Why are people complaining about crushing debt when there's IBR?

[cormy3]

<p>Man, I am really clueless about this financial stuff. But the more I read, the happier I’m getting.</p>

<p>So far my research says you all are wrong in the points that lead to your cynicism. I took all your points very seriously, and looked into them further. Please prove me wrong, please. This sounds too good to be true. I know I probably sound really light headed and naive, but this really opens a lot of options for me.</p>

<p>

Government loans add up to about $20,000 a year at most. Cost of attending a law school is something like $55,000 a year. So government loans are less than half of the cost.

</p>

<p>That would be true if you were talking about just the Stafford loan. But according to [IBRinfo</a> :: Can they help me?](<a href=“http://www.ibrinfo.org/can.vp.html]IBRinfo”>http://www.ibrinfo.org/can.vp.html), Grad Plus loans are included in the IBR program. The Grad Plus loan is offered basically to any graduate school regardless of their family’s financial situation. Furthermore, it is offered with no borrowing limit other than the cost of attendance of the school minus whatever other financial aid the borrower has received. That means for law school, loans that qualify for IBR can meet all your needs, including costs of living and whatever. There is NO need to get private loans, hence none of your loans will not qualify for IBR, hence this sweet sweet deal whose contents I will talk more about below will save your WHOLE debtor life. (Obviously my certainty is exaggerated given how shallow my research has been, this is just a challenge to show me up, please.)</p>

<p>

This might be true if you never land a job that earns in the ballpark of what most lawyers want to make and feel like they should make. In some cases the first three years of extra interest may be forgiven, but after that you will still owe any additional interest for the next 25 years. Even if you are still in the program that interest will continue to accumulate and it will still be listed on your credit report as an outstanding debt. This will severely impact ones attempts to land other types of credit during that 25 year period.

</p>

<p>First of all, refer here about the credit stuff: [IBRinfo</a> :: Frequently Asked Questions](<a href=“http://www.ibrinfo.org/faq.vp.html#_credit]IBRinfo”>http://www.ibrinfo.org/faq.vp.html#_credit). As long as you make your IBR-based payments, credit score ratings will only reflect the fact that you are making your payments. There is nothing released to them about the payments being somehow “reduced.” You will be just as good as anyone else who makes their loan payments on time, in fact better, because there is a much better chance that you WILL make those payments on time.</p>

<p>Secondly, refer back to that same link with the FAQ, you are free at any time to contribute more to paying off your loan than your IBR terms require you to. So nothing is stopping you, if you have the means, from making the same larger payments that you would have made if you didn’t have IBR. The key point is that if you DON’T have the means, IBR is there to save your life.</p>

<p>So no, you will not be paying more in the long-term unless having IBR there makes you a spendthrift and pay the minimum payment even though you have the means and would have paid more with the tougher terms of a non-IBR loan. Such a person could hardly complain because that’s their own damn fault for doing so. In any case, given the utter doomsday portrayed in other threads, about post-law school employment prospects, there IS a high chance of finding a job that you call not in the ballpark of what lawyers want to make. Law school is criticized as being dangerous specifically for the short-term catastrophe of having crushing debt payments during the first few years of one’s careers. This IBR program at the very least negates that. In summary, there is no REAL downside. Perhaps a psychological downside of you being lazier with your debt payments; but the very real upside of not being crushed right out of law school is far, far greater.</p>

<p>Oh and for non-public employees, starting in 2014 you need 20, not 25, years of payment before remaining loans and interest are forgiven.</p>

<p>

The jobs that offer the 10 year public service option only covers a narrow range of positions. There are plenty of low paying legal jobs that are not in this program. Also, if you have to choose a specific job just because of the potential for a loan forgiveness program, as opposed to having the freedom to do what one wants to do, I fail to see how one “wins.”

</p>

<p>Jesus, no one is choosing the type of career based on the terms of this program. I said IF one were to go into public service, there is a layer of sweet goodness on top of an already well-layered cake. </p>

<p>

If you land a higher paying position you’ll fall out of the IBR program and be expected to make payments on this, now larger, debt. In this situation one will almost certainly pay more than they would have paid if they made full payments from the beginning.

</p>

<p>If you read what I post above, even if IBR is cancelled, had you been working hard to pay off your loans, your situation should be no different than if you had never done IBR in the first place. Again, it doesn’t hurt you.</p>

<p>But what are the chances that you disqualify for IBR? I did some sloppy approximating in the IBR qualification calculator, [IBRinfo</a> :: IBR Calculator](<a href=“http://www.ibrinfo.org/calculator.php]IBRinfo”>http://www.ibrinfo.org/calculator.php), and it looks like for a loan amount of $200k, you would need an income over $200k to disqualify for IBR. That’s a hard thing to do, man.</p>

<p>

A student loan is still an loan and an unsecured one at that. It shows up on your credit report just like any other loan as would the fact that you’re not able to repay it at the full monthly amount.

</p>

<p>Read above about IBR not harming one’s credit report. In fact your reduced payments do show up as repaying “the full monthly amount.”</p>