Student loan payments: Actual numbers

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bk1
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Re: Student loan payments: Actual numbers

Postby bk1 » Sat Jul 23, 2016 11:48 am


zot1
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Re: Student loan payments: Actual numbers

Postby zot1 » Sat Jul 23, 2016 11:50 am

That would be awesome.

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Br3v
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Re: Student loan payments: Actual numbers

Postby Br3v » Sat Jul 23, 2016 2:50 pm



To dumb this down for me, this basically means getting rid of the tax bomb right?

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Nebby
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Re: Student loan payments: Actual numbers

Postby Nebby » Sat Jul 23, 2016 3:01 pm

Br3v wrote:


To dumb this down for me, this basically means getting rid of the tax bomb right?

Yes

Somewhere Johann has already downed a bottle of Fireball and is ready to hit the casino

BigLawer
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Re: Student loan payments: Actual numbers

Postby BigLawer » Sat Jul 23, 2016 8:01 pm

Nebby wrote:
Br3v wrote:


To dumb this down for me, this basically means getting rid of the tax bomb right?

Yes

Somewhere Johann has already downed a bottle of Fireball and is ready to hit the casino


Dang it, I already did the refi thing. I need the fireball bottle too please.

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star fox
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Re: Student loan payments: Actual numbers

Postby star fox » Sat Jul 23, 2016 8:46 pm

I see it as extremely unlikely that somebody with a $50k income is going to have to pay a tax bomb as though they received $175k in special income.

ballouttacontrol
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Re: Student loan payments: Actual numbers

Postby ballouttacontrol » Sat Jul 23, 2016 11:09 pm

I'd bet everything i own that the tax bomb is a non issue.

The whining would be astronomical once it comes time and would basically force a chapter 7/13 bankruptcy for most people

And if the IRS actually used their powers to collect, you'd frankly be worse off having the balance forgiven and it'd be better just to stick on payment plans for life

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Kratos
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Re: Student loan payments: Actual numbers

Postby Kratos » Sun Jul 24, 2016 12:07 am


this would be pretty tight

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bk1
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Re: Student loan payments: Actual numbers

Postby bk1 » Mon Jul 25, 2016 3:05 am

BigLawer wrote:Dang it, I already did the refi thing. I need the fireball bottle too please.

Amen.

ballouttacontrol wrote:I'd bet everything i own that the tax bomb is a non issue.

The whining would be astronomical once it comes time and would basically force a chapter 7/13 bankruptcy for most people

And if the IRS actually used their powers to collect, you'd frankly be worse off having the balance forgiven and it'd be better just to stick on payment plans for life

I dunno, I think the solvency rules for cancelled debt make it not that big a deal for people at risk of bankruptcy.

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Re: Student loan payments: Actual numbers

Postby ballouttacontrol » Mon Jul 25, 2016 4:22 am

bk1 wrote:
BigLawer wrote:Dang it, I already did the refi thing. I need the fireball bottle too please.

Amen.

ballouttacontrol wrote:I'd bet everything i own that the tax bomb is a non issue.

The whining would be astronomical once it comes time and would basically force a chapter 7/13 bankruptcy for most people

And if the IRS actually used their powers to collect, you'd frankly be worse off having the balance forgiven and it'd be better just to stick on payment plans for life

I dunno, I think the solvency rules for cancelled debt make it not that big a deal for people at risk of bankruptcy.


Assuming you're making a somewhat ok income, it'd still be 5 years of having zero discretionary income after you file your bankruptcy, through the chapter 13 plan. You need to have a pretty low income to (nonfraudulently) qualify for a ch7. Somewhere around 70-80k or so household income for a family of 3 or 4 to pass the means test. Plus the complete destruction of your credit.

Yea bk filling is not the worst thing in the world, u can key all your assets likely....but still no wayyyy Congress allows the zillions of people with student loan debt to go have to go through that

The Greyest Goose
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Re: Student loan payments: Actual numbers

Postby The Greyest Goose » Mon Jul 25, 2016 8:21 am

ballouttacontrol wrote:I'd bet everything i own that the tax bomb is a non issue.

