Student loan payments: get advice and actual numbers here

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Johann
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Re: Student loan payments: get advice and actual numbers here

Postby Johann » Tue Aug 15, 2017 3:05 am

Nebby wrote:
Calvin Murphy wrote:
Nebby wrote:
Anonymous User wrote:Maybe some numbers will help my question make more sense. When I begin my new position this coming fall, my school's LRAP will require me to pay $990 per month. If I was under REPAYE, my monthly payment would only be only $464. The upside is that monthly out-of-pocket savings of $500 per month over 10 years.

That is helpful.

Yes, if I were you, I would convert to PAYE and ride out into the PSLF sunset. I am currently on PAYE+PSLF w/ my school's LRAP. My school's LRAP is pretty generous, but I have undergrad debt so it made more sense financially to do similar to what you're suggesting. So long as you are comfortable hunkering down into PI/Gov't for the next 10 years, then it makes great financial sense to reduce your monthly payment.

As an aside, I recommend submitting your PSLF certification (at least) annually so there's a constant record of your participation in the program. If it is ever repealed, you'll need proof of your detrimental reliance.

I'm anal and plan on doing it every 6 to 8 months so I can be sure that FedLoans doesn't skip any qualifying payments.


Maybe I misunderstand PSLF, but I would think that the two main drawbacks of switching course at this point would be 1) your previous payments count toward the 10 year payoff timeline that you're on, but the PSLF timer starts at zero (meaning you have ten MORE years, as opposed to ten years minus however many payments you've already made). This is clearly less of a concern if you're only a year into repayment...but something to thing about. Also, 2) if for some reason you decide to change into a private sector job, you will have racked up interest while on PSLF and end up paying a lot more in the end. This isn't a concern for most people who go PSLF, as they're confident that they will remain govt, but it's something to think about.

(1) You misunderstand PSLF. You have to make 120 qualifying payments. Payments qualify if you're in nonprofit/govt when you make them. OP has made QPs since they started payment. PSLF is something you qualify for at 120, it's not a program you enroll in and then make progress towards. It's purely an If A, then B type of forgiveness.
(2) Yes.


The OP is fine because they are on the 10 year standard repayment. However, not ALL loan payments are qualifying payments for pslf as your post implies. Extended/graduated repayment plan payments do not count unless they are equal to or exceed the standard 10 year repayment. So anything greater than 10 years doesn't work (or else all the schools would have programs that set up their pslf students on 25 year repayment plans and got that forgiveness in 10 years.)

And re 2) you can do REPAYE to mitigate some of that interest accrual.

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A. Nony Mouse
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Re: Student loan payments: get advice and actual numbers here

Postby A. Nony Mouse » Tue Aug 15, 2017 6:11 am

I don't think the above is quite right. You need to be on an income-based repayment plan, which are all by definition greater than 10 years, so it's not really about the length of time of payment. The 10 year plan also counts, except that conceptually it doesn't work in that if you do the 10-year-plan you'll pay off your debt by the time you'd get forgiveness (in practice if you have some 10-year-plan payments + you change to an income-based-plan this won't apply, you'll have just paid more than you needed to total).

Federal Student Loan people wrote:Qualifying repayment plans include all of the income-driven repayment plans (plans that base your monthly payment on your income).

Even though the 10-year Standard Repayment Plan is also a qualifying repayment plan for PSLF, you cannot receive PSLF unless you enter an income-driven repayment plan. Here’s why: If you are in repayment on the 10-year Standard Repayment Plan during the entire time you are working toward PSLF, you will have no remaining balance left to forgive after you have made 120 qualifying PSLF payments. Therefore, if you are seeking PSLF and are not already repaying under an income-driven repayment plan, you should change to an income-driven repayment plan as soon as possible.

Be sure to read about the pros and cons of income-driven repayment plans before deciding to repay your federal student loans using those plans.

It's important to understand that the Standard Repayment Plan for Direct Consolidation Loans is not the same repayment plan as the 10-Year Standard Repayment Plan, and payments made under the Standard Repayment Plan for Direct Consolidation Loans do not usually qualify for PSLF purposes.

