Income Based Repayment

[bokelley]

We are going to go into Income Base Repayment.
I do have a questions though, I will be getting a large sum of money soon from my trust. This is going to go straight in the bank, we are not going to touch it. But will this make a difference on the amount we need to pay. The best I can tell is that for IBR they want tax returns, and the only thing that would show on the tax return would be the intrest. Which should not make a huge difference? Or will they want bank account info.

[MarissaNicole]

This is what I know - but someone correct me if I am wrong.

What you have in savings does not matter except for the interest you accrue (which is considered income).

I would think that if the money from your trust is not considered income for tax purposes, then it would not effect your IBR payments.

Although they look at tax returns for IBR, I think they mainly look BACK at them to confirm your income. For example when we signed up they asked us to show paystubs and income. DH had to send his paystubs in and I had to sign/swear that I did not have a job or income. Around December of this year, you should get the forms for repayments and that is when you submit the stuff for IBR.

(ETA: they never asked us for bank stuff).

Also beware that if you do not send in everything together they just throw it out. I had to send our stuff in at least three times because I assumed that they kept a file, and added things as they got it. Nope they only keep a file on you if you give them everything. This posed a problem as we kept having to re-sign and re-date everything as its only valid for 30 days or less.

[GrayMatterWife]

I could be wrong--I am not a will and trust attorney--but I think that a distribution from a trust generally is not considered income. You said the test is an income, not an income-and-assets based test, right? However, any interest you earn on the distributed trust res will constitute passive income.

[OrionGrad]

Also beware that if you do not send in everything together they just throw it out. I had to send our stuff in at least three times because I assumed that they kept a file, and added things as they got it. Nope they only keep a file on you if you give them everything. This posed a problem as we kept having to re-sign and re-date everything as its only valid for 30 days or less.

This happened to us, too! I think we finally got it right on the third try. It's good to hear we weren't the only ones.

[b.morales99]

Same thing here, we only declare interest as income for tax purposes

[MarissaNicole]

Looks like IBR may be available for those with private loans, and it also looks like they may cap repayment at 10% instead of 15%

Chicago Tribune Article

But check it out yourself as I just skimmed the article.