Fonzie's Guide to Paying off your STUDENT DEBT

[Shikima]

Because of you die the government loans disappear. Can't recall if the same holds true or not for other student loans (i.e. someone else had to pay them).

But this doesn't answer the question what to do if the loans are the same rate.

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[st2205]

But this doesn't answer the question what to do if the loans are the same rate.

It should if they're the same rate and one disappears upon death while the other transfers to a spouse.

 

[Shikima]

Still doesn't make any sense man. What does this have to do with my spouse? Planning on knocking me off? I do have my Sig handy...

 

[st2205]

Still doesn't make any sense man. What does this have to do with my spouse? Planning on knocking me off? I do have my Sig handy...

Well, I'll just tell you how I see it for me: I could be aggressive paying off a government loan and end up dying, the government loan disappearing and my wife stuck with the bill for a private loan. Or I can pay down the private loan and in the case that I should expire, the government loan is gone and my wide is left with a much smaller balance on private.

 

[Shikima]

Well, I'll just tell you how I see it for me: I could be aggressive paying off a government loan and end up dying, the government loan disappearing and my wife stuck with the bill for a private loan. Or I can pay down the private loan and in the case that I should expire, the government loan is gone and my wide is left with a much smaller balance on private.

Why would my wife be on the hook for the private loan if she wasn't a co-signer?

 

[thepoopologist]

Win Mega Millions. Problem solved.

 

[Shikima]

Trying!

 

[notdeadyet]

Why would my wife be on the hook for the private loan if she wasn't a co-signer?

Because your debt obligations do not die with you. She will inherit your loan burden, with the exception of federal student loans.


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[Mapplicant]

How frequent are there jobs that will help pay down your student loan debt? As a PGY-1 I've been hearing some things about this but not sure how common this is or if the typical place that will offer that may be some rural place and no one wants to live/work in.

Otherwise, the reminder of paying off higher % debt is noted. I've been saving and invest the "Boglehead" way and have learned quite a bit from the White Coat Investor.

Biggest challenge is to really setup a budget and stick to it so you can handle emergencies without derailment and then have a time expectation of when to be lifted from debt. I've been trying to keep a monthly budget but its quite hard. I'll have to go back to my past year's expenses and come up with an average monthly expenditure number so I can predict future expenses and then budget for other things above that.

 

[Mapplicant]

Good post on white coat investor regarding how to tackle student loans: http://whitecoatinvestor.com/student-loans-vs-investing/

1) Pay off high interest debt. Any credit cards or consumer debt at 8% or higher should be paid off ASAP. Honestly you should have never accumulated this. Live like a resident until it is gone.

2) Invest in tax-protected accounts. If you are a resident max out your personal and spousal Roth IRAs. If an attending, max out your 401K, SEP-IRA, HSA and any other retirement account that allows you full marginal tax rate deductions.

3) Pay off non-deductible loans between 5% and 8%. These include most current student loans.

4) Consider investing in other accounts that offer a tax break, such as 529s (kid’s college accounts), UGMAs, and backdoor Roth IRAs if your circumstances merit.

5) Invest in risky assets in a taxable account (stock mutual funds or investment properties).

6) Pay off loans with after-tax rates of 3%-5%. These include most mortgages.

7) Pay off loans with after-tax rates below 3%.

8) Invest in safe assets in a taxable account such as CDs, bonds, and savings accounts. If these types of assets return to historic norms (4-5% returns) instead of their current 1-2% returns, then it is okay to invest in these prior to paying off very low interest debt.

9) Don’t carry any debt into retirement. Losing the safety net of on-going employment income makes this a risky affair. It’s one thing to get foreclosed on when you’re 30. It’s entirely different when you’re 70.

 

[wolfvgang22]

A large term disability plan and private own-occupation disability insurance would cure these worries and allow smart financial decisions.

This is what I am starting to do. I also got life insurance just prior to starting med school that will be enough to pay off all my private loan debt should I die.

 

[OldPsychDoc]

Re: disability insurance--one of my former administrators posted this on her FB page recently:

PAY ATTENTION TO THIS: If there is one thing I have learned through this medical experience with [36 yr old formerly-healthy husband with stroke], it is that EVERYONE who can sign up for short and long term disability insurance SHOULD DO IT. Don't think twice about it, just do it. Also, if you have a trusted loved one in your life set up a financial Power of Attorney and medical Power of Attorney NOW. Don't wait for a crisis to happen. Do it now, keep it on file.

Word to the wise...

 

[Mapplicant]

Re: disability insurance--one of my former administrators posted this on her FB page recently:

Word to the wise...

