Due to some education misadventures I’m not going to discuss here, I have ended up with north of 100k in student loans but do not have the kind of degree that I took the loans out to get, and so I cannot realistically pay them.
If 15% of my reasonably anticipatable income is put into repaying them for the next 25 years, I will end up being forgiven a huge sum of money - essentially I won’t have paid more than about 1/3 of the total balance.
Well, 15% of my income is still a heavy burden. And, they have started offering useful online courses - stuff that is actually not a waste of time - on Udacity for $125 a credit hour. Apparently, if you enroll in an accredited college or university at least half time - 2 courses a semester - such as in Georgia Tech’s online master’s in comput**er science - you get to defer your loans.
Yes, the interest keeps accumulating - but the interest is *already *accumulating faster than I can pay and still have money left over to eat and pay rent. Per the student loan IBR calculator, I won’t have to pay my existing balance if I do student loan IBR, so what difference does it make if the balance goes even higher? It’s just monopoly money if there is no practical way for you to pay it or be forced to pay it.
So my rough plan is : 2 courses a semester, 5 a year, total cost about 2 grand every year. Or I could spend about $12,000 on student loan payments, and the government will make me pay income tax on that $12k, so I actually get more like 18k subtracted from my roughly ~100k income. (I don’t make that right now but things are looking up) That’s a much larger bite.
I don’t see why I can’t just keep doing this until I hit retirement age. There’s a 10 year “public service” version of IBR. Maybe I could, sitting on possibly a hefty sum of money since my earning potential wasn’t crippled by student loan debt, work in a library from age 65 to age 75 to get my 10 years of public service in. (as long as you obey the rules, the Feds are only allowed to garnish your income not your assets) That means that when the loan debt is forgiven (at 8% interest, it would be 1.5 million dollars by then, since I owe 150k now) I wouldn’t owe taxes on the forgiveness…
I guess it depends on what you mean by “working”. Even if this is possible to pull off theoretically, there’s still the practical problem of being a half-time college student continuously for the next 40 years.
I don’t know, my friend, you’re smart enough to graduate college, you’re smart enough to get this loan paid without crippling your abilities to make more money. By the time you’re 65, $1.5m will seem like chump change.
Something about the math here isn’t making sense to me.
$150k of loans at 5% over 15 years will take $1186/mo ($14232/yr) to pay. That’s less than the 15% you’re quoting for the 1st part of the scheme and will only take 15 years. (Cite: the Student Loan Calc on Banknote)
I’m not clear on how you’re thinking paying 15k a year over 25 years is only going to repay around $50k.
Unless you’ve got some obscene interest rate or one of the other assumption numbers is way out of whack, I vote you’re better off paying the loans on a fixed schedule over the next 15-ish years.
Then you’ll be free and clear by the time you’re in your mid-40’s (assuming here).
Yeah, 15k a year is a lot, but if you budget, live, and spend like you’re only making 85k, you’ll be fine.
I read just yesterday that the 15% refers only to disretionary income, which is defined here: Income-Based Repayment - Finaid as the amount by which adjusted gross income exceeds the poverty line. On the one hand, you will pay less, maybe a lot less, than what you think. But it also means that over 25 years you will pay less, maybe a lot less, than the whole loan.
Why not go to an accredited school like Western Governor’s? They not only allow transfer credit, but life credit and CLEPs as well. It seems difficult to believe that with $100k in student loans you don’t have enough credits to complete a useful degree within one six-month period. (about $4,250, I think?) Then, hopefully, you would have the earning potential to live comfortably and maintain your obligations.
What subject matter are your existing credits in? and how many were you awarded?
Wait, IIRC, there is a cap on how much money you can make to qualify for certain repayment plans. Or at least, it is adjusted yearly. I know every year I have to send information (my tax return), and my payments are readjusted based on this.
Trouble is that you must have paid 10 years worth of repayments to get that.
By then I think your $100K will be paid, or you are still sweeping sidewalks, so its
an unlikely plan.
I think he is mixing up requesting forbearance and mandatory forebearance, he’s thinking its easy to get … Requesting forbearance due to enrolling in irrellevant and “not leading directly to a career” (and doing the same thing each year for the next 30 years…) is not likely to work… I think he conflated Mandatory Forbearance , which has different elegibility, with the ability to request forbearance based on on enrollment. Its a judgement call, but buying degrees online won’t get you granted a request for forebearance.
Note: for completeness, here’s the full list of categories you have to be in to request a mandatory forbearance (that is, they don’t judge the rational of enrollment , eg its likelyhood that it leads to a paying job. Well you see they are all linked to having paying jobs… )
You are serving in a medical or dental internship or residency program, and you meet specific requirements.
The total amount you owe each month for all the student loans you received is 20 percent or more of your total monthly gross income (additional conditions apply).
You are serving in a national service position for which you received a national service award.
You are performing teaching service that would qualify for teacher loan forgiveness.
You qualify for partial repayment of your loans under the U.S. Department of Defense Student Loan Repayment Program.
You are a member of the National Guard and have been activated by a governor, but you are not eligible for a military deferment.
Isilder, this is an enrollment deferment, and not a forbearance request, and currently, enrollment-related deferment requests for federal loans are more or less automatically granted and can be requested an unlimited amount of times.
Habeed can follow this plan and avoid paying the loans forever, assuming:
[ul]
[li] The rules on deferment do not change[/li][li] You can always find a school that will accept you for part-time enrollment. [/li][li] You die while enrolled in classes ( I wouldn’t count on being able to get a qualifying job for PSLF as your ticket for avoiding a couple million in debt at retirement)[/li][li] The cost of tuition does not exceed the cost of loan payments[/li][/ul]
The government is going to tax that $12k when you earn it whether you use it to pay for student loans or new shoes, so I’m not sure where the $18k figure is coming from or it’s relevance.
If you do use it to pay for student loans, though, the interest portion of those payments may be tax deductible - so really that $12k costs you less in taxes if you use it to pay a student loan than if you use it for new shoes.
Because it means if I think “oh I make a hundred grad, 12k of that is nothing”. It isn’t - it’s like 1/5 of every dollar I get every single day I work, and it’s for a degree I didn’t get and paid a school that did some things that were fraudulent, but not so blatant I can win against them with the special protection they enjoy in the courts. (TLDR, it’s a state school that enjoys “sovereign immunity” so that even if you establish with overwhelming evidence that the school cheated you/didn’t follow due process, you cannot obtain any relief as the state has decided it will not allow itself to be forced to pay or do anything in compensation for it’s bad actions. Only exceptions to sovereign immunity mainly require the state legislature to write a bill on my behalf specifically, authorizing me to sue)
Per centage of earning, every day, ‘isn’t nothing’, for everyone that ever took out a loan. Which part of ‘repaying this loan, will cost me a percentage of my earnings, EVERYDAY!’ did you not comprehend when you borrowed this money?
If 12% of your income is too much of a sacrifice, to repay your debt, can you share what percent of your income you WOULD feel comfortable applying to your debt?
Also consider that your loan balance will show on your credit report, even if it is in perpetual deferment.
This may or may not affect your credit score, but it will give lenders pause when they see that you have half a million in debt you haven’t paid a red cent on yet and they will be in line behind if you default. You may spend your life having trouble getting car loans or mortgages, or have to pay inflated rates for them.
So years from now, when you have a job with more responsibility and pressure, a family at home, maybe a kid or three who need to go to soccer practice twice a week and games on the weekend, your plan is to continue being a part-time student in perpetuity to avoid paying back money you borrowed?
