after law school-->IBR question

(Please Ask Questions and Answer Questions)
Tarheel1234
Posts: 22
Joined: Fri Mar 02, 2012 1:31 pm

after law school-->IBR question

Postby Tarheel1234 » Fri May 25, 2012 1:54 pm

If you have high debt coming out of law school and as long as you land a job, you can apply for IBR (income based repayment) and be ok, right? What am I missing here. I understand too that you actually have to land a job and that is not a given. Please educate me.

-pay back loans under IBR policy
-loans forgiven after 25 years of IBR repayment

User avatar
splitbrain
Posts: 656
Joined: Tue Nov 29, 2011 11:38 pm

Re: after law school-->IBR question

Postby splitbrain » Fri May 25, 2012 3:11 pm

It'll save you in terms of cashflow, absolutely, but not interest expense.

You end up paying a significant more amount of interest over 20/25 years than you would if you paid off your loans in 10 years. Additionally, you are taxed on any amount you are forgiven. Basically, consider it a safety parachute you pull when you realize you'd be screwed any other way. However, like a safety parachute, you don't want to jump into things relying SOLELY on this...it's just a bad idea. Still nice to know it's there, I guess...

Image

User avatar
Tiago Splitter
Posts: 15515
Joined: Tue Jun 28, 2011 1:20 am

Re: after law school-->IBR question

Postby Tiago Splitter » Fri May 25, 2012 3:35 pm

Tarheel1234 wrote:If you have high debt coming out of law school and as long as you land a job, you can apply for IBR (income based repayment) and be ok, right? What am I missing here. I understand too that you actually have to land a job and that is not a given. Please educate me.

-pay back loans under IBR policy
-loans forgiven after 25 years of IBR repayment


It's now 20 years, and the forgiven debt, as far as we know, will be considered taxable income.

duckmoney
Posts: 886
Joined: Sun Jun 13, 2010 2:21 pm

Re: after law school-->IBR question

Postby duckmoney » Fri May 25, 2012 3:58 pm

Yes, paying 10 - 15% of your income for the next 20 - 25 years is better than defaulting, but its not nearly as good as being able to pay off the loans and stop the interest from accruing.




Return to “Law School FAQ”

Who is online

Users browsing this forum: Aquinas, Google Adsense [Bot] and 1 guest