Tuesday, February 15, 2011

I.B.R. vs. I Be Po'

I am intrigued by Income Based Repayment and trying to figure out how it stacks up as an actual aid to borrowers, or if it leaves people paying more in the long run.

Correct me if I'm wrong, but this is my understanding of how it works:

They take your loans and info about your income and personal circumstances.  They run everything through a magic machine to determine what your monthly payments are.  Every year, they dig through your earnings and adjust your payments accordingly.  If your monthly payments are computed to be less than what you would pay on interest, the government picks up the difference for the first 3 years of repayment.

However, IF you start making too much money and your computed payments turn out to be more than what you would pay on standard repayment, then you make your payments at the standard repayment level.

If you work in public service and started paying your loans back in 2008, then the remainder of your loans are forgiven after making 10 years' worth of "qualifying payments" either at IBR level or at standard repayment level.  No other repayment plan can be substituted as a qualifying payment. 

If you work in a regular old job, then the balance of your loans is wiped clean after 25 years (if you meet all of their requirements).

Now, the latter one sounds like it would be difficult to actually achieve.  I don't even want to know how much money someone is going to shell out in interest over the course of two decades.  Barring that, let's say that at year 10 of repayment and you had a relatively small loan principal to begin with (about $100,000). And, because you came into the right financial circumstances, you are now paying what you would pay at standard repayment levels.  Does that push up your repayment date?  What I mean is, does the lender calculate your payments based upon the expectation that it will take you 30 years to repay your loan even if you are now paying more? Or, do they say, "based upon your monthly payments, you should have this loan paid off by year 20," which means that you'll never get to the magical 25 year mark?

I point out that it's usually better to pay things off sooner so that you aren't wasting money on unnecessary interest.  However, if the latter is the case, I wonder how many people out there might have been motivated to pay extra every month just to get rid of their student loans and pay less in interest over the life of the loan instead of thinking that they'll get a big chunk of their debt wiped away.

Additionally, it seems like it would be very hard for for a borrower to be able to anticipate how this repayment plan will financially benefit the borrower the most.

If you owe $250,000 in student loan debt, and can see the writing on the wall that you will always have a $30,000 a year job and are never going to marry someone rich, it looks like more of a no-brainer that your loans might make it to the 25 year mark (even if it will make you cry how much money you spent on interest making it to that milestone).

As for public interest jobs, the question becomes slightly different.  The quandary becomes this:

Would it be better to eat top ramen and pay off your loans in about 5-7 years, or should you just go ahead and ride the white lightening for the full 10 years?

Yes, I know the answer depends heavily upon how much you owe and the income you have over the next 10 years.  But, once again, let's say that a person had a principal of less than $100,000, and they expected to make about $60,000 by the 4th year of their employment, is that person better off living in a shed and paying above the monthly amount?  Or, should they just make the minimum payments on IBR for 10 years with the full expectation that they will always work in public service for that entire decade and wait to see what debt gets wiped away?

I know there are money gurus out there who could calculate this stuff faster than Rain Man, but they still can't calculate variables such as your promotional potential, whether you lose that job due to unforeseen circumstances, or if they give up on public service at year 7 of repayment, which would then presumably put them on the road to the "25 or die" track unless they go back to public service at some point in the future.  Unless you owe a very large student loan debt, at which it is going to be hard to pay the full standard repayment amount regardless of what happens in your career, it seems like people who are right on the edge could end up paying more than what they had to should they make the wrong decision (whether it be to try to pay off the debt early or to do IBR for the full 10 years).

What do you think?


  1. Exactly, IBR is totally full of holes. The biggest hole by far is that IBR is not a contract with the borrower. The program could be changed at any time. So even if you could actually figure out all of the variables that is no guarantee of what they will be in the future.
    Assuming the program does not change, the only path to ensure benefit to the borrower is to get a low paying job, not seek or accept raises and not get married for however many years it takes. Does that sound like it is necessarily a better life for everyone who could presently join IBR?

