University of La Verne IBR bro laments his situation
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Date: March 27th, 2017 3:38 PM Author: salmon electric temple volcanic crater
http://www.nbcnews.com/better/money/ex-students-income-based-loan-payments-face-crushing-tax-bill-n517566
Michael Hulshof left the University of La Verne in 2012 with his law degree and $145,000 in student debt. Today, that figure is about $220,000 and, by the time he's 55, he figures it will be around $400,000. That's when his real problems could begin.
Hulshof, a 33-year-old attorney in Antioch, California, entered into a payment plan for graduates who took out federal student loans and who have low income-to-debt ratios. The plan, known as "income-driven repayment," is intended to help graduates who can't afford to pay off their loans within 10 years.
On his income of $90,000 a year, Hulshof pays about $575 per month toward his student loans. It's an affordable payment, but it doesn't come close to covering the $1,500 a month the loans accrue in interest at rates ranging between 6.5 and 8.5 percent.
Under the repayment plan, Hulshof's remaining debt will be forgiven after 25 years. But there's a catch: That forgiven debt is considered income by the Internal Revenue Service, which means he and his wife will face a big tax bill when they finally get out from under the debt cloud.
"Me and my wife talk about it all the time, how we'll deal with it at that point," Hulshof said, estimating that he could owe upward of $175,000 in taxes. "It's incredibly depressing to think about, that bankruptcy may be your only option … to start over at 55 when you worked so hard to get an education to better yourself and society."
(http://www.autoadmit.com/thread.php?thread_id=3565758&forum_id=2#32930346) |
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Date: March 27th, 2017 4:19 PM Author: salmon electric temple volcanic crater
This is my favorite part:
Joshua Cohen, a lawyer specializing in student debt, said that the high number of students in the program and the likelihood that few will be able to pay taxes suggests the IRS may just look the other way.
"How (is the IRS) going to get the manpower to collect on all this?" he said.
...
Cohen, the student-debt attorney, is himself is on an income-driven repayment plan and currently owes about $200,000 on a loan at a 6.3 percent interest rate.
(http://www.autoadmit.com/thread.php?thread_id=3565758&forum_id=2#32930695) |
Date: March 27th, 2017 4:26 PM Author: floppy area wrinkle
If he invests $5,000/year for the next 20 years, so $100K, and he averages 5% gains, he'll have $175K saved for the tax bomb.
So that's $420/month in tax bomb savings plus $575 he's already paying in student loans, so like $1,000/month. Cheaper than paying $1,500/month, which is what he's supposed to be paying.
(http://www.autoadmit.com/thread.php?thread_id=3565758&forum_id=2#32930779) |
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