Is PAYE open to people in big law? Forum

[Johann]

Doesn't that mean you'll barely be making any payments? I thought you were supposed to tell them you're actual salary of 160

Yes and maybe. What I said is what I plan to do but you might decide to tell them ASAP.

When I recertified for stub year, they asked me 2 questions: current income and for a copy of latest tax return. I told the truth on both and just recertified for like $270 a month.

[Anonymous User]

Doesn't that mean you'll barely be making any payments? I thought you were supposed to tell them you're actual salary of 160

Yes and maybe. What I said is what I plan to do but you might decide to tell them ASAP.

When I recertified for stub year, they asked me 2 questions: current income and for a copy of latest tax return. I told the truth on both and just recertified for like $270 a month.

I didn't know this existed - mind blown. I was making those kinds of payments before law school making 500 a week. I feel like I should tell the other first years about this. One girl mentioned she's been unable to save any money at all, and asked if I had any advice because I'm a cheap son of a bitch. Now I do.

[orangecup]

I certified first time around by submitting paperwork from orientation stating yearly salary of $160k. I think my monthly payments are something like $950 on $180k of loans.

[Anonymous User]

Im about to make my first payment in a few days (160k salary, 240K in debt), payment will be around 1200$ (im under PAYE).

should i/can i make additional payments each month? will it be worthwhile/make sense to? or just ride the wave?

[Anonymous User]

I'm the original OP of the thread, and am going to mold OP's question into mine as I have even more debt - $265k:

I signed up for PAYE because it seemed like you pay less money in the grand scheme of things, and PAYE offers more risk protection in the event our career's don't go as we hope. Humor me through the following 3 short hypos and answer the q's at the end?

1.) I either last in big law or earn a >300k income 10 years out under PAYE. Have the PAYE payments cut into the principle or if I wanted to pay off the loans now would I be at square 1?

2.) My career goes down to the tubes. I either burn out, get let go or am disbarred after another DWI. I take a job as a pizza delivery boy, and only earn $15k a year. I pay nothing on my loans?

3.) I do big law for 3 years then go in house for $90k and have a side income for $30k so $120k total every year for 17 years. At year 20, I owe nothing to PAYE but still have a $100k on loans. Is that $100k forgiven treated like income? So I need to make a lump sum payment for $60k (assuming a 40% tax bracket)? What is this tax lien attached to?

If I arranged my income to only go to my wife's bank accounts, would I be able to file bankruptcy and not lose anything? Conversely, would I be able to give a big charitable donation to bring my income for the year down to -100k or do something to ensure that money doesn't go to the government?

[lacrossebrother]

I'm the original OP of the thread, and am going to mold OP's question into mine as I have even more debt - $265k:

I signed up for PAYE because it seemed like you pay less money in the grand scheme of things, and PAYE offers more risk protection in the event our career's don't go as we hope. Humor me through the following 3 short hypos and answer the q's at the end?

1.) I either last in big law or earn a >300k income 10 years out under PAYE. Have the PAYE payments cut into the principle or if I wanted to pay off the loans now would I be at square 1?
just make an excel sheet and put your salary each year. Most likely, not a big dent. Hopefully you were investing the savings from PAYE into general brokerage.
2.) My career goes down to the tubes. I either burn out, get let go or am disbarred after another DWI. I take a job as a pizza delivery boy, and only earn $15k a year. I pay nothing on my loans?
Correct
3.) I do big law for 3 years then go in house for $90k and have a side income for $30k so $120k total every year for 17 years. At year 20, I owe nothing to PAYE but still have a $100k on loans. Is that $100k forgiven treated like income? So I need to make a lump sum payment for $60k (assuming a 40% tax bracket)? What is this tax lien attached to?
40% times 100k is 40k not 60. If there's nothing to attach it to then you are insolvent though and you don't owe anything.

If I arranged my income to only go to my wife's bank accounts, would I be able to file bankruptcy and not lose anything?
no clue. Seems reckless Conversely, would I be able to give a big charitable donation to bring my income for the year down to -100k or do something to ensure that money doesn't go to the government?
ya it's just a tax. You can have deductions.

[Anonymous User]

PAYE includes undergrad government debt so my debt is actually around 300k, and even if you're a guarantor on government student debt (based on what the rep told me). If you plan ahead, you could really guarantee your whole law school's section's debt and have them all default and be in the same position.