Nebby's point about the 120 payments is important. The PSLF clock doesn't "restart."

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Johann
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Re: Student loan payments: get advice and actual numbers here

Postby Johann » Tue Aug 15, 2017 8:13 am

the regulation reads any 10 year standard repayment plan, income based, or income contingent repayment plan. If you make payments under a 20/25-year plan they are NOT qualifying payments.

The 10 year plan works as a qualifying payment, which means you can switch on and off of an IBR/ICR and a 10 year plan and have all payments count towards your 120. You cannot switch onto a 20/25 year extended or graduated repayment plan and have them count.

"Graduated" and "extended" repayment plans are a term of art as they are non "standard", non "IBR" and non "ICR".

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A. Nony Mouse
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Re: Student loan payments: get advice and actual numbers here

Postby A. Nony Mouse » Tue Aug 15, 2017 9:34 am

Right, I agree that the longer ones don't count, but it's not because of their length, it's because they're not income-based.

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Johann
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Re: Student loan payments: get advice and actual numbers here

Postby Johann » Tue Aug 15, 2017 11:19 am

A. Nony Mouse wrote:Right, I agree that the longer ones don't count, but it's not because of their length, it's because they're not income-based.

No it's because the regulation (the codified Cfr) explicitly includes 4 types of payments as Qualifying Payments (which you can pick and choose your way to 120 of):
1) 10 year standard repayments
2) IBR payments
3) ICR payments
4) other payments that equal or exceed a standard 10 year repayment

10 year standard repayments count because the CFR says they do (not because the reason you stated). Thus you can do 10 year standard repayment for a year before switching to IBR (if you wanted to) and those 12 payments count because the law says they count (notbbecause you've paid off your debt and don't need forgivenesss)

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Johann
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Re: Student loan payments: get advice and actual numbers here

Postby Johann » Tue Aug 15, 2017 11:30 am

And you'll see that the reason the 20-25-30 year graduated / extended repayments across the board do NOT count is because of a fear of gaming the system where you can defer all of your payments to the backend of a term that is never reached under pslf's 10 year window. IBR / ICR are not termed repayments like graduated and extended where you can manipulate your payments exclusively based around a timed schedule.

My initial post clearly said graduated and extended don't count. That's true. Those payments do not include IBR/ICR options. Your post said 10 year payments don't count or only count because you back into the forgiveness - that's not true. They count because the regulation says they do and you can make many standard 10 year repayments and never pay off your debt but get pslf if you switch repayment methods at some point.

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Re: Student loan payments: get advice and actual numbers here

Postby grixxlybear99 » Tue Aug 15, 2017 11:42 am

Simply put, on the PSLF Certification Form itself it reads, on page 4 of 6, under Payment Eligibility: "Your payments must be made under a qualifying repayment plan. Qualifying repayment plans include the REPAYE plan, the PAYE plan, the IBR plan, the 10-Year Standard Repayment plan, or any other Direct Loan repayment plan but only payments that are at least equal to the monthly payment amount that would be required under the 10-Year Standard Repayment plan."

It goes on to state ... "Though repayment plans other than the REPAYE, PAYE, IBR, or ICR plans are qualifying plans for PSLF, you must enter REPAYE, PAYE, IBR, or ICR to have a remaining balance to forgive after becoming eligible for PSLF. Otherwise, your loans will be fully repaid within 10 years."

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A. Nony Mouse
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Re: Student loan payments: get advice and actual numbers here

Postby A. Nony Mouse » Tue Aug 15, 2017 11:44 am

I don't get your point, Johann. I said this:
A. Nony Mouse wrote:The 10 year plan also counts, except that conceptually it doesn't work in that if you do the 10-year-plan you'll pay off your debt by the time you'd get forgiveness (in practice if you have some 10-year-plan payments + you change to an income-based-plan this won't apply, you'll have just paid more than you needed to total).

