<p>I was playing around with the Income Based Repayment calculator, and wanted to see what would happen under the worst possible circumstances--if the only employment I could find after graduation would be part-time, minimum wage. Based on the results of the calculator, I would owe $0 per month. This definitely reduces a lot of anxiety about loans, but of course there is the issue of interest further down the road, and the fact that outstanding loan payments covered by IRB are taxable income after 25 years. I have a bit of a special situation due to a disability that can be unpredictable in its severity, and I've thought about applying for Social Security a few times. Let's say that I am unable to work after graduation due to my condition, but I am denied Social Security. Theoretically, could I pay $0 each and every month for twenty-five years? By no means do I want to sit around home after graduation, but I am trying to figure out what would happen if I'd be denied Social Security (or if I get Social Security, and my income is under the threshold for making IRB loan payments, meaning I'd owe $0). </p>
<p>I believe the forgiveness requires 25 years of payments, so if this is your plan, I’d pay $5 a month or so. The amount forgiven is taxable, so even if the initial amount is low, 25 years of interest will make it a much larger amount discharged.</p>
<p>If you can get a job in the public sector (police, teaching, government) you can do 10 years of PAYMENTS, with IBR, and it will be forgiven tax free. I do know this program requires payments, as you have to prove you’ve made 120 payments while employed in a public sector job. The 120 payments do not need to be consecutive so it can take more than the 10 years.</p>
<p>I would strongly suggest you work with the vocational rehab folks in your state to target jobs that you CAN do with your disability. Unless you plan to live with others, and have NO other expenses, your income will need to be above $0.</p>
<p>Thanks for your input! I am working with voc rehab currently, although I am a bit concerned that I won’t be able to perform the requirements of my recommended job path after all. I’m currently interning in a field that was deemed a good match for my skills/interests/limitations, and there have been somewhat serious performance issues. Due to the nature of my condition fluctuating, it can be very hard to foresee how I function. One day I’m given positive feedback, the next I make a critical error against our policy. </p>
<p>I really don’t want to have to live at home all of my life, and am hoping I won’t be stuck there in the long-run. My household income is really low as it is and I want to do my best to contribute, but I have a really bad track record of keeping jobs. </p>
<p>Also keep in mind that should you get married, your spouses income is also factored as part of your IBR</p>
<p>A payment of $0 is considered a payment towards the 20 (PAYE) or 25 (IBR) years for forgiveness. The entire amount forgiven … including the accumulated interest … is taxable in the year in which it is forgiven.</p>
<p>I encourage my students to pay as much as they can even if the calculated payment is $0. This is because I strongly believe borrowers should be trying to pay off the loan, not betting on having it forgiven. Who knows what could happen … the student could begin to make more (and be expected to pay enough that it ends up getting paid off, anyway - and it could have been a smaller amount if it was paid off sooner). Or some future Congress could do away with forgiveness & expect it all to be paid (with only death getting you out of it).</p>
<p>Spouse income is not always factored in (at least, not currently). If the borrower files separately, it’s not always counted. Depends on the repayment plan.</p>