus 10 years. I thought we were comparing the same timeframe

[D. H2Oman]

Moreover, by the time this tax bill hits, most borrowers would have already paid nearly twice as much in repayment as borrowers utilizing the standard repayment plan.

Please, please, please show me your math on this. I'm pretty excited.

Total Graduating Debt: $120,000.00
Initial AGI: $60,000.00
Income Growth Rate: 4.00%
Interest Rate: 6.80%
Discount Rate: 5.80%
Family Size: 1
Poverty Line: $10,830.00
Tax Filing Status: Single


Income-Based Repayment Fixed Monthly Repayment
(25 years) (10 years)
Minimum Payment: $10.00 $50.00

Monthly Payments
First Payment: $546.94 $1,380.96
10th Year Payment: $802.53 $1,380.96
Max Monthly Payment:$1,380.96 $1,380.96

Total Amount Paid: $275,465.08 $165,715.8

Good start, now include the amount forgiven under that 25 year IBR plan with that debt load,starting salary and growth rate

[D. H2Oman]

Hint, it's 0

[D. H2Oman]

Now let's actually use relevant numbers, where there will be some forgiveness.


50K starting
200K debt


Give it a go.


Report back.

[Anonymous Loser]

Hint, it's 0

Right, that's precisely why this program is not politically vulnerable. If you run through the calculations a bit further, you'll find only under the most extreme circumstances will the amount forgiven exceed the increased amount repaid due to the extended repayment schedule.

[Anonymous Loser]

Now let's actually use relevant numbers, where there will be some forgiveness.


50K starting
200K debt


Give it a go.


Report back.

I ran the figures with a higher than average debt load and a lower than average salary that assumes an unrealistically flat income growth. If you want to skew the numbers to fit whatever argument you are currently making, go ahead.

[D. H2Oman]

Now let's actually use relevant numbers, where there will be some forgiveness.


50K starting
200K debt


Give it a go.


Report back.

I ran the figures with a higher than average debt load and a lower than average salary that assumes an unrealistically flat income growth. If you want to skew the numbers to fit whatever argument you are currently making, go ahead.

1. I meant for you to use the 4% growth rate that you used before.


2. Also, your 60k 120 debt is right on the edge of forgiveness anything higher on the debt or lower on the salary and there would be forgiveness. A lot of students are taking out way more than that, and starting lower.

3. For the love of Christ go look at the first mother fucking post you made that I responded to that started this. My whole point was to NOT PLAN THAT THE TAX ON FORGIVENESS WOULD BE GOING AWAY. I'm not even arguing that program is going to get cut, just that the risk is there, and that I think expectation further extension of benefits is a bit unrealistic. (let alone your comment "It's sort of ridiculous to assume that forgiveness under the 25-year repayment program will remain taxable." which is what I was responded to)


But thanks for showing us how even if you're not getting anything forgiven, you're still paying a huge some of money for a very long time. I would have made that point eventually too.



edit: Also that this "Moreover, by the time this tax bill hits, most borrowers would have already paid nearly twice as much in repayment as borrowers utilizing the standard repayment plan." was mathematically impossible. If you actually have anything remaining to be forgiven under the 25 year IBR plan, you will have paid less to that point than you would have under the standard 10 year plan.

[Borhas]

Now let's actually use relevant numbers, where there will be some forgiveness.


50K starting
200K debt


Give it a go.


Report back.

at 50k starting and 200k debt the first payment would be $420 under IBR... so I guess it pays to owe more and make less

[Anonymous Loser]

. . . I think expectation further extension of benefits is a bit unrealistic.

What I have been pointing out--and what you keep overlooking--it that these benefits are expanding all the time. The tax problem is being steadily whittled away, and the existence of pending legislation targeted at this issue strongly suggests continued improvements for borrowers. The marriage penalty was eliminated through recent rulemaking. You can't simply turn a blind eye to these changes because they don't support your argument. And there is nothing to suggest that the benefits available under this program will be reduced in the future beyond the general unease stemming from the current financial crisis.