  2. 1) I think Sallie Mae HATES the program. They make it incredibly difficult to enroll, and they force you to re-enroll every year, while the forbearance programs are basically just a click away at all times.

    This alone is enough to make me think the program is a better deal for the borrower than the bank.

    2) My loans were in 30-year repayment, and despite paying them with extra for principal every month for three years, and paying early so the payment goes to principal, and otherwise attempting to jump through all known hoops, my loans are now 1/3 more than what I originally borrowed. There is NO WAY that a loan that grew while in repayment is going to disappear earlier than 25 years. I have an originally $974 loan that last month was $1,148, and this month is $1,238. They added 10% of the original loan amount at the end of the year, for some fee that I can't even figure out what it could be. And when I asked, they told me my interest was calculated "correctly according to our records." Which wasn't what I wanted to know, but whatever.

    3) The top 10% income level in this country is $74,000, and almost no one with a law degree is going to make that in law for the foreseeable future. A few people might get lucky, but the rest will need to switch careers, and start at the bottom, and that means $40,000 a year for the next decade at least. We'd all like to think a $50k salary is easy-peasy for an advanced degree holder, but it's not. We fell for the law school scam. We're screwed for a good long while. Don't pretend we are a few years away from a high-earning future, because the stats on income in this country do NOT back that up.

  3. Oh, and I think the most important point is that IBR keeps you out of forbearance. As far as I can tell, taking forbearance once will add so much in interest and fees to a non-dischargeable loan, that if you do it for even a year, you are screwed the rest of your life.

  4. It's all about the interest. With IBR you will likely never pay the entire amount of interest for the year which means your principal balance will never go down during the years where you make little money. This ensures you will most likely qualify for all 25 years of IBR repayment.

    Most people with $100k debt will either be on the 20 year standard payment plan or put their loans into forbearance which capitalizes so much interest that your loans will never be paid off anyways. Why not go the extra 5 years on IBR making manageable payments?

  5. To answer your question: "let's say that a person had a principal of less than $100,000, and they expected to make about $60,000 by the 4th year of their employment, is that person better off living in a shed and paying above the monthly amount?"

    I'd recommend just paying the loans off as quickly as possible, live in a shed if need be and deal with it. No one can predict the future, but the longer that debt hangs over the head, the worse. Plus all interest paid is tax deductible, so it is better than paying a credit card. When that debt is cleared, the credit rating will look stellar and can qualify for a low rate mortgage so the debt parade can continue. Life in America today is debt management, because our government is systemically indebted by design.

  6. But that's exactly what I was trying to do, Ken, and my loans kept growing even though I was paying extra for three years.

    My undergrad loans were about $50,000, and I paid that off in less than 8 years. My car loan was $12,000, and I paid that off in 4 years. I don't have credit card debt and I'm good with my bills, but my law loans just kept growing no matter what I did.

  7. Student loan is tax deductible?

    What? How do you figure that? That is absolutely not the case as my accountant pointed out to me a few years ago...

    Student loan interest is capped at somewhere around $3K per year, NO MATTER YOUR INCOME. So if you are paying $6k or $8k a year in interest, you are stopped out at $3k...

    Additionally, the student loan interest deduction starts phasing out around $50k in earnings, and is totally eliminated at levels above $65k in earnings.

    Haha, the government really values higher education.

    We need to get admission to bankruptcy after maybe 5 years. I would gladly let them "repo" my degree & law license to go bankrupt.

  8. That is a good point about the interest being tax deductible.

    I'm not really sure what the tax benefit is at the end of the day by subtracting $3k in interest. Not that I won't take the deduction, but you aren't financially better off paying the full $3,000 in interest in hopes that you get your 50 cents back from the IRS.

    In response to Liz and whether IBR is a bad deal for the bankers....