The whining would be astronomical once it comes time and would basically force a chapter 7/13 bankruptcy for most people

And if the IRS actually used their powers to collect, you'd frankly be worse off having the balance forgiven and it'd be better just to stick on payment plans for life


Exactly. No way the Tax-bomb survives and I bet eliminating it is just the first of a number of measures that will only make fed loans more and more attractive relative to the private market.

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Re: Student loan payments: Actual numbers

Postby JenDarby » Mon Jul 25, 2016 8:47 am

I've played around with student loans calculators and I can't find a scenario where I would have meaningful/beneficial loan forgiveness, beyond actual unemployment.

If I put my AGI at 80k (much lower than I anticipate being able to get it) it has me paying 220k total (my loan balance is 155k) with 131k forgiven on PAYE. To pay less than my current total loan balance I need my AGI to drop down to around 60k at which point I'm paying 154k total with 200k forgiven.

For those with biglaw or other high salaries, once you get past the period where you're skating by on stub year income for qualification, isn't your PAYE payment fairly close (depending on your loans, of course) to pay off levels anyways?

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Re: Student loan payments: Actual numbers

Postby The Greyest Goose » Mon Jul 25, 2016 9:02 am

JenDarby wrote:I've played around with student loans calculators and I can't find a scenario where I would have meaningful/beneficial loan forgiveness, beyond actual unemployment.

If I put my AGI at 80k (much lower than I anticipate being able to get it) it has me paying 220k total (my loan balance is 155k) with 131k forgiven on PAYE. To pay less than my current total loan balance I need my AGI to drop down to around 60k at which point I'm paying 154k total with 200k forgiven.

For those with biglaw or other high salaries, once you get past the period where you're skating by on stub year income for qualification, isn't your PAYE payment fairly close (depending on your loans, of course) to pay off levels anyways?


Yes, it will be. Getting rid of the tax bomb will really only help if you move to a career with an income low enough that taking the forgiveness route makes sense. But keep in mind with inflation, 220,000 in 20 years is about 150,000 today. Riding out PAYE still won't make most biglaw associates come out ahead but it does tip the scale further in favor of Fed loans.

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El Pollito
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Re: Student loan payments: Actual numbers

Postby El Pollito » Mon Jul 25, 2016 10:40 am

thanks to whoever recommended repaye. month 4 and they haven't figured it out and they misallocated my 10-year plan payment so the repaye request was denied on non-payment grounds. THANKS

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El Pollito
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Re: Student loan payments: Actual numbers

Postby El Pollito » Mon Jul 25, 2016 10:53 am

ahahahaha they want me to reapply and try this again because some fucker on their end fucked up

LOLOLOLOL

fuck you whoever recommended repaye

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bk1
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Re: Student loan payments: Actual numbers

Postby bk1 » Mon Jul 25, 2016 12:47 pm

JenDarby wrote:I've played around with student loans calculators and I can't find a scenario where I would have meaningful/beneficial loan forgiveness, beyond actual unemployment.

If I put my AGI at 80k (much lower than I anticipate being able to get it) it has me paying 220k total (my loan balance is 155k) with 131k forgiven on PAYE. To pay less than my current total loan balance I need my AGI to drop down to around 60k at which point I'm paying 154k total with 200k forgiven.

For those with biglaw or other high salaries, once you get past the period where you're skating by on stub year income for qualification, isn't your PAYE payment fairly close (depending on your loans, of course) to pay off levels anyways?

I think it's not as beneficial on debt that low. With debt in the quarter mill range you make more off of the interest subsidy. Plus you can max out your 401k easily because it reduces your AGI.

It's also a hedge against uncertainty (losing job or taking a much lower paying job than you expect).

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bk1
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Re: Student loan payments: Actual numbers

Postby bk1 » Mon Jul 25, 2016 12:48 pm

ballouttacontrol wrote:Assuming you're making a somewhat ok income, it'd still be 5 years of having zero discretionary income after you file your bankruptcy, through the chapter 13 plan. You need to have a pretty low income to (nonfraudulently) qualify for a ch7. Somewhere around 70-80k or so household income for a family of 3 or 4 to pass the means test. Plus the complete destruction of your credit.

