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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'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...

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.

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.