I read this today on a military medicine web page.
"The DoD has increased pay for HPSP and HAP. This month the stipend for HPSP and FAP was increased from $1305 to $1605. In July 2008, the stipend will be increased to $1907. In 2007 the annual grant for FAP participants remained the same but will be increased from $28,454 to $45,000. The stipend increases amount to 18% per year and the grant increase is 58%!"
My main question is this. Since the FAP benefits are taxable, how much of the 28k or 45k can you expect to really be able to use to pay off your loans?
Also, is the HPSP stipend taxable as well?
Both HPSP and FAP stipends and grant are taxable.
One good thing is that you don't have to pay social security taxes. The amount of federal and state taxes you pay depend on your state of residence and number of exemptions.
This new FAP increase will allow you to make over $100,000 per year as a resident! This is amazing.
Assuming your residency pays you $40,000/year, your total taxable income will be $107,884/year.
Use this calculator to determine your federal tax:
http://www.irs.gov/individuals/page/0,,id=14806,00.html
Your federal taxes (single with standard deductions):
$23,366
State taxes:
~$8000
FICA/SS on the $40,000:
~$3000
After tax income: ~$73,518/year (~32% goes to taxes)
You should consider purchasing a home to reduce your tax burden and possibly make some money from your home after leaving residency.
Assuming you live only on your resident salary (after taxes): ~$27,258
You should have $73,518 - $27,258 = $46,260/year to pay off student debt.
Thus, you'll have the following to pay off debt for a:
4-year internship/residency program: $185,040
5-year internship/residency program: $231,300
6-year internship/residency program: $277,560
Hope this helps. Keep in mind that the above is a fairly high tax rate based on standard deductions and single person.