Loan Repayment Help Forum
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bmax
- Posts: 5
- Joined: Fri Aug 28, 2015 3:20 pm
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jrass
- Posts: 343
- Joined: Fri Dec 18, 2015 9:28 pm
Re: Loan Repayment Help
In terms of actually money paid towards your loans, given your debt load and interest rate, you would pay less under PAYE assuming you average under 200k income for the next 20 years. I don't know the particulars of any 96 month plan, but you're currently paying over 12k a year in interest alone. You could likely refinance the loan at a lower rate. I'd probably do that.
The thing with PAYE is for it to make economic sense, you really can't cut too far into the principal and forgiven debt is treated as income by the IRS so in 20 years you may be f'd if you're on the hook for a $400k tax bill when you've only made $150k. This is further complicated by how inheriting your parents' firm will be treated. If inheriting the firm is treated as income your monthly payments could be very high once you leave big law (as it will be based on your salary from the year you left, AND the fair value of the firm you inherit).
In general, I favor PAYE because $1 is worth more to most people making under 100k than it is to most people making over 300k, and I'm confident that politicians in 20 years from now will forgive these tax debts to get our generation's votes.
The thing with PAYE is for it to make economic sense, you really can't cut too far into the principal and forgiven debt is treated as income by the IRS so in 20 years you may be f'd if you're on the hook for a $400k tax bill when you've only made $150k. This is further complicated by how inheriting your parents' firm will be treated. If inheriting the firm is treated as income your monthly payments could be very high once you leave big law (as it will be based on your salary from the year you left, AND the fair value of the firm you inherit).
In general, I favor PAYE because $1 is worth more to most people making under 100k than it is to most people making over 300k, and I'm confident that politicians in 20 years from now will forgive these tax debts to get our generation's votes.
