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The first bill I received for my MFA loans was for $416. I panicked and applied for an income-based repayment plan, which, paired with my habitual underearning
by ourmandave 8y ago
The first bill I received for my MFA loans was for $416.
I panicked and applied for an income-based repayment plan, which, paired with my habitual underearning, lowered my payments to $96 a month.
After five years of payments, I now owe more than what I originally borrowed because my payments haven’t even scratched the principal.
Income based repayments forgives the loans and interest after 25 years.
Original principal is $44,000. $96 X 12 = $1,152 / year. 25 X 1152 = $28,800 total repaid.
So, 20 years to go...
- bradleyjg 8y agoKeep in mind that under current law that forgiveness is taxable income to the borrower. So he'll still be left with one quarter to one half the forgiven principal, which by that time may well be greater than the original principal even in real terms.
- ourmandave 8y agoYes, but by then a person with a Masters in Fine Arts will be making $150,000 annual. Of course, a Subway 6" combo will be $60 too.
- bradleyjg 8y agoThat’s why I said real terms. Grad PLUS loans are at 7%. CPI is at 2.8%.