Folks with >125,000 loan balances…. (Folks in health care pay a lot of money for those credentials but not every field is actually well compensated)…Are you going with RAP to avoid a huge tax bomb at the end?
anyone with a Big loan balance choosing RAP for the interest subsidy ?
byu/Unhappy-Ad-5061 inStudentLoans
Posted by Unhappy-Ad-5061
5 Comments
I think the tax bomb is still a thing. I’m doing RAP to pay the least possible to low interest loans and pay higher toward higher interest loans.
It’s going to depend a lot on the salary. If the AGI is over $100K, that interest subsidy disappears pretty quickly even with a larger loan balance. If it’s under $100K or the loan balance is extremely high, I could see RAP being a better option than IBR, especially for older borrowers.
I thought I was going to choose RAP, but my RAP payment is higher than my standard payment due to my income so I’m going with standard instead. My standard plan payment still covers the interest.
You will still have the tax bomb…except on RAP it’s after 30 years instead of 20/25 years on IDR.
I have read it’s possible to do RAP then switch to IBR for 20/25 year repayment…I am hoping to do that but waiting to hear more info