PI + IBR: Does Debt Still Matter? Forum

[JOThompson]

Many TLS posters suggest minimizing debt for PI/govt careers. Others feel that it's best to attend the top schools you're accepted to and then utilize IBR. How does this advice vary with the prestige of desired PI jobs? For me, it'd either be Iowa $$$ or maybe Vandy at sticker. What do you recommend?

[KG_CalGuy]

Federal IBR programs require you to commit the whole 10 years for loan forgiveness. If you aren't sure you can do that, it may be best to minimize your debt. For a school-sponsored LRAP it varies.

[beach_terror]

This may be a little too specific, but do you know if you are limited to 1 payment a month for a 10 years? Would it be possible to make multiple qualifying payments in a month to expedite the process...or is that undermining the point.

[Geist13]

This may be a little too specific, but do you know if you are limited to 1 payment a month for a 10 years? Would it be possible to make multiple qualifying payments in a month to expedite the process...or is that undermining the point.

The point of the ten year stipulation is not to get you to re-pay a specific amount or percentage of your debt. It is to ensure that the program is being used by people who spend a significant part of their career as public servants. It stipulates 120 consecutive monthly payments, which means you need to be making the payments for 10 years.

[beach_terror]

Yeah that's what I figured, just wanted to be sure. Thanks!

[chicago520]

.

[84Sunbird2000]

To add on: I currently think that PI/Gov't will be my final destination. However, in 2023 or 2024, will I still be on the same path? I think it's a bad idea to just bank on what you'll be doing 13 or 14 years from now in order to accrue mind-blowing debt. Sure, the IBR extended-repayment program might make your payments on 200k debt doable from private practice, but it'll also have eaten away at 100s of Ks because of interest.

[09042014]

To add on: I currently think that PI/Gov't will be my final destination. However, in 2023 or 2024, will I still be on the same path? I think it's a bad idea to just bank on what you'll be doing 13 or 14 years from now in order to accrue mind-blowing debt. Sure, the IBR extended-repayment program might make your payments on 200k debt doable from private practice, but it'll also have eaten away at 100s of Ks because of interest.

This is why I think it matters which school you go to.

If we are talking t13 schools, max the shit out of your debt. If you change your mind, you've got decent prospects, and the school name will help with getting a good PI job.

But if you are deciding between UWisconsin, and Loyola Chicago, and Loyola is free, go to Loyola.

[Borhas]

OP, that is my line of thinking. IBR is a good baseline level of debt protection for those dead set on government/PI work, but I also looked at school LRAP as a level of protection not requiring a decade block of work. The biggest risk I see is that for whatever reason I'll want to do something other than PI/government... I don't see that happening, but that's a very subjective factor that must be taken account. My thinking is, that I will maximize my chances of having a fulfilling government/PI career if I plan according to that now... got to make a commitment at some point anyway, right?

What would I recommend? If that's what your plan is go to best school (this means having a good reputation, at a good location, AND it will have lots of access to volunteering opportunities to pad that PI resume.) Debt should still matter though, but I wouldn't make it the overriding factor.

[ram jam]

One must work for the govt. or PI in order to qualify for IBR? I am under the assumption that one can qualify for IBR while working in the private sector, so long as you are in a predetermined income/debt fellatio.

[honestabe84]

This may be a little too specific, but do you know if you are limited to 1 payment a month for a 10 years? Would it be possible to make multiple qualifying payments in a month to expedite the process...or is that undermining the point.

The point of the ten year stipulation is not to get you to re-pay a specific amount or percentage of your debt. It is to ensure that the program is being used by people who spend a significant part of their career as public servants. It stipulates 120 consecutive monthly payments, which means you need to be making the payments for 10 years.

What do you mean?

[BaiAilian2013]

One must work for the govt. or PI in order to qualify for IBR? I am under the assumption that one can qualify for IBR while working in the private sector, so long as you are in a predetermined income/debt fellatio.

Wut? Are you sure you don't mean ratio?

[Thomas Jefferson]

This may be a little too specific, but do you know if you are limited to 1 payment a month for a 10 years? Would it be possible to make multiple qualifying payments in a month to expedite the process...or is that undermining the point.

The point of the ten year stipulation is not to get you to re-pay a specific amount or percentage of your debt. It is to ensure that the program is being used by people who spend a significant part of their career as public servants. It stipulates 120 consecutive monthly payments, which means you need to be making the payments for 10 years.

I'm almost 100% sure that the MONTHLY payments do NOT need to be consecutive.

[ram jam]

One must work for the govt. or PI in order to qualify for IBR? I am under the assumption that one can qualify for IBR while working in the private sector, so long as you are in a predetermined income/debt fellatio.

