Government Already Proposing End to PAYE/PSLF gravy train

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type b pharmD said:
Technical insolvency not practical insolvency.

If your debts exceed your assets you are insolvent.
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You should seriously consider leaving this country. Give up your citizenship and migrate. Start a new life. A new start.
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midweststudent1 said:
Assets= house + retirement + vehicles + anything else you own

I don't want to be insolvent at ANY point if I don't have to be. Pay off that debt as quickly as you can
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For my situation .. its either pay back 500k with standard repayment or 200k with ibr
 
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type b pharmD said:
Already in the works!
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May I know which country are you planning to move?
Asking you because I got a good offer from UAE, but I am still thinking.

I think even if I give up my citizenship, I still have to pay my loans and then leave, rite?
I mean the US govt is not gonna let me just leave.
 
asian pharm said:
May I know which country are you planning to move?
Asking you because I got a good offer from UAE, but I am still thinking.

I think even if I give up my citizenship, I still have to pay my loans and then leave, rite?
I mean the US govt is not gonna let me just leave.
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I'm actually not planning to move for about 20 or so years (retirement).. just getting started on looking for locations. I do not plan to practice pharmacy as an expat, just run existing business and or maybe start a new one.

I hear UAE is the best place to go for pharmacy abroad...

Imho, its a better deal to just accumulate some money here, then move.

If you renounce citizenship, and dont share your address or contact details abroad , its highly unlikely youd be sought out. There is no debtors extradition last time I heard. Might be different if its 100s of thousands vs the us treasury... but.. still not really worth their effort to haul you in .. that doesnt guarantee payment.. and its not like they will sue the UAE to garnish your foreign wages.
 
Wow, who proposed this amendment? Completely out of touch with healthcare providers. They have to uphold the deal for those enrolled in PSLF... People have planned their lives around this government program and have been working in the lower pay public sector in order to acheive this for years. Govt is not losing money on this, rather they are just not making a ton off of the loan. PSLF essentially gives working professionals in the public sector an interest free loan. The original amount will still be paid by someone with a high debt to income ratio, they just arent killing them on the 7% interest. It would be insane from a healthcare perspective o let this bill pass there is already a shortage of primary care clinicians, this would very much add to that problem.
 
Has anyone ever tried to get a pharmacist position at a VA or public hospital? They are almost impossible get. Their salary is very comparable to the private sector. Some even make more and you can't beat their benefits (11 paid holidays, vacation and even pension at some places).

So do these places really need this program to recruit pharmacists? I doubt it. Besides they are getting 57 k off their student loans just like everybody else.

This program was meant for teachers, congressional aids, etc, not for healthcare professionals with 250 k in student loan debt but make 6 figure salary. No one is going to feel bad for well paid healthcare professionals when this program is capped or eliminated.
 
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confettiflyer said:
That would be Barry Obama himself (this is the White House proposal).
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Which makes me think why would his administration proposed this? It still has to be negotiated with the republicans so most likely the terms will be more strict and limited.

I think his administration knows it is hard to justify forgiving 300 k in student loans to a surgeon who did 7 years of residency at a non profit hospital and therefore he would only need 3 additional years.
 
BMBiology said:
This program was meant for teachers, congressional aids, etc, not for healthcare professionals with 250 k in student loan debt but make 6 figure salary. No one is going to feel bad for well paid healthcare professionals when this program is capped or eliminated.
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Don't forget punky law graduates.

But remember....the same could be said about bankers and the auto industry. I wouldn't have shed a tear if they didn't get bailed out, but they did anyway. So whether people feel bad or not is irrelevant, it'll come down to good old fashioned lobbying.
 
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I don't think the economy would be affected if the government doesn't pay a doctor's student loan debt.

Helping teachers? Sure
Helping doctors, lawyers, dentists, pharmacists? No way!
 
BMBiology said:
Which makes me think why would his administration proposed this? It still has to be negotiated with the republicans so most likely the terms will be more strict and limited.
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Do recall that it was a republican that started PSLF as it exists today in the first place. I'd actually disagree with you...I think for-profit schools will see this as a threat and lobby to severely curtail the white house proposal.