    They're honestly more worried about fraud than they are that you going on IBR will eat into their profits. There is actually a lot of money to be made in IBR because you end up paying much more than a person on standard repayment. What they actually care about is if you are hiding income that would be used to calculate your payments. If you are unemployed, then your payments can go down to $0 AND still potentially qualify as a payment. They're going to perform an anal cavity search to see if you are hiding any self-employment income.

    Could you imagine? If you paid on IBR for 12 years and let the interest accrue, and then they find some excuse to kick you out of the program, they've scored a sweet victory because, not only did interest accrue during that time period, you also don't get to wipe out the remainder of your debt at the 25 year mark.

  9. Great Post. IBR is indeed a BS solution.

    Let's not forget that the forgiven amount is considered income and subject to income tax. At the very least the forgiven amount should not be taxed.

    The 2005 amendments to the bankruptcy code were the dagger. Now credit card debt is super difficult to wipe away.

    Let's face it. This tax and bankruptcy code is set up to reward businesses and not people. Taking personal debt of ANY kind is surefire way to stay poor.

    Pay it off as quickly as possible. Any other advice is just plain stupid.

  10. IBR is a good option if your goal is NOT to pay back your loans and simply stay out of default. It is pretty a good deal though if you are making under 70k a year. But often if you have support obligations - you will find yourself making relatively small payments.

    The reality is that most of us will NEVER PAY THEM BACK! So why lose sleep over it? It simply becomes a question of giving them SOMETHING in order to maintain your credit in good order.

  11. "...if your goal is NOT to pay back your loans and simply stay out of default."

    The new American Dream?

  12. We should all just default. IBR was put in place because mass defaults would bring attention to the problem and force a solution, like with foreclosures. The government had to hurry up and actually create programs letting people keep their homes, because a mass economic failure isn't in their interest.

    Same idea with IBR, except IBR was done in advance of the impending failure. If every student just refuses to pay what do you think will happen? The courts will just tell the lenders "Fuck you, we're not accepting your lawsuit against the borrower, we have too many already--go settle." Settlement would be pennies on the dollar because these grads are all broke. Further, nobody will borrow a cent to get higher education after seeing all these destitute law grads.

    As a result, the higher education complex as well as the student loan industries would collapse, much like real estate has collapsed.

    In order to insulate these scam industries, this crappy option was created.

  13. Unaccredited Law Student, former Cooley Kid, starting my own unaccredited Scam Blog, need help. Here is my first post. Would love a link, and your thoughts on how I can improve. You are one of my hero's! Keep fighting the ABA man!


  14. Um, sure, maybe IBR was instituted as a devious plot to avoid having grads become destitute so no one would change the laws... Or. Oh wait. Maybe they just wanted grads to avoid becoming destitute? Destitute people don't pay taxes, if you need more reason than just compassion =)

    Besides, if you default, it really means a LOT more money for the banks if you have a private loan. And the bank will just sell your loan anyway. Since you can't discharge the debt in bankruptcy, they can pretty much always collect.

    I think there's a real problem with the "default as a way to rebel" plan. You'd just be shoveling even more money to the banks.

    Try changing the rules so a default means something - make student loans dischargeable in bankruptcy. That would be a lot more useful to everyone.

  15. Hey Liz, how about you just pay back the money you borrowed like you promised? Or don't and just live hand to mouth forever. The choice is yours.

    And you can forget all about a change in bankruptcy law making student loans dischargeable. The Republicans in the House of Reps will never allow it and the Dems are likely to lose the Senate in 2012 [23 Senate Dems face re-election but only 10 Republicans]. The Franken bill will never get out of committee, much less voted on or passed. And that is absolutely as it should be. High-income taxpayers should not be paying for your mistake.

  16. Hey asshole, did you see that I've been trying to pay it back? The loans keep growing, even when I pay extra every month.

    And sure, you're probably right about the Republicans blocking the Franken bill to make private student loans dischargeable in bankruptcy. They've already given us eight years of hell that just keeps on giving. Ending a needless giveaway to the banks (that is probably UnConstitutional anyway if we think about it too much) yeah, that doesn't sound like the GOP we've all come to know and love. (Two wars at once and a tax cut too, while young people are condemned to pay for the wildly inflated loans until they're 70 and taxpayers are on the hook for defaults - there's a free market!)