Noted. I've been to a couple of financial dinners hosted by a financial firm that sells disability insurance to physicians and my first gut reaction was "Huh! Another bunch of salesmen. I'll just take the free meal!"

But it seems disability insurance may have some role for a physician since it is another type of insurance that we are able to afford and can have value should something happen. I'll have to see about this once I finalize my life insurance purchase.

 

[Shikima]

What are people typically doing for LTD insurance?

 

[WolverineDoc13]

Oy, scary post. Anyone here thinking of joining the military? Or who can offer advice on this? (The reserves) The army gave a pretty cool presentation at our school (I do like an attractive man in uniform). The offer a 2,000 monthly stipend and 250K loan repayment. The duties after residency are 1 weekend a month and 2 weeks per year (unless we start another war...). I imagine the benefits are similar in other branches.

I'm considering that to help, but I'm not quite sure how they utilize psychiatrists for active-duty soldiers (pre-deployment med checks?)

Any thoughts on this?

 

[notdeadyet]

I'm Army reserve corps. Happy to answer questions. A couple thoughts that recruiters tend to gloss over:

The stipend you are talking about is called STRAP and is about $2,200/month,. It is a 2:1 payback program, which means if you take STRAP for all four years of residency, you will owe 8 years of drilling status as a psychiatrist post-residency.

The student loan repayment is called HPLRP and is $40K/year for up to 6 years. You can only take it during your PGY-3/4 years. After you finish residency, you can take it for four more years, but while you take it, you are NOT paying back STRAP obligation.

In other words, if you take STRAP for PGY-1-4 years of residency and HPLRP for PGY 3/4, followed by HPLRP for four more years, you will be in drill status for a total of 16 years from the time you start residency. You will be on flexi-training while a resident (drilling as infrequently as one weekend every other month and two weeks every other year). For the 12 years post-residency, you will be on regular drill status (one weekend per month and two weeks per year) and also deployable.

Feel free to PM me with more questions or check out the various Army Reserve and National Guard threads in the military forum on SDN.

 

[Shikima]

Notdeadyet, What is there post residency?

 

[notdeadyet]

Notdeadyet, What is there post residency?

I can only speak for Army (which tends to have the most benefits), but if you are reserve corps, you are limited to either HPLRP or Special Pay, which is $25K/year, on top of drill pay. When you join the Reserve Corps, you sign up for 6 years minimum (essentially).

For folks going active, there is accession bonuses. Something like $200K bonus for psychiatrists. But you are active duty (full-time soldier) for four years.

 

[notdeadyet]

Having been in the Army for 5 years, I want to stress one I know to be a truism: DO NOT join for the money. You need to do it because you want to make a sacrifice, provide a service, and care for servicemen/women. Join for the money and you will likely be disappointed, bitter, and an annoyance to everyone around you. You can come close to matching the military financial benefits by moonlighting heavily, and you can always tell your moonlighting location "no."

They call it military "service" for a reason.

 

[Mapplicant]

Always read the fine print regarding military service (AKA, it's never as cushy as the recruiters make it out to be in a one hour presentation) and as it has been said ad nausea - never join for the money.

 

[WolverineDoc13]

Thanks for the advice! Tough decisions await!

 

[singmed15]

Sorry to revive what appears to be a dead thread, but a question to anyone out there...

Do federal loans accrue interest during residency, even in forbearance?

 

[F0nzie]

Sorry to revive what appears to be a dead thread, but a question to anyone out there...

Do federal loans accrue interest during residency, even in forbearance?

Yes, the unsubsidized portion.

 

[Shikima]

Having been in the Army for 5 years, I want to stress one I know to be a truism: DO NOT join for the money. You need to do it because you want to make a sacrifice, provide a service, and care for servicemen/women. Join for the money and you will likely be disappointed, bitter, and an annoyance to everyone around you. You can come close to matching the military financial benefits by moonlighting heavily, and you can always tell your moonlighting location "no."

They call it military "service" for a reason.

As prior service myself, and had been contemplating rejoining, I decided not to go that route. The VA's nonsense is enough to gag on at times and I feel like I'm helping more in that environment as they're putting their lives back together - not a lot I can do while they're still AD.

 

[notdeadyet]

Yep. There are many ways to contribute. You can raise your hand and work with soldiers, sailors, airmen and marines currently serving actively and in the reserve so that they can make sense of their sacrifices and continue to serve in the safest way possible. You can serve our veterans after the fact at the VA, Vet Center, or various charities and help them come to terms with their time and best accommodate their experiences and enjoy the next phase of their life. And maybe most significantly, you can do everything in your power to take strong and passionate stands to prevent future wars and practice old school preventative medicine. Some of the best ways to serve do not involve a uniform...

Thank you for your service, Shikima. I don't think I was aware...


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