Capping loan repayments

[MarissaNicole]

So as many of you may know there is IBR - which limits loan repayment to 15% of income.

I am not sure how this is going to work but it looks like the President is looking to cap student loan payments to 10% of income in certain classes.

Chicago Tribune

I'm not sure if this could benefit any of us or not?

[Pollyanna]

So as many of you may know there is IBR - which limits loan repayment to 15% of income.

I am not sure how this is going to work but it looks like the President is looking to cap student loan payments to 10% of income in certain classes.

Chicago Tribune

I'm not sure if this could benefit any of us or not?

Somehow I doubt dawkters will fall into this category. We will fall into the category of "tax the hell out of those "rich" doctors"...

[moonlight]

This year IBR loves us because we made so little last year. I'm really scarred of what our payments might be next year.

Does anyone have ubber high IBR payments this year?

[MarissaNicole]

Somehow I doubt dawkters will fall into this category. We will fall into the category of "tax the hell out of those "rich" doctors"...

Ofcourse... but during residency we may fall into this category?

[Vanquisher]

We deferred and forbeared our way through residency. Good times.

My student loans from college are in forbearance. They called to tell me that I have accrued over $2000 in interest since my loans were taken out. Chump change. I still can't pay it, dude. I told them our income for 2009, and now I am going into income based repayment at $0 a month.

We qualify for the Earned Income Credit this year. Wooohoooo. Can't wait to do my taxes this year. Next year? Not so much.

[poky]

Somehow I doubt dawkters will fall into this category. We will fall into the category of "tax the hell out of those "rich" doctors"...

Uh...maybe I'm missing something, but what does student loan repayment have to do with taxes?

[PrincessFiona]

Re: Capping loan repayments

Well maybe I'm missing something but won't this ultimately result in people paying more interest over a longer period of time?

Is this paytillyoudieonomics?


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[MarissaNicole]

Well maybe I'm missing something but won't this ultimately result in people paying more interest over a longer period of time?

Is this paytillyoudieonomics?


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The program would be beneficial to people in residency who would normally not be able to enter repayment because they couldn't meet the monthly payment, so the 10% would help them pay some interest while in residency because they would be aquiring interest in deferrment anyways.

Taken from the IBR website: • INTEREST PAYMENT BENEFIT - If your monthly IBR payment does not cover the monthly interest that accrues on the loans, the government will pay your unpaid interest on Subsidized Stafford Loans (either Direct Loan or FFEL) for up to three consecutive years from when you first enter IBR repayment. After three years, and for all the other types of loans, interest that accrues will be capitalized (added to the loan principal on which future interest is calculated) when the borrower no longer is eligible for an IBR repayment amount.

And for those in other professions where their income may never peak/spike like a doctors, their loan gets forgiven after 20 years as long as they paid the certain percentage of their income over that period (good news for people like social workers and teachers).

[Vishenka69]

I'm a bit confused as to what exactly is being capped. Annual payments not to exceed 10% of gross income? We never fell into that category but I guess we have less loans than average.

[MarissaNicole]

I'm a bit confused as to what exactly is being capped. Annual payments not to exceed 10% of gross income? We never fell into that category but I guess we have less loans than average.

Yes but it is a special program that just started summer of 2009. The current program caps your payments at 15% of your income. But I think the President is trying to lower the payments to 10% of income.

Explains payments here (it is also based on family size) So if you only make $40,000 a year, you only have to pay $297 a month.

[Bittersweet]

Does anyone have ubber high IBR payments this year?

Me! Thanks to a giant, huge, ugly lender mess up, we are paying four figures per month for Dh's loans. Our situation seems to be an anomaly, though (lucky us ). Just watch those statements closely.

[moonlight]

Uh...maybe I'm missing something, but what does student loan repayment have to do with taxes?

Knowing you, I'm sure you've already looked this up... but payments (IBR) is based on your reported income taxes from the previous year. The first of residency our payments are $0, but next year we are 'concerned' because our income has increased in 2010 compared to 2009.

[moonlight]

Well maybe I'm missing something but won't this ultimately result in people paying more interest over a longer period of time?

Is this paytillyoudieonomics?


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It depends. If you have locked in loans by consolidating in years past (and that option is no longer available) and the interest rate is lower than current day rates then we (current residents) lose. Our students loans that have lower rates than what was offered with previous consolidation do better. And as long as the economy sucks then rates will stay low and our student loans won't accrue as much interest.

The thing that *hurts* is that we are PGY1. We expected that these med school loans would be "differed" through residency, but once we reached the golden era of residency loan deferments are now gone and we have to pay.

The thing that aggravates me is that they want (from us) a very very small payment compared to what we owe. And where does the money come from to make those payments? My husband's check. And where does that check come from? The government! Very aggravating.

It’s very obvious that who ever comes up with this has no idea what really happens after medical school is over.

[poky]

Knowing you, I'm sure you've already looked this up... but payments (IBR) is based on your reported income taxes from the previous year. The first of residency our payments are $0, but next year we are 'concerned' because our income has increased in 2010 compared to 2009.

I hadn't, actually, and I'm still confused. It's based on taxes paid, not on income? I was asking because Pollyanna made it sound like doctors wouldn't be included in this "cap loan repayment based on income" program, somehow, because of "tax the hell out of the rich dawkters", which didn't make sense to me. How is loan repayment a tax?

[MarissaNicole]

I hadn't, actually, and I'm still confused. It's based on taxes paid, not on income? I was asking because Pollyanna made it sound like doctors wouldn't be included in this "cap loan repayment based on income" program, somehow, because of "tax the hell out of the rich dawkters", which didn't make sense to me. How is loan repayment a tax?

They often look to your prevuious years tax returns to determine your income in order to calculate your payments. So you were right - it is based on income.