Think about it...if a for-profit (heck, even large non-profit) school is the beneficiary of student loan largess, there's a huge incentive for them to have this provision removed as it becomes a disincentive to borrow more for tuition. Don't forget government employee unions which may see this as an attack on their constituency.

Best part is, you can paint the poor overleveraged student (like me) as the victim to the general public about the rules changing in the middle. Better yet, no one is going to bother pushing the story of the surgeon getting loans forgiven because it's not very compelling. The kid with $300k in law school debt making $45k as a public defender? That's good reading.

tl;dr version:

In favor of cutting PSLF: tea partiers, a few far right republicans, Barack Obama (apparently)
In favor of keeping it as-is: Unions, for-profit (and non-profit) schools

We'll end up with a more generous cap of $150,000, in my opinion.
 
BMBiology said:
I don't think the economy would be affected if the government doesn't pay a doctor's student loan debt.
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It already has...why do you think we're missing so many primary care physicians?

Actually, if you think about it, pharmacists should be in favor of a PSLF cut because:

PSLF cut --> Even fewer physicians go into primary care --> health care is forced to go to midlevels and even pharmacists for routine "primary care-ish" stuff.
 
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confettiflyer said:
It already has...why do you think we're missing so many primary care physicians?

Actually, if you think about it, pharmacists should be in favor of a PSLF cut because:

PSLF cut --> Even fewer physicians go into primary care --> health care is forced to go to midlevels and even pharmacists for routine "primary care-ish" stuff.
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The shortage of primary care physicians is something new?
 
It's like this weird cycle....

Tuition inflation --> More borrowing --> Fewer people going into lower paying fields (peds, primary care) --> Stuff like PSLF helps stem the tide --> more subsequent tuition inflation by schools due to PSLF --> more borrowing --> Still fewer people going into lower paying fields --> PSLF changed --> rebound hypertension, so to speak.
 
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Or here:

"the advent of managed care in the 1990s led
to a short-lived resurgence of medical students entering
primary care training. Following a hallmark high in
1997, family practice residency programs’ enrollment
steadily declined as specialty programs enrollment
began to resurge."

“Fighting Hand to Hand over Physician Workforce Policy” By
Kevin Grumbach, Health Affairs, Vol. 21, No. 5 (2002), p. 20-22

Cited here: http://www.healthcapital.com/hcc/newsletter/7_12/pss.pdf
 
Well though its unlikely that they would renege on PSLF for those enrolled already, we still need to make our voice heard. In addition, this program will severely limit physicians going into primary care.
  • Scream from the rooftops that this is a terrible proposal that if applied retroactively, will almost instantly add tens of thousands of dollars and possibly hundreds of dollars of month to the bills of people already struggling with the most debt.
  • Write your story. Say who you are, how much you owe, how much you make and how these changes would affect you and your family.

  • Send your story to your Senators (especially), Congress people, the White House and the Consumer Finance Protection Bureau.

  • Send your story to Elizabeth Warren especially, who has been a champion of student loan borrowers. Also write to Barbara Boxer, who has paid attention to this issue. Dick Durbin has been friendly to student loan borrowers in the past, as has Bernie Sanders.

  • Write comments in any article you see online about this change. You likely don't want the world knowing your financial problems, but you can anonymize your story to make sure it's out there and combats any article that spins this as a "reform," which it isn't for many borrowers. If applied retroactively and to married couples, this is effectively the end of IBR and PSLF for borrowers already in both programs.
 
confettiflyer said:
I do...

". In response to reports that there was a growing over supply of specialists, during the
mid-to-late 1990s a growing proportion of new medical graduates chose primary care
specialties over non-primary care specialties."

http://bhpr.hrsa.gov/healthworkforce/reports/physwfissues.pdf
(PDF Page 8 -- numbered as page 3, bottom)

Nice long analysis if you feel like reading it (I sortof did).
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Let's assume this is accurate. PSLF didn't exist in the 90s and there was a surge of primary care physicians. How does this support your argument?

Med school tuition has always been expensive. I am not saying student loan debt is not a factor in choosing a residency but I think it is just one of many factors. If your main concern is student loan debt then I don't think you would go into primary care, hoping you would get a job at the VA, even if the government forgives your student loans after 10 years.

