Student Loans

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Locked
Topic Author
jen25w
Posts: 10
Joined: Mon Oct 29, 2018 7:26 am

Student Loans

Post by jen25w » Mon Jan 21, 2019 9:25 am

Hello, I have $92,000 in Direct Student Loan debt. Please save any snide comments about the loan amount. I do not regret taking out that much and would do it again in a heartbeat.

I just opened my own 1-person business where I am paid 100% by the county courts i.e. government. I have zero private pay clients and I am not an attorney but do work in the legal field. I make approx. $75,000 a year and have been on the IBR hoping to get public loan forgiveness after 10 years. I worked for non profits until I opened my own business so definitely qualified at that time. Because I am paid through the courts I'm hoping I still qualify for loan forgiveness. My CPA has been trying to shift things around to make it look like I'm making less than I am for my company to keep my payments low but I'm making quite a bit more now than before I had my own business so I'm afraid of how much my monthly payments will increase. I am dealing with that separately. My question is does anyone recommend loan consolidation or refinancing for student loans? Thank you in advance.

User avatar
PrettyCoolWorkshop
Posts: 192
Joined: Tue Aug 11, 2015 8:44 pm

Re: Student Loans

Post by PrettyCoolWorkshop » Mon Jan 21, 2019 9:31 am

Your post needs a couple more details to get a decent answer.

What are the balances on each separate loan (if multiple)?
What is/are the interest rate on the loan(s)?
What is/are the minimum payment(s) on the loan (if not using income-based repayment)?
How many years are left on the income-based repayment?
What payment is required for income-based repayment (looks like it is calculated as % of salary)?

And oddly... are you and your CPA acting in an ethical manner? There are truthful ways to minimize income (S-corps, etc) and untruthful ones.
Last edited by PrettyCoolWorkshop on Mon Jan 21, 2019 9:34 am, edited 1 time in total.
Be greedy and fearful. All the time.

mark1623
Posts: 93
Joined: Mon Jan 14, 2019 2:33 pm

Re: Student Loans

Post by mark1623 » Mon Jan 21, 2019 9:32 am

Assuming you qualify for 10 year PSLF then its probably a bad idea to refinance. How many more years do you have?

Keep in mind that pretax 401k contributions will get that income number down quickly, giving you the double benefit of smaller loan payments and big savings.

champion_ham
Posts: 71
Joined: Thu Apr 26, 2018 11:55 am

Re: Student Loans

Post by champion_ham » Mon Jan 21, 2019 9:42 am

Why live under this burden of debt for 10 years? ...Especially when you and your CPA are having to jump through all these hoops to hide income. Your details are light, but if you roll up your sleeves, you could probably have this debt paid off in a few years.

mark1623
Posts: 93
Joined: Mon Jan 14, 2019 2:33 pm

Re: Student Loans

Post by mark1623 » Mon Jan 21, 2019 9:51 am

champion_ham wrote:
Mon Jan 21, 2019 9:42 am
Why live under this burden of debt for 10 years? ...Especially when you and your CPA are having to jump through all these hoops to hide income. Your details are light, but if you roll up your sleeves, you could probably have this debt paid off in a few years.
Normally this advice makes sense but these kinds of loans can be forgiven tax free after making minimum payments for 10 years. Paying a few thousand bucks a year for a handful of additional years seems far superior to paying off the entire 92k yourself.

User avatar
F150HD
Posts: 2429
Joined: Fri Sep 18, 2015 7:49 pm

Re: Student Loans

Post by F150HD » Mon Jan 21, 2019 10:25 am

.... My CPA has been trying to shift things around to make it look like I'm making less than I am for my company to keep my payments low ...
?

Compound
Posts: 715
Joined: Mon May 26, 2014 1:32 pm

Re: Student Loans

Post by Compound » Mon Jan 21, 2019 10:33 am

F150HD wrote:
Mon Jan 21, 2019 10:25 am
.... My CPA has been trying to shift things around to make it look like I'm making less than I am for my company to keep my payments low ...
?
:confused

Also, is your own business a 501(c)3? If not, I suspect you’re going to be out of luck on the PSLF.

magicman
Posts: 27
Joined: Thu Jan 21, 2016 1:44 am

Re: Student Loans

Post by magicman » Mon Jan 21, 2019 11:21 am

Because I am paid through the courts I'm hoping I still qualify for loan forgiveness.
I doubt you will qualify for the forgiveness when you own your own business but you'll have to research it.
My CPA has been trying to shift things around to make it look like I'm making less than I am for my company to keep my payments low but I'm making quite a bit more now than before I had my own business so I'm afraid of how much my monthly payments will increase.
Sounds sketchy. You make decent income, I'd consider using Dave Ramsey's baby steps or YNAB to help eliminate debt.

User avatar
BolderBoy
Posts: 4471
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: Student Loans

Post by BolderBoy » Mon Jan 21, 2019 11:37 am

jen25w wrote:
Mon Jan 21, 2019 9:25 am
I just opened my own 1-person business...
If your business is "for profit", I'm not sure your IBR plan would apply. You work for your business and your business does its business with the courts, is that right? The Courts pay your business in its business name and your business pays you in your name, right?

The lines may be too blurry for the IBR plan to apply.