Wut? Are you sure you don't mean ratio?

No, I do mean ratio. But I feel like I am getting screwed with all of this debt in my future.

[ozarkhack]

It stipulates 120 [strike]consecutive[/strike] monthly payments, which means you need to be making the payments for 10 years.

Not true. If you want, you can dip in and out of public service w/o losing credit for "time served."

And the nice thing about IBR is that if you dip out of PI/govt work, you can still use IBR to keep the lower payments (obviously, though, if you jump into a well-paying job, you might not qualify).

[najumobi]

This may be a little too specific, but do you know if you are limited to 1 payment a month for a 10 years? Would it be possible to make multiple qualifying payments in a month to expedite the process...or is that undermining the point.

The point of the ten year stipulation is not to get you to re-pay a specific amount or percentage of your debt. It is to ensure that the program is being used by people who spend a significant part of their career as public servants. It stipulates 120 consecutive monthly payments, which means you need to be making the payments for 10 years.

consecutive months? do you have a link for that? i thoought all you need is 120 payments....not necessarily consecutive.

[najumobi]

It stipulates 120 [strike]consecutive[/strike] monthly payments, which means you need to be making the payments for 10 years.

Not true. If you want, you can dip in and out of public service w/o losing credit for "time served."

And the nice thing about IBR is that if you dip out of PI/govt work, you can still use IBR to keep the lower payments (obviously, though, if you jump into a well-paying job, you might not qualify).

ok thanks.

[BaiAilian2013]

One must work for the govt. or PI in order to qualify for IBR? I am under the assumption that one can qualify for IBR while working in the private sector, so long as you are in a predetermined income/debt fellatio.

Wut? Are you sure you don't mean ratio?

No, I do mean ratio. But I feel like I am getting screwed with all of this debt in my future.

Wordplay! That makes more sense now.

[mirpanda]

Just to back up the assertion that monthly payments do not have to be consecutive:

http://www.ibrinfo.org/can.vp.html

You may qualify for Public Service Loan Forgiveness if:

You have federal student loans in the Direct Loan program. Covered loans include Stafford, Grad PLUS, or Consolidation loans through the Direct Loan program.

If your federal loans are not in the Direct Loan program, you may be able to switch (see box on the right to find out more).

Your Direct loans originated before or after the loan forgiveness program was created, for either graduate or undergraduate study.

You work full time in an eligible job.

While working in an eligible job, you make qualifying payments for a total of 10 years (120 monthly payments which do not have to be consecutive).

As long as you are in the Direct Loan program, these payments can be made through the Standard (10-year) repayment, Income Contingent
Repayment (ICR), and/or Income Based Repayment (IBR) plans.

You are still working full time in an eligible job and have debt remaining after 120 qualifying payments.

[mirpanda]

One must work for the govt. or PI in order to qualify for IBR? I am under the assumption that one can qualify for IBR while working in the private sector, so long as you are in a predetermined income/debt fellatio.

From http://www.ibrinfo.org/what.vp.html#eligible:

What are eligible jobs?
In most cases, eligibility is based on whether you work for an eligible employer. Your job is eligible if you:

-are employed by any nonprofit, tax-exempt 501(c)(3) organization;

-are employed by the federal government, a state government, local government, or tribal government (this includes the military and public schools and colleges); or

-serve in a full-time AmeriCorps or Peace Corps position.

If you don't meet these criteria, the Department of Education's regulations create a two-part test of other circumstances under which you may still be eligible:

(1) your employer is not "a business organized for profit, a labor union, a partisan political organization, or an organization engaged in religious activities, unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing;"
and,
(2) your employer provides any of the following public services: emergency management; military service; public safety; law enforcement; public interest law services; early childhood education; public service for individuals with disabilities and the elderly; public health; public education; public library services; and school library or other school-based services.

These definitions of eligible jobs reflect the Department of Education's final regulations for PSLF, as posted in the Federal Register on October 23, 2008. http://edocket.access.gpo.gov/2008/pdf/E8-24922.pdf

EDIT: The above is to qualify for the 10 year public service loan forgiveness program associated with IBR. If you are not in public service, you may still qualify for IBR, with loan forgiveness after 25 years, or 20 years if your loans originate after 2014.

[ccs224]

EDIT: The above is to qualify for the 10 year public service loan forgiveness program associated with IBR. If you are not in public service, you may still qualify for IBR, with loan forgiveness after 25 years, or 20 years if your loans originate after 2014.

