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I have German friends who had all their university free, and even had friends on my course (in the UK) where their government was paying their fees.

This may be so, but from what I understand, competition to get into university is steep. In 2010, less than half of German high school students passed the exam required to enter a university. I'm not sure how the process goes, but I am fairly certain that 'C' students aren't flocking to the equivalent of a US directional state school.

Quote from: runnershigh17 on April 17, 2015, 01:06:32 PM

Americans mentioning income based repayments/Extended Repayments/Income Sensitive repayments ect, remember that paying just $30 a month comes at a cost. Most of these plans stretch out your payments to 20-30 years instead of the normal 10 years.

Example - For a $20,000 at 5% you would pay $25,000 (about $5000 in interest) if you made the regular payments for 10 years

$20,000 loan at 25 years? $35,000!!! You will pay $15,000 in interest for the right to take an extra 15 years to pay for these loans.

Even if you do an income based repayment for only a few short years the extra payments on the interest you make will add a few hundred to thousand dollars to your loan. This is the same for government or private loans. Most government loans only cover the interest payments while you defer in school, not while you are paying the loan.

TLDR - If your American, don't go on an income based repayment plan if you don't have to. Loan companies and the government are only too happy for you to take as long as possible for you to pay off your loan because it give them more money. Stick to the 10 year schedule or make it shorter if you can.

Not all payment plans are created equal. For example, the plan I'm on. The interest doesn't capitalize on the principle amount for up to 5 years. After that, it will only add to the principle once per year (when you renew). There is also no penalty for paying more than required which means you can pay the interest (or more than that). Sure your loans are not decreasing as much as if you were on the normal plan but it allows you to use income to pay other things. For me, it was credit cards which have a much higher interest rate. When those are paid off, I can roll the money that was going to the card to the student loans.

You want to eliminate the higher interest debt as fast as possible and work your way down. But yeah, if you're just avoiding payments altogether, it's a pretty foolish thing to do.

Quote from: ajr30 on April 17, 2015, 02:14:18 PM

Quote from: runnershigh17 on April 17, 2015, 01:06:32 PM

Americans mentioning income based repayments/Extended Repayments/Income Sensitive repayments ect, remember that paying just $30 a month comes at a cost. Most of these plans stretch out your payments to 20-30 years instead of the normal 10 years.

Example - For a $20,000 at 5% you would pay $25,000 (about $5000 in interest) if you made the regular payments for 10 years

$20,000 loan at 25 years? $35,000!!! You will pay $15,000 in interest for the right to take an extra 15 years to pay for these loans.

Even if you do an income based repayment for only a few short years the extra payments on the interest you make will add a few hundred to thousand dollars to your loan. This is the same for government or private loans. Most government loans only cover the interest payments while you defer in school, not while you are paying the loan.

TLDR - If your American, don't go on an income based repayment plan if you don't have to. Loan companies and the government are only too happy for you to take as long as possible for you to pay off your loan because it give them more money. Stick to the 10 year schedule or make it shorter if you can.

Not all payment plans are created equal. For example, the plan I'm on. The interest doesn't capitalize on the principle amount for up to 5 years. After that, it will only add to the principle once per year (when you renew). There is also no penalty for paying more than required which means you can pay the interest (or more than that). Sure your loans are not decreasing as much as if you were on the normal plan but it allows you to use income to pay other things. For me, it was credit cards which have a much higher interest rate. When those are paid off, I can roll the money that was going to the card to the student loans.

You want to eliminate the higher interest debt as fast as possible and work your way down. But yeah, if you're just avoiding payments altogether, it's a pretty foolish thing to do.

If you have credit card debt with a higher interest rate it is much smarter to pay that off first. That is not a bad use income based repayments. However, some people like to just make their payments smaller when they really have the extra cash. That is a poor use of the income based repayments.

True. Many people are disciplined enough to pay more than the minimum so, in that case, it's better on the 10 year plan. At least then you're sure to have it paid off in that amount of time. But if you have discipline, you can actually pay off faster on IBR if you pay more than the minimum.

I got my bachelors from a private school in the states and my masters degree from a school that paid me to be there. I did everything that I could to do the "right thing" and managed to get out of my school with only... $48,000 in student loans. But there's this miraculous thing called an income based repayment plan. I'm on that for the bulk of my loans, but there are two that I need to pay off (one for $5,000 and one for $3,000) monthly. Fortunately those only cost me $50 a month (each), so it's not a concern. After this month (my second month with the EPIK program) I'll send in some paperwork and my income based repayment plan will change to reflect this new job. Not sure how much I'll pay, but it will be small.

It's depressing when I think about how much money I owe, but it's heartening knowing that I can make minimal payments in a responsible way and still live my life.