I said the 10 year plan works and if you go on and off different plans, those payments would count. My point was only that while the 10 year payments count, if you were exclusively on the 10 year plan forgiveness would be moot, so it wouldn't matter.

My quibble was with the idea that the length of the extended and graduated standard plans mattered because you brought up their length and said that if they counted schools would put students on those and get them forgiveness at 10 years despite being on a longer plan. This is essentially what many schools are doing, except with REPAYE and PAYE and IBR - paying only for the income-based repayment plans, not the standard 10 years, and getting forgiveness through PSLF.

So my point was that I agree with you that the graduated/extended plans don't count, but you seemed to imply that this was something to do with the length of the plan, and it's not, it's just that they don't count. Like you said, they're not in the CFR.

(Also pretty sure I quoted the exact text quoted just above.)

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Re: Student loan payments: get advice and actual numbers here

Postby JenDarby » Tue Aug 15, 2017 11:48 am

I know I'm curious to see who wins in this TLS fight of attrition between a gov and biglaw attorney

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Re: Student loan payments: get advice and actual numbers here

Postby A. Nony Mouse » Tue Aug 15, 2017 11:50 am

SOMEONE IS WRONG ON THE INTERNET

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grand inquisitor
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Re: Student loan payments: get advice and actual numbers here

Postby grand inquisitor » Tue Aug 15, 2017 11:55 am

nony didn't you realize you can win every argument by going back and editing both your own and johann's posts after the fact?

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Re: Student loan payments: get advice and actual numbers here

Postby Nebby » Tue Aug 15, 2017 6:53 pm

I didn't read anything Johann posted but I assume OP should ignore it

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Johann
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Re: Student loan payments: get advice and actual numbers here

Postby Johann » Wed Aug 16, 2017 8:28 am

Nebby wrote:I didn't read anything Johann posted but I assume OP should ignore it


your initial post that had incorrect info was the reason i posted to begin with:

Nebby wrote:(1) You misunderstand PSLF. You have to make 120 qualifying payments. Payments qualify if you're in nonprofit/govt when you make them. OP has made QPs since they started payment. PSLF is something you qualify for at 120, it's not a program you enroll in and then make progress towards. It's purely an If A, then B type of forgiveness.
(2) Yes.


The red highlights are not true. My initial point was to simply state if you make payments on a graduated/extended repayment method, those payments will not count and you will not get forgiveness as anticipated.

I know I'm right - as has been confirmed upthread:
grixxlybear99 wrote:Simply put, on the PSLF Certification Form itself it reads, on page 4 of 6, under Payment Eligibility: "Your payments must be made under a qualifying repayment plan. Qualifying repayment plans include the REPAYE plan, the PAYE plan, the IBR plan, the 10-Year Standard Repayment plan, or any other Direct Loan repayment plan but only payments that are at least equal to the monthly payment amount that would be required under the 10-Year Standard Repayment plan."

It goes on to state ... "Though repayment plans other than the REPAYE, PAYE, IBR, or ICR plans are qualifying plans for PSLF, you must enter REPAYE, PAYE, IBR, or ICR to have a remaining balance to forgive after becoming eligible for PSLF. Otherwise, your loans will be fully repaid within 10 years."


I dont care if you, JD, or nony ever read my posts. I post in here for people who ask questions and to create a resource of actual helpful knowledge that is CORRECT

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Re: Student loan payments: get advice and actual numbers here

Postby JenDarby » Wed Aug 16, 2017 8:37 am

Nebby wrote:I didn't read anything Johann posted but I assume OP should ignore it

I assume what johann posts is correct, and I actually did read it

but this conversation should have ended at the first correct post, because it's not this complicated

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Re: Student loan payments: get advice and actual numbers here

Postby Johann » Wed Aug 16, 2017 8:40 am

anyways to get this thread back on track:

graduated with roughly ~200k of debt >5 years ago
repayment method: PAYE til the grave
total amount of payments: $12,500
current monthly payment: $750
salary: ~200k
owe/balance: $>250k

household stats:
graduated: ~400k
repayment methods: all PAYE
total amount of repayments: (estimate but) ~20k
current monthly payment: $1,500
income: >$300k
owe/balance: $>500k

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A. Nony Mouse
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Re: Student loan payments: get advice and actual numbers here

Postby A. Nony Mouse » Wed Aug 16, 2017 9:02 am

Johann wrote: I dont care if you, JD, or nony ever read my posts. I post in here for people who ask questions and to create a resource of actual helpful knowledge that is CORRECT

Well, you're clearly not reading mine.

