Student Loans - Income Based Repayment?

[Nords]

Or tens of thousands to install solar panels.

Ahem. The logic behind these state/federal subsidies is that the govts avoid the environmental/legal/infrastructure costs of building more utility plants. Seems cheaper to just let a few foresighted individuals keep their money instead of raising everyone's taxes (or electric bills) to pay for more problem-creating industry.

Judging from your loophole-detection and -exploitation prowess, I'm pretty sure that the govt has reaped more of the taxable benefits of your knowledge & critical-thinking skills than they ever loaned you to acquire that education (plus whatever the school tried to teach you). Or at least they've given you all that money now in hopes of not having to pay you unemployment/welfare later. I can support that.

It's rare that the common taxpayer gets a chance to do to the taxing authorities what they regularly do to the taxpayers without a second's hesitation. This is the byproduct of misaligned incentives...

 

[Rustic23]

Not wanting to turn this political, but wouldn't it be a Democratic/Republican program? After all the Dems gained control of the house and senate in 2006, as I recall, and Bush could not have signed it without those in control of congress passing it.

 

[SecondCor521]

what happens if you or spouse dies? I would think that the debt would have to be paid from the estate....

Nope, or at least not in the case of my student loans. They are specifically forgiven if I, the borrower, die before it is repaid. I treat this as an adjustment when I calculate my life insurance needs. However, my SL debt is just a bit above $5k and I will probably finish paying it off by the end of next year.

I think similarly to FUEGO, I think: I will vote and advocate for the government that I think properly aligns incentives (among other things that are important to me politically). And I will use the rules of the government I get to my full advantage, including tax laws and any other government programs that are ill-constructed.

2Cor521

 

[Emeritus]

Not wanting to turn this political, but wouldn't it be a Democratic/Republican program? After all the Dems gained control of the house and senate in 2006, as I recall, and Bush could not have signed it without those in control of congress passing it.

He could have vetoed it. But the suggestion that it is somehow an Obama program simply distorts the truth.

 

[Emeritus]

And I will use the rules of the government I get to my full advantage, including tax laws and any other government programs that are ill-constructed.

2Cor521

We call this the "I have no ethics I only have to comply with the law" approach, also known as the TITANIC defense that We don't have to make it safe, we only have to comply with the enforceable rules. Its also known as the Nuremburg defense. It was also Bill Clinton's defense strategy. I have no ethical problem in general with people who comply with the specific intent of ill-considered programs. The ethical issue is generally related to the effects of confusion in the regulation. A lot of people die because products are in legal compliance with regulations but violate the intent of a law or regulation.

 

[Emeritus]

I know you enjoy being a goad, but think carefully before you turn your kids into the equivalent of little communists- putting all their energy into gaming the system rather than into accomplishment. You may be old enough to escape some of the corrosion that always comes from this course, but they definitely are not. Find a way to get down to Cuba for a look see.

Ha

Why does system gaming = communists? People have been gaming systems since systems were invented.

 

[Rustic23]

I did not blame Obama! Unlike you, I blamed both the Republicans and the Democrats!

 

[Texas Proud]

snip...

Apologies regarding my failure to respond to your Q regarding income. I was away from the thread for a while and had a lot of other responses to make! At least one disinterested poster had the courtesy to tell me that they are ignoring this thread, and hence no response was required!

To answer your question, yes, you can assume for the sake of this thread that our current 1040 AGI is in excess of $66k. Though due to the nature of the tax code, it isn't too much higher than that. Obviously our total gross income is MUCH higher than that.

Keep in mind though that we have 2 young children and both of us sacrifice to keep working and not spend time with our kids or be a stay at home mom (or dad in my case). In the parlance of 2010, we are "entitled" to have one of us stay at home to take care of the kids, hence our AGI would be well below $66k if we decided to exercise our "entitlement".

snip....

Keep in mind that AGI is BEFORE itemized deductions and exemptions.... so your kids, taxes, etc. etc. do not reduce your AGI... you might be looking at the wrong number that will be used.... unless you put down the wrong info...

As an example.... my taxable income is about 65% of my AGI.... because of kids, deductions etc... this can make a big difference in how much is paid....

 

[FUEGO]

Similar, but expanded, line of reasoning here, and some interesting discussion:
http://www.early-retirement.org/forums/f28/housing-stimulus-42568.html#post786690

Interesting quote from me in that thread:

I am setting a personal goal to extract $30,000 from the government this year and next. I will do whatever is legally allowable to achieve this goal. I figure with enough effort, hard work, and diligence I'll be able to get my fair share. If you don't get yours, well, thanks!

So this thread regarding student loan IBR and debt forgiveness is just me working toward my goal. I'll book those $30000 gains and then some if I decide to pursue this IBR/debt forgiveness plan. Those who think I'm a weasel: put me on ignore! But do so at your own peril, because you may miss out on a clever way to take a buck back from your ole Uncle Sam next time he dreams up some convoluted incentive to achieve some lofty and noble goal.

 

[FUEGO]

I agree that the brickbats being thrown at Fuego should instead be directed at those who write the rules for these programs.