Yea bk filling is not the worst thing in the world, u can key all your assets likely....but still no wayyyy Congress allows the zillions of people with student loan debt to go have to go through that

I'm saying that if those people don't have a ton of assets (which seems likely to me), they could probably avoid bankruptcy in the first place (because of the insolvency rules).

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Re: Student loan payments: Actual numbers

Postby ballouttacontrol » Mon Jul 25, 2016 3:07 pm

bk1 wrote:
ballouttacontrol wrote:Assuming you're making a somewhat ok income, it'd still be 5 years of having zero discretionary income after you file your bankruptcy, through the chapter 13 plan. You need to have a pretty low income to (nonfraudulently) qualify for a ch7. Somewhere around 70-80k or so household income for a family of 3 or 4 to pass the means test. Plus the complete destruction of your credit.

Yea bk filling is not the worst thing in the world, u can key all your assets likely....but still no wayyyy Congress allows the zillions of people with student loan debt to go have to go through that

I'm saying that if those people don't have a ton of assets (which seems likely to me), they could probably avoid bankruptcy in the first place (because of the insolvency rules).


Ah gotcha

JenDarby wrote:I've played around with student loans calculators and I can't find a scenario where I would have meaningful/beneficial loan forgiveness, beyond actual unemployment.

If I put my AGI at 80k (much lower than I anticipate being able to get it) it has me paying 220k total (my loan balance is 155k) with 131k forgiven on PAYE. To pay less than my current total loan balance I need my AGI to drop down to around 60k at which point I'm paying 154k total with 200k forgiven.

For those with biglaw or other high salaries, once you get past the period where you're skating by on stub year income for qualification, isn't your PAYE payment fairly close (depending on your loans, of course) to pay off levels anyways?


First, you seem to be comparing PAYE to a 0% interest free loan.

Even if not, using your numbers, you probably come out ahead on PAYE. If you use a 4% annual return on your money, the net present value of 25 yearly payments (for simplicity of math, but it wouldn't differ a lot breaking it down monthly) of $8,800 is approximately $142,973. So, in present day dollars, you pay about $12k less using your PAYE number versus if you paid the loan balance off today in 100% cash for $155k.

If your interest rate on a Refi or the 5 or 10 yr plan or whatever is above 4%, the above difference only grows.

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Re: Student loan payments: Actual numbers

Postby JenDarby » Mon Jul 25, 2016 3:13 pm

ballouttacontrol wrote:First, you seem to be comparing PAYE to a 0% interest free loan.

Even if not, using your numbers, you probably come out ahead on PAYE. If you use a 4% annual return on your money, the net present value of 25 yearly payments (for simplicity of math, but it wouldn't differ a lot breaking it down monthly) of $8,800 is approximately $142,973. So, in present day dollars, you pay about $12k less using your PAYE number versus if you paid the loan balance off today in 100% cash for $155k.

If your interest rate on a Refi or the 5 or 10 yr plan or whatever is above 4%, the above difference only grows.

I made no such comparison. I just stated what I would pay on PAYE if I had not refinanced my loans with some basic assumptions, including making significantly less than I currently make.

My refi will be 2.95% fixed for 10 years after doing 1.5 years of 4.1% variable (my loans were at an average 7.2% interest rate before refi).

My monthly payments on PAYE would likely get pretty close to my 10 year repayment plan payments. There really would be little benefit on PAYE unless I manage to become unemployed or make significantly less than I currently do by my mid 30s and need federal protections.

As to the bolded, no one is advocating paying down loans immediately as an alternative to PAYE.

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Re: Student loan payments: Actual numbers

Postby ballouttacontrol » Mon Jul 25, 2016 3:40 pm

JenDarby wrote:
ballouttacontrol wrote:First, you seem to be comparing PAYE to a 0% interest free loan.