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Wed Aug 16, 2017 9:18 am

So, I have a $45,000 per year scholarship to a t14 (edit: t13, f georgetown) that costs ~60,000 per year. I am a rising 2L. I take out no loans for living expenses as my fiancé is working and we saved money for living expenses before coming to law school. I paid the first semester 1L tuition differential, ~7,500, out of pocket and took out loans on the 7,500 from second semester.

I had a 1L SA in a secondary market, so in my bank account I currently have ~$22,000. My fiancé has ~20,000 in hers. I am now taking out loans at roughly ~15,000 for 2L and probably ~18,000 for 3L. Should I pay off the 7,500 from 1L now or save my money? I have secured a 3,500/wk biglaw SA for 2L. How much of that (I'm living in DC for the next summer) should I expect to actually pocket post expenses? Should I pay off my loans through summer associateships or just save the loans for post grad repayment? Thoughts appreciated.
Last edited by Anonymous User on Wed Aug 16, 2017 9:21 am, edited 1 time in total.

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Re: Student loan payments: get advice and actual numbers here

Postby Nebby » Wed Aug 16, 2017 9:21 am

I'm not disagreeing that Johann's ill-conceived correction is right. I posted in the context of original OP who was on a qualifying repayment plan (literally stated as such in my post). It's my fault for providing advice that didn't consider irrelevant variables (OP was on qualifying plan and who the fuck even picks 25 year repayment plan?). I'll strive to make my posts contextless in the future. What a fruitful exercise this was.

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Wed Aug 16, 2017 12:27 pm

Johann wrote:anyways to get this thread back on track:

graduated with roughly ~200k of debt >5 years ago
repayment method: PAYE til the grave
total amount of payments: $12,500
current monthly payment: $750
salary: ~200k
owe/balance: $>250k

household stats:
graduated: ~400k
repayment methods: all PAYE
total amount of repayments: (estimate but) ~20k
current monthly payment: $1,500
income: >$300k
owe/balance: $>500k


How is your monthly payment so low on PAYE with a 200k salary? Seems like it should be twice that according to the studentloans.gov calculator.

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Re: Student loan payments: get advice and actual numbers here

Postby Nebby » Wed Aug 16, 2017 12:48 pm

Anonymous User wrote:
Johann wrote:anyways to get this thread back on track:

graduated with roughly ~200k of debt >5 years ago
repayment method: PAYE til the grave
total amount of payments: $12,500
current monthly payment: $750
salary: ~200k
owe/balance: $>250k

household stats:
graduated: ~400k
repayment methods: all PAYE
total amount of repayments: (estimate but) ~20k
current monthly payment: $1,500
income: >$300k
owe/balance: $>500k


How is your monthly payment so low on PAYE with a 200k salary? Seems like it should be twice that according to the studentloans.gov calculator.

Reducing adjusted gross income with tax deductions/credits and because it's based on the prior year's income

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JenDarby
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Re: Student loan payments: get advice and actual numbers here

Postby JenDarby » Wed Aug 16, 2017 1:11 pm

Nebby wrote:
Anonymous User wrote:
Johann wrote:anyways to get this thread back on track:

graduated with roughly ~200k of debt >5 years ago
repayment method: PAYE til the grave
total amount of payments: $12,500
current monthly payment: $750
salary: ~200k
owe/balance: $>250k

household stats:
graduated: ~400k
repayment methods: all PAYE
total amount of repayments: (estimate but) ~20k
current monthly payment: $1,500
income: >$300k
owe/balance: $>500k


How is your monthly payment so low on PAYE with a 200k salary? Seems like it should be twice that according to the studentloans.gov calculator.

