<p>My wife is in grad school for teaching and currently has about $40K in debt. She will probably have to borrow another $10K before she is finished. All her loans are through direct unsubsidized government loans. We've been borrowing as little as possible and living super cheap.</p>
<p>I had no idea about income based repayment until recently. Since she will be going in to a public service job she will be eleigible to have her loans forgivven after 10 years. Since she will be making a teacher's salary I am almost positive her payments per month will be no difference if she borrows $50K or $100K (because payments can't be higher than 10%).</p>
<p>Why wouldn't she just borrow the max this last lending period in order to take some of the financial pressure off us? Is there something I'm missing?</p>
<p>So, if I’ve got this right, what you’re asking is why your wife shouldn’t go into debt far beyond her ability to repay . . . to make your lives a little easier for the time being?</p>
<p>The answer, in case you haven’t already figured this out, is that life is unpredictable. Maybe she won’t get the job she’s anticipating. Maybe she’ll get laid off. Maybe she’ll decide she wants to take time off and have kids. Maybe she’ll discover she hates teaching and wants to go back to school to do something else entirely! Any of these (and multiple other) scenarios could interfere with the neatly arranged repayment plan that you’ve envisioned. At that point, with interest payments accruing, she could be looking at a lifetime of debt.</p>
<p>What you two have been doing up until now, “borrowing as little as possible and living super cheap,” has definitely been the right way to go . . . it may make life more challenging now, but it will definitely pay off - for both of you - in the long run. Hang in there!</p>
<p>I supported my wife’s decsion for US to take on $50K in debt so she could be a teacher. After providing on one income for 18 months I think she’s pretty comfortable that I’m not trying to leverage her credit so I can buy a new television.</p>
<p>If you truly believed this borrowing to be the best option, you would not have bothered to ask. </p>
<p>Someone doesn’t want to take out more loans, presumably your wife. Don’t push her on this one. Life is unpredictable. There is no guarantee that she will qualify for that write-off in the future. </p>
<p>There are many living-like-church-mice experts in this forum. You aren’t going to get a lot of votes here for running up debt to support life-style choices.</p>
<p>My daughter just received her masters degree in teaching, and not only was her degree basically covered by scholarships, she also earned a salary through her full time practicum for the two years of her degree.</p>
<p>I am hard pressed to think of any circumstance that someone should have large loans, when they are going into a field that doesn’t require them to.</p>
<p>I would also double check about that loan forgiveness, although schools might forgive Perkins loans, with govt budget cuts, I would not count on having Stafford loans forgiven unless it is through a third party like The Gates Foundation.</p>
<p>BTW OP- although my daughter has an undergrad degree from a top college, has a MIT from a good university, two years of classroom experience, years of related work experience, she is still interviewing for positions six months after graduation.</p>
<p>I don’t understand why some of you are reading this to sound like I’m trying to talk my wife in to getting more loans so I can buy a motorcycle or something. I am gathering information so that me and the wife can come up with a good decision.</p>
<p>Income based repayment caps payment on student loans at 10% of monthly income and all remaining debt may be written of after 25 years or 10 years of working in the public sector or at a non-profit.</p>
<p>The Loan Forgiveness program you are referring to OP, doesn’t apply until you have made -120 qualifying payments-
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<p>You do realize that debt may prevent your family from taking on additional loans like for housing or transportation. Additionally, credit scores are used when renting a house, applying for a job and buying insurance.</p>
<p>You (along with a couple of your compatriots) seem more interested in lecturing than answering the question. There have been a couple decent answers that provide some thinking points. Those I appreciate.</p>
<p>Then LOOK hard at the statistics that clearly demonstrate that many, many leave the teaching-education world after three years. Can you confidently say that your wife won’t be one of them? Can you confidently say that she won’t get pregnant and prefer to stay home? Are you willing to bet the farm/future on it? </p>
<p>But if the answer is yes, then definitely borrow more so the taxpayers can pay it off. It can be a good deal. But recognize that such debt will be with you – and counted against you when applying for a mortgage or other credit-- until its paid off.</p>
<p>I think what the posters are saying is that your idea could work if all goes well but it severely limits your life options (as to type of job, where you work, if you work, family planning) while significantly increasing your risk of future financial hardship. People are just trying to help you understand the risk. Yes they come on a little strong at times. I suspect that is because some of them have made their own mistakes and are on a mission to prevent others from making the same mistakes. Others appear to have a professional background in financial advising and just want to help. </p>
<p>As to your post, what happens if your wife gets sick or disabled or has to leave the workforce to care for someone? Do you trust the government not to change the repayment options before she graduates?</p>
<p>How much more would the two of you want her to borrow? You write that she probably only needs $10k. There is a difference between borrowing the maximum amount, and essentially planning to leave a balance to be forgiven, and borrowing a bit more than the bare minimum in the hope that with good planning the two of you can manage to pay all (or at least most) of it yourselves.</p>
<p>I quickly scanned the messages on this thread and did not notice anyone addressing one thing: the tax liability of when debt is forgiven.</p>
<p>Basically when you are on IBR, your debt will most likely continue to grow because you probably would not be paying down the interest. Then the interest will start to accrue not only on the original amount, but also on the interest that you accrued in previous months. By the time the loan is forgiven the amount of what you owe will be staggering. The amount that is forgiven will become a taxable income. The tax liability is most likely will be significant. </p>
<p>It’s your decision of course, but you already have a workable solution. IBR should be last resort (in my humble opinion).</p>
<p>If you read the info about loan forgiveness carefully, teachers teaching IN CERTAIN schools MAY be eligible. Not all teachers in all schools. You can bet the schools will be the ones in tough inner cities, or very, very rural areas with a lot of poverty, where it is difficult to attract and keep teachers. Is that where your wife intends to teach? Do you live in such an area now? Are you willing to move to a high poverty area so she can teach there and get her loans forgiven? A teacher really has to LOVE what they do every day; it’s a tough job without even the ability to leave the building for a lunch break if you need one. If she is teaching in a place that is tough, and sad, and horrible, she won’t love teaching. I don’t think the loan forgiveness is something you should count on or build into your financial plan.</p>
<p>It is not only working ten years, but also **making 10 years of consecutive on-time payments ** if you miss a payment, or take a leave from work, you could lose your eligibility.</p>
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<p>As a married couple, your income is also considered in her IBR. Depending on your income and family size, she may not be eligible for IBR.</p>
<p>Right now there is a glut of teachers. If she is teaching common branch (elementary education) English or social studies as a middle/high school teacher, it is going to be very hard for her to get a job. Right now there is a freeze on hiring of english social studies teachers. </p>
<p>In addition, has now become harder to keep the jobs as systems that used to give tenure automatically after 3 years of satisfactory service, no longer do so. This means if she gets a U rating before she gets tenure, she gets fired (no more job).</p>
<p>If she feels that she is going to work for a charter school (there is no job security from one year to the next).</p>
<p>There is an over-abundance of teachers even for science and math. For the positions that was advertised in our school, there was several hundred of applications for the few positions open. They were all willing to relocate if they got the position. In fact, one of our new teachers, moved herself from SC within a week of getting her job so she could be here for the first day of school. We were all amazed she could accomplished it in such a short time frame.</p>