    And I've paid for plenty of high-income taxpayers' mistakes.

    Not that it really matters any longer. China moves into the top spot in 15 years, maybe sooner, and then the top income people will face the same pressures the rest of us have. No one actually wins a race to the bottom, dude.

  17. Sniffle, sniffle...poor Liz is so learned in economics and so good with money that she borrowed far more than she can repay. And now has the gall to complain about it. And these are apparently "magic" debts that keep growing no matter how much she pays on them. What nonsense. If you didn't like the terms, you shouldn't have taken the cash. But since you did, it's time to pay up. Of course, you can choose not to repay the debt and endure the consequences. In America, you have a choice.

  18. What law student knew the terms of the loans? I really had no way of knowing that I would be paying 10% insurance fees every year, or that my payments would be reducing principal by $12 a month. These terms aren't anywhere in my loan; they're only found in the law that governs the terms of my loan. (Thank you GOP of 2005 for letting the bank lobby write the law).

    And what law student was actually provided reliable information on which to base ROI calculations? My school lied its ass off, and the ABA, NALP, and US News just repeated the same lies.

    So I can't tell which it is, but you either get off on being a dumbass, or you get paid by banks to make up crap (If so, then you probably don't even live in this country). But you just don't know what you're talking about.

  19. This is as good a place as any to post a tip I figured out about Sallie Mae - although I realize it's possible everyone else was already on to this one:

    You have to make your payments on the exact same day every month. They capitalize the interest based on a daily calculation, and they apply your payment to interest based on the number of days since your last payment.

    So if you pay on the 3rd one month, and the 6th the next month, three days more of your payment will go toward interest, and three days less will go to principal.

    Theoretically, it all evens out, since there are only 365 days in a year, so they can't actually charge you for more days of interest than exist in one year. But the lower principal payments through the year mean that through the year, you're paying on interest calculated on a larger amount because the principal isn't going down on some months. THAT makes a difference, because your next month's payment will always be applied to the interest first, with leftover going to principal.

    But the principal can keep going up, and that increases the interest calculation, which keeps putting you deeper in the hole through the year, with interest always calculated on a higher principal amount, and payments always applied to interest first so principal doesn't really go down.

    Even better, the payment they give you is the minimum, so at MOST you can apply a really insignificant amount to principal every month . Also, they apply your payment pretty much whenever they want to, so it's tough to keep it to a consistent schedule.

    It's kind of non-intuitive. I kept thinking the daily interest calculations would even out, but after watching for a few months, it looks like they don't because the interest applied to payments affects the amount left for principal, and the principal grows when you pay more in interest. Then you calculate the interest based on the new, higher principal and so on...

  20. Now I understand. The terms of the loans were secret. And you "really had no way of knowing" what the principal amortization would be on your loans. After all, how could anyone possibly be expected to look at a loan amortization table when borrowing tons of cash. After all, that is unheard of. You're a helpless victim.

    If the facts are as you describe, simply prove your claim in court. Problem solved. But if the facts are as you describe, why is the overwhelming majority of student loan debtors repaying their debts as promised? Could it possibly be that you just don't know what you're talking about?

    Or better yet, organize those who are victims like yourself into a political movement and demand changes to the bankruptcy laws. Could anything be more politically sympathetic in a time of record federal budget shortfalls than an enormous group of deadbeat lawyers crying out for redress? "Everyone, please, gather round...we are VICTIMS and we demand your money!" That should work.

    Yours is an interesting dilemma.

  21. Um, yeah, it was sort of "secret." Many of the terms of the loan were in the law governing the bank, NOT my loan papers. And they changed the law AFTER I started school.

    Even if I had read the law beforehand, I probably would not have understood the implications for the principal of calculating interest daily, based on number of days since payment, and then applying payments to interest first, on six-figure loans.