If your concern is a drop in primary care physicians, then why open this program to other physicians as well? I am sure there is no shortage of plastic surgeons. There is certainly no shortage of lawyers and pharmacists who want to work for the governments, the VA, and non profit hospitals.
 
Seeing as though the principal would get paid out regardless of PSLF in most cases, dont forget, one more note - the Federal Student Loan Program turned a $41.3 billion profit in 2013. Apple made $37 billion in profit in 2013. That's right. The Federal Student loan program is more profitable than Apple. It's more profitable than any bank in the world. In fact, were the Federal Student Loan Program a company, it would be the most second profitable in the world, behind Exxon. So any talk of "sustainability" and need for reform among these programs is absurd when viewed in context of the overall profit of the program.

source: http://www.usatoday.com/story/news/nation/2013/11/25/federal-student-loan-profit/3696009/
 
BMBiology said:
Let's assume this is accurate. PSLF didn't exist in the 90s and there was a surge of primary care physicians. How does this support your argument?

Med school tuition has always been expensive. I am not saying student loan debt is not a factor in choosing a residency but I think it is just one of many factors. If your main concern is student loan debt then I don't think you would go into primary care, hoping you would get a job at the VA, even if the government forgives your student loans after 10 years.

If your concern is a drop in primary care physicians, then why open this program to other physicians as well? I am sure there is no shortage of plastic surgeons. There is certainly no shortage of lawyers and pharmacists who are willing to work for the governments, the VA, and non profit hospitals.
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I personally don't care about the physician supply or anything like that, it's the unintended consequences of legislation that fuel PART of the reason why.

We've discussed other professions before, it would be impossible to legislate a targeted benefit to only benefit hipsters with liberal arts degrees that cost $250k working non-profit while simultaneously excluding surgeons working at non-profit hospitals.
 
Trent Steele said:
Well though its unlikely that they would renege on PSLF for those enrolled already, we still need to make our voice heard. In addition, this program will severely limit physicians going into primary care.
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No one is actually enrolled in PSLF. It's not a repayment program.
 
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Trent Steele said:
Seeing as though the principal would get paid out regardless of PSLF in most cases, dont forget, one more note - the Federal Student Loan Program turned a $41.3 billion profit in 2013. Apple made $37 billion in profit in 2013. That's right. The Federal Student loan program is more profitable than Apple. It's more profitable than any bank in the world. In fact, were the Federal Student Loan Program a company, it would be the most second profitable in the world, behind Exxon. So any talk of "sustainability" and need for reform among these programs is absurd when viewed in context of the overall profit of the program.

source: http://www.usatoday.com/story/news/nation/2013/11/25/federal-student-loan-profit/3696009/
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I think this is misleading and it is based on the assumption that everyone would pay back their student loans. What is the latest 90 day delinquency rate? Isn't it already 10%? The government simply can't take away your degree if you default. That is why the interest rate is 6.8%
 
confettiflyer said:
I personally don't care about the physician supply or anything like that, it's the unintended consequences of legislation that fuel PART of the reason why.

We've discussed other professions before, it would be impossible to legislate a targeted benefit to only benefit hipsters with liberal arts degrees that cost $250k working non-profit while simultaneously excluding surgeons working at non-profit hospitals.
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You can't? Really? You cant put a cap on amount that is forgiven? Who is going to enroll now? Not surgeons, not lawyers and anyone else with high student loan debt.

This cap is meant to not only limit the government exposure but to also limit the program from people who can actually afford to pay back their student loans. They may not live the good life but they certainly can afford to pay their student loans.
 
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BMBiology said:
You can't? Really? You cant put a cap on amount that is forgiven? Who is going to enroll now? Not surgeons, not lawyers and anyone else with high student loan debt.

This cap is meant to not only limit the government exposure but to also limit the program from people who can actually afford to pay back their student loans. They may not live the good life but they certainly can afford to pay their student loans.
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You can cap the amount, but you can't exclude specific professions (see my original post). There are plenty of attorneys with giant loans that work true public service, which this law was intended for. A small cap will exclude them and too many other people/institutions with skin the game.
 