There's just no argument to be made for cutting or reducing the program: it's a popular Bush-era program, funded entirely through savings realized as the result of the elimination of subsidies to private lenders, and it doesn't really cost much. Even in the most extreme examples, the net present value of the amount forgiven under the 25-year repayment plan is laughable. Moreover, the program directly benefits what is likely the most politically active and influential constituency in the country: college graduates. The education lobby has been very successful in past efforts to promote reform of educational lending, and has had no problem finding influential sponsors for legislation designed to eliminate the tax problem. There is every reason to believe that the tax problem will be eliminated by the time the first borrowers reach forgiveness decades from now.

As far as I can tell, every single analyst to consider the CCRAA assumes that the tax problem will be fixed long before any borrower is forgiven. I agree.


As for my figures not resulting in a forgiven loan balance, that's simply the reality of the program. The most accurate source I can find reports that the average law student has a total educational debt of $92,937. And the best information I have states that the average starting salary for recent law school graduates is $84,952. The 25-year IBR program isn't supposed to result in loan forgiveness for very many borrowers: it's just a safety net that is not applicable to the all but a handful of borrowers.

If you actually have anything remaining to be forgiven under the 25 year IBR plan, you will have paid less to that point than you would have under the standard 10 year plan.

Oh my God. If you are going to make claims like this, at least run it through the calculator first.

Total Graduating Debt: $100,000.00
Initial AGI: $50,000.00
Income Growth Rate: 4.00%
Interest Rate: 6.80%
Discount Rate: 5.80%
Family Size: 1
Poverty Line: $10,830.00
Tax Filing Status: Single

Loan Forgiveness
Forgiveness Year: 25 years

Income-Based Repayment Fixed Monthly Repayment
Years in Repayment: 25 years 10 years
Minimum Payment: $10.00 $50.00

Monthly Payments
First Payment: $421.94 $1,150.80
10th Year Payment: $624.62 $1,150.80
Max Monthly Payment: $1,150.80 $1,150.80

Total Amount Paid: $223,040.47 $138,096.57
NPV of Total Paid: $105,419.02 $105,310.19

Total Accrued Interest: $139,497.13 $38,096.57
Capitalized Interest: -$7,034.30 $0.00
Total Interest Paid: -$132,462.84 -$38,096.57
Total Unpaid Interest: $0.00 $0.00

Total Amount Paid: $223,040.47 $138,096.57
Total Interest Paid: -$132,462.84 -$38,096.57
Payments to Principal: $90,577.63 $100,000.00

Total Debt: $100,000.00 $100,000.00
Capitalized Interest: $7,034.30 $0.00
Payments to Principal: -$90,577.63 -$100,000.00
Remaining Balance: $16,456.66 $0.00

Government Payments
Loan Forgiveness: 25 years
100.00%
Total Unpaid Interest: $0.00 $0.00
Balance Write-off: $16,456.66 $0.00
Total Forgiveness: $16,456.66

[firemed]

As for my figures not resulting in a forgiven loan balance, that's simply the reality of the program. The most accurate source I can find reports that the average law student has a total educational debt of $92,937. And the best information I have states that the average starting salary for recent law school graduates is $84,952. The 25-year IBR program isn't supposed to result in loan forgiveness for very many borrowers: it's just a safety net that is not applicable to the all but a handful of borrowers.

I don't really care about the rest of the argument (because I am tired) but I had to soooo very much LOL at the bolded.

You can't have been on here that long and not know that that number is effectively worthless.



ETA: and that total educational debt number is pretty worthless too. People with full rides and parents paying living expenses averaged with people taking $180K averages out to about $90K. But the majority of people taking loans are taking BIG LOANS... averaged with the people taking VERY SMALL loans to cover a few expenses.

[Anonymous Loser]

You can't have been on here that long and not know that that number is effectively worthless.



ETA: and that total educational debt number is pretty worthless too.

That's why I used the much more extreme figures of $120,000 in educational debt and $60,000 AGI in the calculation that was challenged.