Law Schools, Money, Student Loans

How the Heck Will You Pay Your Law School Loans After You’ve Been Kicked Off Income-Based Repayment?

Here at Above the Law, we frequently address law school loan debt and the many ways it has screwed over various members of the legal profession, including some of our own editors. As many of you know, both Elie and I graduated from law school with six figures of loan debt. And although we both have a seemingly insurmountable pile of debt to pay off, we’ve gone about doing so in different ways. He’s been paying collection agencies not to break his knees since 2007, and I’ve been paying my loans like a good little indentured servant since 2010.

But I’ve got to admit, that wouldn’t even be possible if it weren’t for income-based repayment (IBR), the magical plan that caps your payments at 15 percent of your discretionary income. With IBR, I’ve been able to continue making interest-only payments for about two years, gleefully awaiting the day that I’ll finally be able to dig into the principal amount — which will likely never happen, but hey, a girl can dream.

The pesky thing about IBR is that you have to reapply each year to tell your loan servicer that yes, you’re still ridiculously poor, and no, you still can’t afford to pay those insane amounts they’d expect you to fork over otherwise. I sent in my reapplication packet more than a month ago, specifically so that I’d know what my new payment amount would be for the upcoming bill’s due date.

So you can imagine my COMPLETE AND UTTER shock when I opened my mail this morning to see that with my glamorous “entry-level journalism salary,” I’d apparently been kicked off of my IBR plan.

Happy f**king New Year to me, right?

The first few thoughts that went through my mind after I read January’s bill were as follows:

  • What the hell happened?
  • Is this a sick joke?
  • Holy crap, there’s a freaking comma in this number!
  • How in God’s name am I going to pay this?
  • Damn, I’m going to be so skinny because I won’t be able to afford food. That’d be sort of cool.
  • Hmm, I wonder if there’s a niche market in prostitution solely for chubby chasers.
  • WHY CAN’T I STOP CRYING?

After I took a few moments to collect myself and wipe my tears, I called my loan servicer to find out why they decided to curse my very existence on this planet. After explaining the situation and being put on hold for a few minutes, the very nice woman I spoke to on the phone explained to me that they hadn’t even acted on my IBR reapplication yet, even though they’d had it in their hands since the beginning of November.

“Then why was I sent this bill?” I asked, perhaps too politely for the four-letter word that was actually included in that sentence. And then this lady from the loan company dropped a great revelation upon me, the same logic bomb she’d dropped on approximately 42 — yes, she told me that’s how many other people had been driven into a psychotic rage this morning over an issue like mine — other callers today alone:

“Oh, sweetie, don’t worry, we just sent you an automated bill for January. The machine doesn’t know if you’ve reapplied for IBR. The bills just go out like that. I’ve had to talk so many people down from the ledge today. We’ve very busy with IBR applications right now. You should probably check back after Christmas.”

Of course, she already knew this, but I explained to her that the bill was due on January 2. If I really were kicked off of IBR, they were giving me less than a week to come up with money I don’t own because… magic? This woman then reassured me that I “could always do a forbearance.” I feel badly for doing it, but I hung up on her.

All of this leads me to a question for our readers, some of whom have never had the pleasure (displeasure?) of working in Biglaw. How the hell will you pay your law school loan debt after you’ve been kicked off IBR?

Perhaps you’ll take endless forbearances, as the woman I spoke to so kindly suggested. Perhaps you’ll try to get your loan debt discharged in bankruptcy, and likely fail to prove you’ve got a “certainty of hopelessness.” Perhaps you’ll start looking for a sugar mama or a sugar daddy. Or perhaps you’ll just default on your loans — everyone else is doing it, and with 11 percent of federal loan debt in 90+ days’ delinquency, it’s all the rage.

Because really, even if you’ve been a dutiful debt soldier like me up until now, at this point, it’d be simpler to just take the easy way out. You’ve probably already come to terms with the fact that you’ll never own a home or be able to have children and raise them comfortably. The student loan bubble is on the brink of bursting anyway — hell, some claim it’s already popped.

What’s the worst that could happen?

The Scariest Chart Of The Quarter: Student Debt Bubble Officially Pops As 90+ Day Delinquency Rate Goes Parabolic [ZeroHedge]

Earlier: Student Loan Debt: What’s the Worst That Could Happen?
Not Even Bankruptcy Will Make Your Student Loans Go Away
Can You Show ‘Undue Hardship’ On Your Student Loans? You May Be Surprised.

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