Reducing adjusted gross income with tax deductions/credits and because it's based on the prior year's income

we've covered this before, but I think it's important because your post is vague enough it sounds more like you are referring to taxable income rather than AGI. There's a ceiling as to what you can do as an individual to reduce your AGI for student loan payment purposes since AGI is only reduced by above the line deductions (i.e.):

Classroom expenses paid for by teachers
Job related moving expenses
Student loan interest and tuition
Deductible retirement account contributions
HSA
Alimony payments.

So it is not reduced by mortgage interest deductions (one of the biggest ones for taxable income purposes for many people), any credits, etc.

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grand inquisitor
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Re: Student loan payments: get advice and actual numbers here

Postby grand inquisitor » Wed Aug 16, 2017 1:17 pm

my biggest source of disappointment in life, after my sex life, is the fact that i can't use mortgage interest deduction to reduce my paye payment.

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Johann
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Re: Student loan payments: get advice and actual numbers here

Postby Johann » Wed Aug 16, 2017 2:04 pm

Anonymous User wrote:
Johann wrote:anyways to get this thread back on track:

graduated with roughly ~200k of debt >5 years ago
repayment method: PAYE til the grave
total amount of payments: $12,500
current monthly payment: $750
salary: ~200k
owe/balance: $>250k

household stats:
graduated: ~400k
repayment methods: all PAYE
total amount of repayments: (estimate but) ~20k
current monthly payment: $1,500
income: >$300k
owe/balance: $>500k


How is your monthly payment so low on PAYE with a 200k salary? Seems like it should be twice that according to the studentloans.gov calculator.

2 person household and max deferred income (401k, HSA)

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Wed Aug 16, 2017 2:31 pm

Anonymous User wrote:So, I have a $45,000 per year scholarship to a t14 (edit: t13, f georgetown) that costs ~60,000 per year. I am a rising 2L. I take out no loans for living expenses as my fiancé is working and we saved money for living expenses before coming to law school. I paid the first semester 1L tuition differential, ~7,500, out of pocket and took out loans on the 7,500 from second semester.

I had a 1L SA in a secondary market, so in my bank account I currently have ~$22,000. My fiancé has ~20,000 in hers. I am now taking out loans at roughly ~15,000 for 2L and probably ~18,000 for 3L. Should I pay off the 7,500 from 1L now or save my money? I have secured a 3,500/wk biglaw SA for 2L. How much of that (I'm living in DC for the next summer) should I expect to actually pocket post expenses? Should I pay off my loans through summer associateships or just save the loans for post grad repayment? Thoughts appreciated.

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Johann
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Re: Student loan payments: get advice and actual numbers here

Postby Johann » Wed Aug 16, 2017 2:44 pm

Anonymous User wrote:
Anonymous User wrote:So, I have a $45,000 per year scholarship to a t14 (edit: t13, f georgetown) that costs ~60,000 per year. I am a rising 2L. I take out no loans for living expenses as my fiancé is working and we saved money for living expenses before coming to law school. I paid the first semester 1L tuition differential, ~7,500, out of pocket and took out loans on the 7,500 from second semester.

I had a 1L SA in a secondary market, so in my bank account I currently have ~$22,000. My fiancé has ~20,000 in hers. I am now taking out loans at roughly ~15,000 for 2L and probably ~18,000 for 3L. Should I pay off the 7,500 from 1L now or save my money? I have secured a 3,500/wk biglaw SA for 2L. How much of that (I'm living in DC for the next summer) should I expect to actually pocket post expenses? Should I pay off my loans through summer associateships or just save the loans for post grad repayment? Thoughts appreciated.

personal decision. if youre looking at 33k of debt and biglaw money, theres no wrong answer really. invest in tax-advantage retirement accounts if you want. buy shit if you want to enjoy your last years of freedom. refi for low rates. pay all the debt down with your savings. doesnt matter. id just invest it/retirement accounts and keep taking the debt prolly.




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