One thing is universal though: everyone will pay, in some way, shape, or form.
 
I feel like this has to be done because of the suspected student loan bubble, but I think that they need to at least respect that some of us are responsible enough to pay back our debts. Plus from what I understand this effects loans after 2015? I feel like part of the problem is all the for profit schools that have popped up (some in the pharamacy realm) which have turned education into a business where they are able to take your money and reinvest elsewhere.

What's really surprising is that many advocacy groups (AMA, whatever lawyers have, and APhA) aren't fighting tooth and nail for this. I guess we're all just going to have to live as paupers and pay off our debt? I feel worse for MDs and DOs in various specialties that don't reach there full earning potential 10 or more years down the road.
 
baah...even with the PAYE expansion to include us, graduating with $115k in debt didn't help me with poop...seems like the best plan is just to graduate with the lowest amount of debt: state school, 3 year programs, or live @ home

anyone looking to join the "live cheap, setup a budget, and pay off your loans as soon as you can", follow my thread...I took out all the "look @ my blog!!" crap and am now focusing more on budgeting
 
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DruggieDoRight said:
What's really surprising is that many advocacy groups (AMA, whatever lawyers have, and APhA) aren't fighting tooth and nail for this. I guess we're all just going to have to live as paupers and pay off our debt? I feel worse for MDs and DOs in various specialties that don't reach there full earning potential 10 or more years down the road.
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The budget proposal just came out recently and I'm sure the discussion is happening.

I think the AMA just wants more money for residencies and whatnot.
 
BMBiology said:
You can't? Really? You cant put a cap on amount that is forgiven? Who is going to enroll now? Not surgeons, not lawyers and anyone else with high student loan debt.

This cap is meant to not only limit the government exposure but to also limit the program from people who can actually afford to pay back their student loans. They may not live the good life but they certainly can afford to pay their student loans.
Click to expand...

I don't see how a cap on the 25 year forgiveness could be added. The reason a $57,500 cap on PSLF works is because you just wait another 15 years and it will eventually be forgiven. But what about someone who does the 25 year forgiveness and has their loans balloon to >$1m (very possible). What do you do? Re-enroll them into IBR/PAYE for another 25 years?

You can't just put a cap at the end of 25 years and say, oh we won't forgive your balance, it's too big, because you have no repayment plan for them to graduate into. And even if you do, they can just keep on paying 10% of their income until they die, and then their loans get forgiven anyways. Albeit, they will have ballooned to an even greater amount by then, so it will look like a greater "loss" to the taxpayer.. ha! Even though that person probably paid what they originally borrowed, many times over.
 
The main takeaways from this proposed budget, which are likely to stay in whatever bill does eventually pass are:

1) No more tax bomb
2) Don't do PSLF (but PAYE x25 years at 10% is available for all loan dates now, which is a huge improvement over IBR x25 years at 15%)

The fact is most pharmacist and especially physician jobs don't qualify for PSLF, so this will affect a few people negatively, but most will be better off.
 
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If the government can take part of your social security, they can put a cap on the forgiven amount.

I think there will be a cap or a tax penalty on any amount that is forgiven because if there is nothing then what is going to stop someone from borrowing 100 k vs. 200 k? Might as well borrow 200 k because it wouldn't matter. You should still pay the same amount.

And who knows what is going to happen during the next 25 years? The Obama admin is already proposing changes and the government has not forgiven one single cent.
 
BMBiology said:
I think his administration knows it is hard to justify forgiving 300 k in student loans to a surgeon who did 7 years of residency at a non profit hospital and therefore he would only need 3 additional years.
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It's not like that surgeon was sitting in front of his computer playing solitaire all day long.

There's zero justification in forgiving the loans of some public policy grad student from Georgetown University ($$$) who works for a decade as a Congressional Staffer or at an NGO before joining some high-falutin think tank or consulting firm, but not doing the same for the surgical resident who works 80-100 hrs a week at nearly minimum wage for 6-10 years. The distinction is purely semantic.