    Most non-bank professionals wouldn't have either.

    Overall, though, you just sound like a bank employee sent out to drum up online support for more bank-friendly rules. You guys were all over the boards in 2009, and now they're changing the rules again, so I guess you're back.

  22. If everybody was defrauded as you claim to have been, then why do such a huge percentage of student loan borrowers repay the money? The latest data I've seen [U.S. Dept. of Education for FY2008, released in September 2010] show an overall default rate of 7%. If everybody was victimized, why are 93% of them doing as they promised and paying their debts?

    Maybe the correct answer is that no one was defrauded. The other 7% were just so careless and ignorant that they failed to conduct even a rudimentary analysis before scarfing up the cash. Far more plausible.

    And do you imagine that everyone who offers a contrary notion must work for a bank? I mean, is it a reflex or something? One need not be a bank employee to have brains enough to do a bit of research before incurring a mountain of debt. You just have to be a simpleton not to...

    So enjoy that law degree of yours. Kind of expensive, huh? Especially the psychic toll of finally realizing the decades-long impact those costs will exert on your quality of life...

  23. I didn't say "defrauded." Asshat. I merely pointed out how it works. The lack of transparency probably doesn't rise to fraud, but it doesn't have to in order to justify a change to the laws, which is what I'd like to see.

    And hey, who knows where you work? But it's obvious from both the scorn you have for the degree holders, and your poor reasoning and argument skills, that you never went to law school. So why you're on a law blog defending the banks is... a puzzle.

  24. There's no puzzle. Your "law" blog invites comments and I'm commenting. I grasp your argument much better now. The terms of your student loans were not adequately disclosed. Hence, you borrowed money you would not have otherwise and now you are burdened with more than the anticipated amount of debt. Well, at least it sounds like you've learned an expensive lesson and are trying to keep others from a similar fate. There is virtue in that, even if your own situation is very unlikely to improve anytime soon.

    Anyway, thanks for allowing me to post and I apologize for my "poor reasoning and argument skills". I'm sure you know exactly how tough it is to keep up with highly educated, successful people like yourself.

  25. Several options to benefit from IBR. Take a public interest job and suck it up for 10 years so your entire loan is wiped clean. Not too bad to the alternative which is an entire life of debt. Second is to find a way to leave the country like marrying a foreigner and using that as a way to re-establish yourself and find a job in another country. That is probably the only way the government can't get to you and your spouse's earnings. Everyone else will live in indentured servitude for 25+ years and be extremely vulnerable to any changes made to IBR which could be at any time.

  26. I don't understand what people think borrowers are supposed to do if because of the economy they can't find the work they thought was there when they started school?

    It is easy to put down Liz - but how about some concrete suggestions on what she can actually do to improve her life? She is trying to not default and wants to pay it back... What creative ideas do you have?

  27. Also, my understanding is that PI jobs are hard to find. What jobs qualify for that?

  28. Um, just to be clear, I am nowhere near default.

    I think the IBR program makes more sense than just making payments, given what I've seen of how they calculate payments on the regular student loans, and I qualified. I had 27 years left anyway (30-year loan) so there was no downside for me.

  29. There is a reason why it only looks like 93% of the loans are not in default.

    The bean counters only counts the people who go into default within the first 2 years of repayment as actually being in default. If you quit paying in year 5, then you aren't counted towards that statistic.

    I have regularly heard that in excess of 30% (maybe even 40%) of student loans are currently not being paid back, and I believe that also counts people in forbearance. Although, it is nearly the same thing except that you were on the ball enough to arrange something with the lender before you got behind on your payments.

    I'm not sure what reason is offered for not counting people who stopped paying 2 years after repayment. All I do know is that if you count the people who stopped paying from the beginning, you are going to catch a number that is highly skewered to people who said, "wham, bam, thank you, ma'am" to their school loan obligation. Past that date, you're really going to start catching the cases who tried to make an honest effort to pay, but were eventually financially crushed into giving up. Their stats simply ignore the people whose debt has ballooned due to interest, or had a life altering event.