I thought it was 15 years, not 20-25 for non govt/PI work, but my really cursory glance at the ibrinfo.org FAQ section didn't seem to indicate either. Either way, people should note applies only when your payments are more than 15 percent of whatever you earn above 150% of poverty level, so if you're planning on making a decent wage, but not a large enough one to not worry about loan payments, nor a small enough one to have them take up 15% of your income, then IBR isn't going to be of service.

[garrett09]

just want to comment on one thing OP said: some people *do* say that you should go to the best school possible to do PI, debt be damned. from what i can tell, the thinking here is two-part:
1) good schools tend to have better LRAPs
2) there's a certain segment of PI work/jobs that cares about prestige and brand-namedness as much as BigLaw, and if you want to work there (DOJ, major advocacy nonprofits, etc), it's probably a good idea to go to a prestigious school

if you're not in at a school with a killer LRAP, and you're more interested in being a public defender than legal director of this-or-that organization or someone high up at the DOJ, I think prestige matters a lot less for public interest.

(grain of salt, though. this is from a 0L.)

[mirpanda]

EDIT: The above is to qualify for the 10 year public service loan forgiveness program associated with IBR. If you are not in public service, you may still qualify for IBR, with loan forgiveness after 25 years, or 20 years if your loans originate after 2014.

I thought it was 15 years, not 20-25 for non govt/PI work, but my really cursory glance at the ibrinfo.org FAQ section didn't seem to indicate either. Either way, people should note applies only when your payments are more than 15 percent of whatever you earn above 150% of poverty level, so if you're planning on making a decent wage, but not a large enough one to not worry about loan payments, nor a small enough one to have them take up 15% of your income, then IBR isn't going to be of service.

Here is the info that states 25 years:

http://www.ibrinfo.org/what.vp.html

Income-Based Repayment
Income-Based Repayment (IBR) is a new payment option for federal student loans. It can help borrowers keep their loan payments affordable with payment caps based on their income and family size. For most eligible borrowers, IBR loan payments will be less than 10 percent of their income - and even smaller for borrowers with low earnings. IBR will also forgive remaining debt, if any, after 25 years of qualifying payments.

President Obama signed the Health Care and Education Affordability Reconciliation Act on March 30 (http://www.govtrack.us/congress/bill.xpd?bill=h111-4872) that reduces the payment period from 25 years to 20 years and changes the 15% cap to 10%. However, these changes only apply to loans made to a new borrower that originate after 2014:

SEC. 2213. INCOME-BASED REPAYMENT.
Section 493C (20 U.S.C. 1098e) is amended by adding at the end the following new subsection:
‘(e) Special Terms for New Borrowers on and After July 1, 2014- With respect to any loan made to a new borrower on or after July 1, 2014--
‘(1) subsection (a)(3)(B) shall be applied by substituting ‘10 percent’ for ‘15 percent’; and
‘(2) subsection (b)(7)(B) shall be applied by substituting ‘20 years’ for ‘25 years’.’.

You're correct that you must have a "partial financial hardship" due to the monthly payment on a standard 10 year repayment plan exceeding 15% of your discretionary income in order to qualify for IBR. Here is a calculator to play with to determine eligibility: http://www.ibrinfo.org/calculator.php

According to this, if you qualify for the program and participate, but your income goes up while in IBR, you can't be "kicked out" of the program, but your interest will be capitalized and added to the loan balance if you no longer have a partial financial hardship:

http://www.ibrinfo.org/faq.vp.html#increase

What happens when my income increases while I am in IBR?
Because your IBR payment amount is a percentage of your income, your payments will rise as your income increases. Your lender should reassess this annually, and you should check with them to see if you need to fill out additional paperwork.
If your income increases to the point where you no longer have a partial financial hardship, any unpaid interest that has accumulated would be capitalized, (added to your total loan balance). You can still stay in IBR, and your payments will be capped at the 10-year standard monthly payment on the balance you owed when you first entered repayment on the loan. You will never be "kicked out" of IBR based on your income. Here's a calculator to find out what that 10-year standard payment would be.

Of course, one has to weigh the pros and cons when choosing how to deal with debt, but for those interested in PI/Govt, IBR and LRAP are valuable tools to help you pursue your goals without the crushing burden of debt severely limiting your QOL. Even if you choose to leave PI before the 10 year period is up for a higher paying gig, you can still stay in IBR. However, interest will pile up and many people are definitely not comfortable with carrying debt for so long. In order for IBR to be a viable option outside of PI, you have to take into consideration how much interest you will have to pay over the course of your enrollment in the program and if you want to still be making student loan payments when your kids, which you haven't even spawned yet, are starting college.