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So i'm convinced I am missing something here…

The economy sucks, law grads are stuck either unemployed or underemployed with massive amounts of debt, blah blah, nothing new. But with things like IBR, LRAP and PSLF, how can student loan debt be "crushing"?

For example, IBR - even if you're stuck in a position that is paying you a measly $30k/year, IBR caps the monthly payment you have to make. If you're in public service, the debt is discharged in 10 years, and if not, then in 25. So how can law school debt be "crushing"? Isn't the point of IBR to allow individuals with this kind of debt to pay it back based on their gross income, while having some survival money too?

Like I said, I could certainly be misinformed, and if I am, enlighten me! Thanks

magicdonquan wrote:So i'm convinced I am missing something here…

The economy sucks, law grads are stuck either unemployed or underemployed with massive amounts of debt, blah blah, nothing new. But with things like IBR, LRAP and PSLF, how can student loan debt be "crushing"?

For example, IBR - even if you're stuck in a position that is paying you a measly $30k/year, IBR caps the monthly payment you have to make. If you're in public service, the debt is discharged in 10 years, and if not, then in 25. So how can law school debt be "crushing"? Isn't the point of IBR to allow individuals with this kind of debt to pay it back based on their gross income, while having some survival money too?

Like I said, I could certainly be misinformed, and if I am, enlighten me! Thanks

Big assumptions are underlined. And if you're only making $30k/yr after this much school, it's probably a different kind of crushing.

Edit: A good portion of that was snark, but not all of it.

OP, I think you pretty much have it right. I think what people are so worried about is (1) if you are relying on IBR, any regular increase in salary is essentially being cut 15% and (2) keeping that debt around for 10 or 25 years makes it hard to do other things requiring money, like saving, buying a house or car. But yea, you won't starve if you have a job.

If you don't get a public service gig, or can't stay in one for ten years, the forgiven debt at the end of 25 years is taxed as ordinary income. Everyone hopes to have things paid off by then, but if you can barely pay off the interest while on IBR, the massive tax hit at the end of the rainbow would be crushing.

Student loans are an area of concern to the CFPB, which is seeking consumer comment on student loans and student debt. Americans now hold more school loan debt than credit card debt. Resource for this article: CFPB wants input on student loans as student debt swells.

This is the most reasoned thread on this topic I've seen here at TLS.

I think that another source of the "crushing misery" feeling is that after giving up three years (more or less) of income and in pursuit of a different career, you will likely start out making less in your first job than you would have made had you not gone to law school at all. Money certainly isn't everything. I've spent most of my adult life practicing law and I've enjoyed it far and away more than I've regretted it. But when the math finally works itself out so badly for the new lawyer and there is no escape from the situation he put himself in through his own effort and ambition, not even enjoying being lazy but WORKING to be stuck forever, that stings.

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Sure, if your life goes perfectly with no unexpected events or major changes, student debt can be manageable and not-crushing, as it were.

But if you are planning on any major life changes (starting a family, buying a house, starting your own business), have previous debt (from undergrad, another grad program, or credit card debt), or are faced with a tragedy you did not anticipate (death of a loved one, medical emergency, family issues, etc.) the debt can absolutely be crushing. Who wants to take that chance?

Aren't the above mentioned programs only applicable to federal loans? People with private loans would not benefit from salary correlated monthly payments or debt forgiveness, if it is only applied to fed loans, so the debt could very well be "crushing" for some people.

I can barely even begin to choke out my contempt for OP's idiocy.

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If you go to a T14 law school I don't think there is anything wrong with a person if they feel jaded taking home $20 thousand a year.

MTal wrote:I can barely even begin to choke out my contempt for OP's idiocy.

lol'd.

anyone ever tell you that you should write a book?

Don't forget with IBR, the forgiven debt is income that year. Prepare for a huge tax bill.

blowhard wrote:Don't forget with IBR, the forgiven debt is income that year. Prepare for a huge tax bill.

blowhard wrote:Don't forget with IBR, the forgiven debt is income that year. Prepare for a huge tax bill.

Not with public interest IBR. Check out IRC Section 108(f)(1).

nealric wrote:

blowhard wrote:Don't forget with IBR, the forgiven debt is income that year. Prepare for a huge tax bill.

blowhard wrote:Don't forget with IBR, the forgiven debt is income that year. Prepare for a huge tax bill.

Not with public interest IBR. Check out IRC Section 108(f)(1).

Yes, not with PSLF but OP addressed both timetables. That's also not really part of IBR. It's a separate program.

nealric wrote:

blowhard wrote:Don't forget with IBR, the forgiven debt is income that year. Prepare for a huge tax bill.

blowhard wrote:Don't forget with IBR, the forgiven debt is income that year. Prepare for a huge tax bill.

Not with public interest IBR. Check out IRC Section 108(f)(1).

OOOOOOH

I actually did not realize that. Epicwin.

blowhard wrote:Don't forget with IBR, the forgiven debt is income that year. Prepare for a huge tax bill.

Prepare to get AMTed. I have heard some serious horror stories from people who got pushed into that upper bracket by "income" they didn't realize they had.

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I am reviving this because I think the OP is mostly right. It might suck to only earn 30k after a JD. However, that is irrelevànt to the amount of debt. What sucks about the debt is that it is hanging there. The tax hit at the end is really bad, so that is a big deal if you have huge debt at the end of 25 years.

But if you don't have to pay much or have to pay nothing for years, and you won't be in default that provides little incentive not to.take out massive loans. The loans are separate from the problems of having a low paying job.

katjust wrote:I am reviving this because I think the OP is mostly right. It might suck to only earn 30k after a JD. However, that is irrelevànt to the amount of debt. What sucks about the debt is that it is hanging there. The tax hit at the end is really bad, so that is a big deal if you have huge debt at the end of 25 years.

But if you don't have to pay much or have to pay nothing for years, and you won't be in default that provides little incentive not to.take out massive loans. The loans are separate from the problems of having a low paying job.

Not sure if serious. If you think spending 25 years on IBR with a 6 figure debt on your back is no problem, then go ahead and do what you want. I hope you never need good credit for anything. I think you are digging yourself into a hole that you will spend most of your working life to get out of. I don't think that law school is worth it. You will be much better off going into a career where you don't have to go so far in debt.

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