    If a person lost their job tomorrow, they could sell their house, move out of their expensive apartments, and either go live in a cardboard box or move in with a relative. In other words, they could relieve themselves of a debt obligation that does not fit with their current financial picture.

    Not only that, you can do that based upon your subjective circumstances. Technically, you could afford that nice apartment, but something happened that you perceive that it would be in your financial best interest to move back home. Your car stopped running, and now you either need to fix it or buy another. You are about to get married. You are about to get divorced and your spouse has turned it into a bitter fight that requires the use of an expensive lawyer.

    Student loans don't care about those life circumstances. Still, its sad that the only solution people are willing to talk about is new and improved ways that increase the amount of interest due. They can't bear to raise taxes just a little to make higher educational affordable so that, even if people still have to take out loans, that they aren't unbearable.

    Granted, you can't do that with private schools as they only get money from tuition, alumni donations, and possibly an affiliated church. However, to explain why private school's tuitions are spinning out of control is that, for some period of time, they've graduated class after class of impoverished and angry people who don't want to contribute a dime to the school. If you graduated 30 years ago when tuition was much cheaper and there were fewer attorneys, your likelihood of not only being successful, but having money left over to send to your school was much greater. Now, people pay upwards of $1,000 a month for student loan bills and are chasing any last case that they can send over to their special chiropractor friends in the next building to pay it back. That reality has completely sapped the good will of their donor base. I can feel for the new crop of students who are paying over $200 more a semester hour than I did, but I have to eat and live in something that shields me from the elements.

  30. Are Liz and NoJobForU the same person? What's that about?

  31. Sorry, no offense intended.

  32. Sheesh. I am on record as being in favor of the cuts to future students - we don't need more grad students, and taxpayers have already shelled out enough for the ones we have.

    What I want is to see the interest payments restructured so the bank gets less from taxpayers and students, period, but the Senate (both parties) will never let that happen.

    Also, the loans should be discharged in bankruptcy. It's so ridiculous that the banks can just keep selling these loans and adding fees, long after the original principal amount has been paid in interest.

    Oh, and I looked into it some more, and IBR actually does cut into the banks profits considerably because of the way the payments are structured, and if it saves debtors from defaults, it cuts the taxpayers' exposure too. A lot of people don't realize this, but the government guaranteed private loans against default, and that outstanding obligation counts as debt owed (at least in the 2008 budget it did - I haven't checked since).

    The way the loans are structured makes it hard to pay off that outstanding obligation, too. It's all astonishingly stupid.

  33. Liz is too gutless to believe in default but too arrogant and conceited to actually accept blame for choosing to take these loans.

    Either you were defrauded and have no moral obligation to pay these loans back, or you weren't and you should buck up and deal with it.

    If people like Liz were in charge, we'd still be paying taxes to Great Britain and just be a colony. It takes guts to stand up against an unfair situation and organize people to fight back.

    If only 1 or 2 people wanted Independence from England, yes, those 1 or 2 people would have just been quartered and ruined. But 1 or 2 people stood up and then everyone else joined, and we won the war against a far superior enemy.

    Sadly this generation is gutless. I can pay back my loans too and also can use IBR. But I realize something is wrong with the whole thing. I'd get on board for a mass default but people don't want to do that.

    So you know what? You people sit there and bitch and complain. I'll just pay off my loans and ignore you. I would have loved to help out but you're too stupid to understand what you really want out of this. You're just whining mindlessly.

  34. False dichotomy.

    I don't have to claim fraud to note that the loan docs and employment information that led me to believe it would be a good bet were all so much less than transparent. These are basically payday loans with high interest rates compounding DAILY, but we think of them as "good debt" because they're set up by our school's administration. And we're told over and over by everyone in the system that you can always find work as a lawyer.

    And mass default is stupid. It's just giving the banks more money for doing nothing. You don't seem to know anything about loans, actually. You just know you're somehow mad at me for, what, knowing more than you do? Not defaulting? Noting that the system is obviously flawed?