I don't actually have any problem with the cap, as it is consistently applied across all fields. However, for PAYE/IBR to be sound public policy, it needs to have lower interest rates. Under the current proposed PAYE plans, the government is actually going to have to "forgive" MORE money at the end of 25 years than at the end of the 10-year PLSF program, because of accrued interest at 6.8-8.4% (doubling the principal every decade). That's absurd. It's also a huge debt bomb that never gets smaller for the people who are in this program, which means these people would be in a world of hurt when applying for mortgages or car loans for 25 years. That's untenable. Delayed gratification till death is a little bit too much. And if say at the end of 25 years, our government's budget remains broke, it could very well renege again on full debt forgiveness, and that would be morally reprehensible if during that time the principal had doubled under the government sanctioned payment plan at 6.8-8.4% interest.

The question is why do we still need interest rates (other than a minimum service rate) if at the end of 25 years it's all going to be forgiven anyway? You've basically precluded default risk. By having the huge interest rates, the federal government is only going to find itself with large paper write-offs of forgiven loans 25 years from now.
 
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Tyrion+Lannister+11.jpg

This is the sort of thing that frequently happens to people that never intended to pay their debts. Always plan on paying them, because the government can flip on a dime and decide not to.
 
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confettiflyer said:
It already has...why do you think we're missing so many primary care physicians?

Actually, if you think about it, pharmacists should be in favor of a PSLF cut because:

PSLF cut --> Even fewer physicians go into primary care --> health care is forced to go to midlevels and even pharmacists for routine "primary care-ish" stuff.
Click to expand...

Cant say it better....100% agree
 
BMBiology said:
If the government can take part of your social security, they can put a cap on the forgiven amount.
Click to expand...

ROFL @ social security. anyone on here actually believe it'll be around for most of us anyway?

BMB this is where we both agree -- i'm not relying on the gov't to give me anything with respect to social security.
 
ortho11111 said:
It's not like that surgeon was sitting in front of his computer playing solitaire all day long.

There's zero justification in forgiving the loans of some public policy grad student from Georgetown University ($$$) who works for a decade as a Congressional Staffer or at an NGO before joining some high-falutin think tank or consulting firm, but not doing the same for the surgical resident who works 80-100 hrs a week at nearly minimum wage for 6-10 years. The distinction is purely semantic.

I don't actually have any problem with the cap, as it is consistently applied across all fields. However, for PAYE/IBR to be sound public policy, it needs to have lower interest rates. Under the current proposed PAYE plans, the government is actually going to have to "forgive" MORE money at the end of 25 years than at the end of the 10-year PLSF program, because of accrued interest at 6.8-8.4% (doubling the principal every decade). That's absurd. It's also a huge debt bomb that never gets smaller for the people who are in this program, which means these people would be in a world of hurt when applying for mortgages or car loans for 25 years. That's untenable. Delayed gratification till death is a little bit too much. And if say at the end of 25 years, our government's budget remains broke, it could very well renege again on full debt forgiveness, and that would be morally reprehensible if during that time the principal had doubled under the government sanctioned payment plan at 6.8-8.4% interest.

The question is why do we still need interest rates (other than a minimum service rate) if at the end of 25 years it's all going to be forgiven anyway? You've basically precluded default risk. By having the huge interest rates, the federal government is only going to find itself with large paper write-offs of forgiven loans 25 years from now.
Click to expand...

Finally another voice of reason. This post makes 100% sense. I've bolded the spots where I'm doing a virtual standing ovation or a big tent revival AMEN.

There's a gut feeling floating around that debtors need to pay their fair share, etc... I generally agree, BUT...the incident that caused problem is done, the money is borrowed, the money has been spent. Now what?

It's like showing up to bankruptcy court to wag your finger at someone saying they overspent/should have done a better job. Well...yes, thank you captain obvious, now what do we do about it that won't wreck the entire economy and take you with it?
 
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BMBiology said:
If the government can take part of your social security, they can put a cap on the forgiven amount.

I think there will be a cap or a tax penalty on any amount that is forgiven because if there is nothing then what is going to stop someone from borrowing 100 k vs. 200 k? Might as well borrow 200 k because it wouldn't matter. You should still pay the same amount.