Even if not, using your numbers, you probably come out ahead on PAYE. If you use a 4% annual return on your money, the net present value of 25 yearly payments (for simplicity of math, but it wouldn't differ a lot breaking it down monthly) of $8,800 is approximately $142,973. So, in present day dollars, you pay about $12k less using your PAYE number versus if you paid the loan balance off today in 100% cash for $155k.

If your interest rate on a Refi or the 5 or 10 yr plan or whatever is above 4%, the above difference only grows.

I made no such comparison. I just stated what I would pay on PAYE if I had not refinanced my loans with some basic assumptions, including making significantly less than I currently make.

My refi will be 2.95% fixed for 10 years after doing 1.5 years of 4.1% variable (my loans were at an average 7.2% interest rate before refi).

My monthly payments on PAYE would likely get pretty close to my 10 year repayment plan payments. There really would be little benefit on PAYE unless I manage to become unemployed or make significantly less than I currently do by my mid 30s and need federal protections.

As to the bolded, no one is advocating paying down loans immediately as an alternative to PAYE.


k. i was just responding to how you are talking as if paying $100k over 10 years and 100k over 25 years are equivalent. idc if it validates your own loan.

$1 now is worth more than $1 in 10 years, and is worth almost triple what it will be in 25 years.

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JenDarby
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Re: Student loan payments: Actual numbers

Postby JenDarby » Mon Jul 25, 2016 3:41 pm

ballouttacontrol wrote:
JenDarby wrote:
ballouttacontrol wrote:First, you seem to be comparing PAYE to a 0% interest free loan.

Even if not, using your numbers, you probably come out ahead on PAYE. If you use a 4% annual return on your money, the net present value of 25 yearly payments (for simplicity of math, but it wouldn't differ a lot breaking it down monthly) of $8,800 is approximately $142,973. So, in present day dollars, you pay about $12k less using your PAYE number versus if you paid the loan balance off today in 100% cash for $155k.

If your interest rate on a Refi or the 5 or 10 yr plan or whatever is above 4%, the above difference only grows.

I made no such comparison. I just stated what I would pay on PAYE if I had not refinanced my loans with some basic assumptions, including making significantly less than I currently make.

My refi will be 2.95% fixed for 10 years after doing 1.5 years of 4.1% variable (my loans were at an average 7.2% interest rate before refi).

My monthly payments on PAYE would likely get pretty close to my 10 year repayment plan payments. There really would be little benefit on PAYE unless I manage to become unemployed or make significantly less than I currently do by my mid 30s and need federal protections.

As to the bolded, no one is advocating paying down loans immediately as an alternative to PAYE.


k. i was just responding to how you are talking as if paying $100k over 10 years and 100k over 25 years are equivalent. idc if it validates your own loan.

$1 now is worth more than $1 in 10 years, and is worth almost triple what it will be in 25 years.

Nowhere did I come close to making that incorrect statement.

ballouttacontrol
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Re: Student loan payments: Actual numbers

Postby ballouttacontrol » Mon Jul 25, 2016 3:41 pm

ite

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JenDarby
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Re: Student loan payments: Actual numbers

Postby JenDarby » Mon Jul 25, 2016 4:00 pm

Johann, don't let this guy become the face of the PAYE party.

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El Pollito
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Re: Student loan payments: Actual numbers

Postby El Pollito » Mon Jul 25, 2016 4:30 pm

El Pollito wrote:ahahahaha they want me to reapply and try this again because some fucker on their end fucked up

LOLOLOLOL

fuck you whoever recommended repaye

just in case anyone cares the result is

1. yes we fucked up

2. yes we cost you thousands of dollars

3. no we can't fix it

4. you can reapply and be in forbearance for months

5. or how about we put you back on your original repayment plan?

i hope someone sues these fucks

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JenDarby
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Re: Student loan payments: Actual numbers

Postby JenDarby » Mon Jul 25, 2016 4:48 pm

^ that's ridiculous. My interactions with my fed loans servicer were always terrible. I wasted hours resolving things that shouldn't have been an issue to begin with

incidental pro to refinancing: IME customer service has been wonderful since they actually want your money and hire competent people to help you




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