It can be argued that Fuego is now doing the most most productive (and patriotic) thing possible:
-- Looking to extend his repayment so the money stays at work in the private sector rather than going to Washington.
-- Most importantly, he's posting here and baldly exposing this crazy waste of taxpayer money. Over 250 people have read this post--that's a lot of publicity. Maybe each one will tell a few folks. Hopefully the awareness and anger about programs like this will contribute to outrage among the electorate and the curtailment of these giveaways.

Yes; I hope folks make some calls to congressman and say why are we subsidizing this almost-millionaire 30 year old FUEGO fellow by letting him shirk his six figure student loans. Let's get rid of the debt forgiveness altogether and save the federal coffers a couple hundred million (or billion(s)). If that can be my contribution to society, then it would be great!

 

[FUEGO]

Ahem. The logic behind these state/federal subsidies is that the govts avoid the environmental/legal/infrastructure costs of building more utility plants. Seems cheaper to just let a few foresighted individuals keep their money instead of raising everyone's taxes (or electric bills) to pay for more problem-creating industry.

But "environmental/legal/infrastructure costs" are job creation! Why not create a couple million new jobs building new power plants using proven tech that works with known risks?

I seriously considered getting a couple kw's of solar panels up and running because I could net some cash from doing it, with a very decent payoff in 5 years. Not quite lucrative enough though given my latitude. Not that the feds or the state cares if it is appropriate at this latitude....

 

[FUEGO]

Keep in mind that AGI is BEFORE itemized deductions and exemptions.... so your kids, taxes, etc. etc. do not reduce your AGI... you might be looking at the wrong number that will be used.... unless you put down the wrong info...

As an example.... my taxable income is about 65% of my AGI.... because of kids, deductions etc... this can make a big difference in how much is paid....

Our taxable income is also much less than AGI. But I was referring to the right stats about AGI being the key metric. The benefit of kids is the headcount in our household. IBR sets your repayment amount based on a threshold tied to the poverty level (150% of the poverty level). So 2 more kids equals a higher poverty threshold ($33k w/ 2 kids vs. ~$21k w/ just DW and I if I recall correctly).

So changing the number of kids doesn't change the AGI a lot (however kids still affect AGI some, due to things like dependent care costs and educational benefits potentially coming out before the AGI line at the bottom of 1040 pg 1).

 

[FUEGO]

I think similarly to FUEGO, I think: I will vote and advocate for the government that I think properly aligns incentives (among other things that are important to me politically). And I will use the rules of the government I get to my full advantage, including tax laws and any other government programs that are ill-constructed.

You can either get angry at all of these wasteful unneeded spending programs, or you can get rich off of those that you legitimately qualify for. I figure everyone can think up something better to do with free money that they can get back from the government vs. the crap the government would spend it on. Hey, if your moral reservations prevent you from benefiting from these crazy government programs, then take the money and give it to your favorite charity.

I mean, I would do this. If I had an extra $100,000+ from not owing on student loans, I could give more to charity.

 

[FUEGO]

Nope, or at least not in the case of my student loans. They are specifically forgiven if I, the borrower, die before it is repaid. I treat this as an adjustment when I calculate my life insurance needs.

Yes, federal student loan debt is forgiven in the event of death of the debtor. I consider it a free six figure life insurance policy. I also know that should DW or suffer from a premature demise, it would bump up the NW by a good bit immediately (that's the "grave" part of cradle-to-grave).

 

[Emeritus]

I did not blame Obama! Unlike you, I blamed both the Republicans and the Democrats!

I didn't say you did . I clearly posted the quotation I was responding to.

"Originally Posted by chinaco
This is an Obama program. The voter backlash will be in less than a month."

 

[Rustic23]

What you said was "Nope solid bushie " and then you went on to say "Watch for more GOP memory lapses" clearly indicating a Republican program. I was only pointing out that the Democrats took control of the congress and senate in 2006. As most on this board know they are the ones that appropriate the money and that is where the bills are passed. Yes the President can veto them, and Congress can override that veto. So therefore, from 2006 to 2008 when Obama was sworn, the Democrats and the Republicans are responsible for our mess, and since 2008, it is all Democrat, unless you want to include the third arm of Government and blame the Supreme Court.

 

[Emeritus]

What you said was "Nope solid bushie " and then you went on to say "Watch for more GOP memory lapses" clearly indicating a Republican program. I was only pointing out that the Democrats took control of the congress and senate in 2006. As most on this board know they are the ones that appropriate the money and that is where the bills are passed. Yes the President can veto them, and Congress can override that veto. So therefore, from 2006 to 2008 when Obama was sworn, the Democrats and the Republicans are responsible for our mess, and since 2008, it is all Democrat, unless you want to include the third arm of Government and blame the Supreme Court.

Bush signed the law, not Obama
Guess what Obama has to obey the law Bush signed.
Guess what Obama has to fight the war Bush started,
Guess what Obama has to deal with the recess he inherited

By your reasoning 9/11 is absolutely and totally a Republican responsibility
Republicans are totally responsible for all those deaths

I think the reasoning is silly

 

[Bestwifeever]

Th-th-th-things are getting too political....