    I haven't done anything, yet you've posted multiple insults acting like I'm the worst person ever because I pay my loans, understand the system, and push for a better system.

  35. Liz knows so much more than so many others that she got scammed just like so many others.

    So she scamblogs her days away while trying to crawl out from under all of that self-inflicted debt.

    An irresistible combination: failure and egomania.

  36. Liz seems to be confused. I posted one comment myself, and she doesn't realize she is responding to several different people.

    It's funny how my principal amounts go down but Liz' amounts do not. I'm on a 10 year payment plan, I don't expect the amounts to go down all the way within 2 years. But I see how they visibly go down with my regular payment.

    Liz is also too stupid to grasp that a mass default forces a change in the system precisely because it is broken. That's why Rosa Parks refused to stand up. If you actually paid attention in law school you'd know that in order to challenge a law or anything else, people have to actually break that law. When enough people do it at once, it either becomes a class action or the legislature steps in because courts aren't going to handle 12312364345 individual cases.

  37. Ok, so multiple people hate me for refusing to default. Gotcha.

    Don't default. Sure, I'm no Rosa Parks, but I know the bank can just sell the loan. It can't be discharged in bankruptcy, so it's always a collectible stream of income. They add 20% in fees every time it's sold, too, plus penalties... and your payments apply first to interest and penalties.

    Default is just a way to make sure 1) The loan follows you forever (most state SOL laws are heavily in favor of the banks) and 2) The bank makes a lot more money off the loan.

    If you want to give your bank a haircut, change the way your payments are applied. Make multiple monthly payments to keep interest from compounding on principal for 30 days at a time. Sign up for things like IBR, that stretch out payments but lower the amount that's actually going to the bank. Push to allow the loans to be discharged in bankruptcy.

    Don't make some stupid stand that no one will ever care about and gives the bank more money anyway - no one feels bad for debtors in this country, particularly lawyer debtors.

  38. Way to go Liz.

    Don't default.

  39. Liz, you are awesome. If you are still paying attention to this thread, I just wanted to let you know that.

  40. They've been doing daily interest loans for at least 30 years, because that's what I had as an undergraduate. If your loans are growing, presuming that you are making all of your payments on time, the payments aren't large enough to cover the interest. Suppose that you owe $100K at 7%. The first $584 per month goes to pay interest before any principal is paid.

    If you make more frequent payments, at least one of which is enough to cover the interest, your balance should decline. That you have to "pay the interest first" is sort of a red herring, presuming that you are paying enough to satisfy the interest. Suppose that you pay an extra $500 in the middle of your billing cycle. You might get only about $200 of principal reduction, but when you make your regular payment two weeks later, you will have accrued only about $300 in interest, rather than the usual $584, and so you will get credit for the rest of your payment in principal reduction.

    This all presumes that the daily interest rate is interest rate/365.

  41. This goes out to the guy who tells liz to pay her students loans back , and who claims that the republicans will never allow school loans to be discharge in bankrupcy. First of all, I think IBR is a good program for everyone who owes more than $250,000 in school loans like Medical doctors, chiropractors and lawyers perhaps and whose deisre is to succeed and live a promisedl life that staying in school will pay off. Technically, the government has stepped in and help to bail out the true working midle class people of this country which is formed by doctors, lawyers, and other professions. Doctor many years ago did not have to deal with the cost of inflation and increasingly high college education. Todays new population are the ones left to deal with all the economic problems facing the country from foreign conflict to internal matters. I think the program is a good opportunity for those professionals who want to succeed and the goverment has decided to let you keep more for you and your families. Just remember to always give back . I think IBR is a pretty good deal in my own opinion , again personal opinion. If you owe less than $50,000 set up IBr until you land a good job pay for two to three years then save enogh to know them out in in full . That will save you some. If you decide to go back to school some more then think IBR may be a good option, until your practice, firm , setting picks up .

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