I'm not a lawyer or an accountant.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

02nz
Posts: 2553
Joined: Wed Feb 21, 2018 3:17 pm

Re: Student Loans

Post by 02nz » Mon Jan 21, 2019 11:41 am

jen25w wrote:
Mon Jan 21, 2019 9:25 am
My CPA has been trying to shift things around to make it look like I'm making less than I am for my company to keep my payments low but I'm making quite a bit more now than before I had my own business so I'm afraid of how much my monthly payments will increase.
This would be bad from any poster. But for a person who works in the legal profession? Who gets "paid 100% by the county courts i.e. government"? :oops:

User avatar
Nate79
Posts: 5177
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Student Loans

Post by Nate79 » Mon Jan 21, 2019 12:10 pm

I think the chance of you qualifying for PSLF is almost zero, especially if you are asking the question on the internet. To get forgiveness you need to have every duck in a row, every single year. There is no grey area.

TropikThunder
Posts: 1858
Joined: Sun Apr 03, 2016 5:41 pm

Re: Student Loans

Post by TropikThunder » Mon Jan 21, 2019 12:26 pm

BolderBoy wrote:
Mon Jan 21, 2019 11:37 am
You work for your business and your business does its business with the courts, is that right? The Courts pay your business in its business name and your business pays you in your name, right?
I think this is the key point (regarding the business setup, anyway). You have to be employed by a non-profit 501c3 or government entity. It doesn’t count if you (or your company) receive payments from such an employer, otherwise the guy or gal who fills the vending machines at the courthouse would qualify for PSLF. If your company is not a 501c3, then your income and payments don’t qualify.

How do I know? Because for PSLF, you need to make 120 payments under an Income Dependent Payment program (including IBR) while employed by a qualifying employer (501c3 or government entity like I listed above). To have the payments you have made count towards the 120, you have to file a form with Fed Loan Servicing to have your employer certify that they are a qualifying employer and the dates of your employment. You’re not an employee of the court, therefore no qualifying employer therefore no qualifying payments.

StoopieHippo
Posts: 55
Joined: Sat Sep 15, 2018 10:42 am
Location: Seattle, WA

Re: Student Loans

Post by StoopieHippo » Mon Jan 21, 2019 12:28 pm

Compound wrote:
Mon Jan 21, 2019 10:33 am
F150HD wrote:
Mon Jan 21, 2019 10:25 am
.... My CPA has been trying to shift things around to make it look like I'm making less than I am for my company to keep my payments low ...
?
:confused

Also, is your own business a 501(c)3? If not, I suspect you’re going to be out of luck on the PSLF.
THIS.

Also, have you looked at how many people are ACTUALLY getting their loans forgiven? It's a very small amount and most people get the run around. If you've got your own business (and I'm assuming it's NOT a not-for-profit business, since apparently you're moving money around and trying to hide income), I highly doubt you'd qualify. You may want to look at refinancing (though this would DEFINITELY take you out of the game for loan forgiveness) if your rates are high.

Side note: I had $180k when I graduated (the husband had $150k). We're down to $39k currently (it's been 5 years of focusing on loans). It's doable. Not fun, but doable.

smitcat
Posts: 4362
Joined: Mon Nov 07, 2016 10:51 am

Re: Student Loans

Post by smitcat » Mon Jan 21, 2019 1:13 pm

Besides all of the posts above which I believe to be correct, you asked this....
"My question is does anyone recommend loan consolidation or refinancing for student loans? Thank you in advance."
My information was that you cannot refinance a loan in such a way that it still qualifies for PSLF since it will therefore no longer be a student direct loan. But you would want to ask that question from the source and no here as our answers will not be binding at the time you apply.

201BadBoy
Posts: 5
Joined: Mon Jan 21, 2019 1:17 pm

Re: Student Loans

Post by 201BadBoy » Mon Jan 21, 2019 2:28 pm

Not sure if this is super helpful, but here appears to be a breakdown of 10 student loan breakdown options https://thecollegeinvestor.com/21558/be ... ent-loans/

TropikThunder
Posts: 1858
Joined: Sun Apr 03, 2016 5:41 pm

Re: Student Loans

Post by TropikThunder » Mon Jan 21, 2019 2:32 pm

smitcat wrote:
Mon Jan 21, 2019 1:13 pm
Besides all of the posts above which I believe to be correct, you asked this....
"My question is does anyone recommend loan consolidation or refinancing for student loans? Thank you in advance."
My information was that you cannot refinance a loan in such a way that it still qualifies for PSLF since it will therefore no longer be a student direct loan. But you would want to ask that question from the source and no here as our answers will not be binding at the time you apply.
Just to add onto this: you can do a Direct Consolidation Loan, which means the loan(s) is/are still Direct but it would restart the clock on the 120 payments so the standard advice is to consolidate first. If you consolidate and refinance with a private lender (SoFi for example), then those would no longer be Direct Loans and would no longer qualify for any of the special programs (IBR, PSLF, etc).

User avatar
LadyGeek
Site Admin
Posts: 57803
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Student Loans

Post by LadyGeek » Mon Jan 21, 2019 4:08 pm

Discussions of dishonest behavior or bypassing the law is totally unacceptable.

"Shifting things around" to intentionally misreport income is tax evasion (or fraud, in the case of a loan application). This thread has run its course and is locked.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Locked