Freaked out about loan situation...

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sunynp
Posts: 1899
Joined: Tue May 24, 2011 2:06 pm

Re: Freaked out about loan situation...

Postby sunynp » Sat Apr 21, 2012 1:59 pm

Sorry about that _ I get tired of saying s/he. I think your plan is correct but I still think running it by some current clerks from you school would be worth it. Find out how they are handling the financial side of being a clerk. Also, it doesn't hurt to maintain your network of contacts with other grads from your school.

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DocHawkeye
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Joined: Fri Oct 29, 2010 11:22 am

Re: Freaked out about loan situation...

Postby DocHawkeye » Sat Apr 21, 2012 2:42 pm

I think that it’s worth pointing out that after 25 years of on-time payments under the IBR plan, the remaining balance is forgiven. There is a 10 year provision for public sector workers, but I don't know if PI or goverment law work qualifies.

http://studentaid.ed.gov/PORTALSWebApp/ ... BRPlan.jsp

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wiseowl
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Re: Freaked out about loan situation...

Postby wiseowl » Sat Apr 21, 2012 2:49 pm

DocHawkeye wrote:I think that it’s worth pointing out that after 25 years of on-time payments under the IBR plan, the remaining balance is forgiven. There is a 10 year provision for public sector workers, but I don't know if PI or goverment law work qualifies.

http://studentaid.ed.gov/PORTALSWebApp/ ... BRPlan.jsp


Correct.

It is also worth pointing out, however, that that lump sum cancellation is taxable income.

You will need to be slowly packing away savings all along to deal with the sudden tax hit.

ToTransferOrNot
Posts: 1928
Joined: Thu Jan 22, 2009 12:45 am

Re: Freaked out about loan situation...

Postby ToTransferOrNot » Sat Apr 21, 2012 2:53 pm

FYI: The accrued but unpaid interest does, in fact, capitalize, when you become inelgible for a partial financial hardship. (Regardless of whether you formally leave the IBR program or not.) You may not become ineligible for a PFH the first year out of the clerkship (if you go into biglaw), but you probably will in your second year.

Also, keep in mind that whatever interest that goes unpaid by the IBR payments on your subsidized loans is forgiven for two or three years. If you're going to make extra payments, make sure you direct them to your GradPLUS loans.

Unfortunately, you should also keep in mind that most schools' LRAP plans don't kick in until you are forced to enter repayment, which happens 6 months after your graduation date. You keep acccruing interest for those 6 months; and then, when you enter repayment, all accrued interest capitalizes. You should try to pay down the accrued interest on your highest interest rate loan before you officially enter repayment.

flcath
Posts: 1502
Joined: Fri Nov 06, 2009 11:39 pm

Re: Freaked out about loan situation...

Postby flcath » Sat Apr 21, 2012 3:02 pm

wiseowl wrote:
DocHawkeye wrote:I think that it’s worth pointing out that after 25 years of on-time payments under the IBR plan, the remaining balance is forgiven. There is a 10 year provision for public sector workers, but I don't know if PI or goverment law work qualifies.

http://studentaid.ed.gov/PORTALSWebApp/ ... BRPlan.jsp


Correct.

It is also worth pointing out, however, that that lump sum cancellation is taxable income.

You will need to be slowly packing away savings all along to deal with the sudden tax hit.

This'll be reformed for those who still pay in at 15% of their income. For the new folks who pay in at 10%, who knows.

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ColtsFan88
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Re: Freaked out about loan situation...

Postby ColtsFan88 » Sat Apr 21, 2012 10:16 pm

DocHawkeye wrote:I think that it’s worth pointing out that after 25 years of on-time payments under the IBR plan, the remaining balance is forgiven. There is a 10 year provision for public sector workers, but I don't know if PI or goverment law work qualifies.

http://studentaid.ed.gov/PORTALSWebApp/ ... BRPlan.jsp


It's also worth noting that the 25 year forgiveness is for people who don't make a lot and can't service their debt. You pay 10% every year. If you make 160k/year for those 25 years, you've payed 400,000 not including the tax bomb. You're better off just paying down your loans without IBR.

And the 10 year forgiveness is through PSLF and it includes any public sector job. At the very least any public sector job a federal clerk is looking at.




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