And who knows what is going to happen during the next 25 years? The Obama admin is already proposing changes and the government has not forgiven one single cent.
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I LOL'ed at this part too. Social security, really? They can have all my social security, I expect nothing from it. And anyone who is in their 20's or 30's (probably even 40's) should expect the same. I'm not counting on the government to take care of my retirement.

Besides, this still doesn't answer the question to what happens to the person who graduates from the 25 year IBR/PAYE repayment plan and fails to have all their debt forgiven if they exceed some future implemented cap? Do they re-enter some new repayment plan? Are they no longer eligible for IBR/PAYE payments that are based on their income? Do they default and it all becomes due immediately? Because I can guarantee that those people will not be able to pay the huge balances that have accrued with outlandish interest rates of 6.8-8% over 25 years. I get a much better rate on my private student loans, the only reason I take out federal loans is because of the repayment benefits.
 
BMBiology said:
If the government can take part of your social security, they can put a cap on the forgiven amount.

I think there will be a cap or a tax penalty on any amount that is forgiven because if there is nothing then what is going to stop someone from borrowing 100 k vs. 200 k? Might as well borrow 200 k because it wouldn't matter. You should still pay the same amount.

And who knows what is going to happen during the next 25 years? The Obama admin is already proposing changes and the government has not forgiven one single cent.
Click to expand...
Can the government just not give me social security at all? Because I'd rather a program that generates poor return on investment over a 40 year period to not exist. It's a decent program for people that don't know how to invest, but a terrible one for those that do. I'm basically being robbed for a program I'll never use or need, it's BS.
 
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Mad Jack said:
Can the government just not give me social security at all? Because I'd rather a program that generates poor return on investment over a 40 year period to not exist. It's a decent program for people that don't know how to invest, but a terrible one for those that do. I'm basically being robbed for a program I'll never use or need, it's BS.
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Total agreement here. You're robbed, not to finance your future retirement, but to pay for the retirement of others today (including many who did not put a single penny into the pot). It's worse than a ponzi scheme. Just consider it as another tax and rely on yourself.
 
a runner said:
I LOL'ed at this part too. Social security, really? They can have all my social security, I expect nothing from it. And anyone who is in their 20's or 30's (probably even 40's) should expect the same. I'm not counting on the government to take care of my retirement.

Besides, this still doesn't answer the question to what happens to the person who graduates from the 25 year IBR/PAYE repayment plan and fails to have all their debt forgiven if they exceed some future implemented cap? Do they re-enter some new repayment plan? Are they no longer eligible for IBR/PAYE payments that are based on their income? Do they default and it all becomes due immediately? Because I can guarantee that those people will not be able to pay the huge balances that have accrued with outlandish interest rates of 6.8-8% over 25 years. I get a much better rate on my private student loans, the only reason I take out federal loans is because of the repayment benefits.
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You are not counting for social security to be there but you are counting the government to forgive your student loans? LOL
 
To my understanding and correct me if I am wrong if you "default" on your student loans it doesn't affect your credit score for future home purchases or vehicle etc. Why is that? Would there be more of an incentive for students to be aware of their anticipated loan burden after graduation? And maybe change as to what school they would choose? Or not go to these for profit private schools?
 
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BMBiology said:
You are not counting for social security to be there but you are counting the government to forgive your student loans? LOL
Click to expand...

Yup, a 10 year timeline is a bit more believable than 40.
But a PAYE forgiveness timeline of 25 years is...questionable.
 
Jibby321 said:
To my understanding and correct me if I am wrong if you "default" on your student loans it doesn't affect your credit score for future home purchases or vehicle etc. Why is that? Would there be more of an incentive for students to be aware of their anticipated loan burden after graduation? And maybe change as to what school they would choose? Or not go to these for profit private schools?
Click to expand...

1) Pretty sure they do affect credit score. Loans show up like any other installment account on your credit report any negative data would be crunched by a credit score calculation.

2) I think students are aware but are optimistic (Seaward, 2000).

3) See #2 regarding changing what school they go to. Also, most of us in pharmacy don't really have a choice. If you're a Californian, even before the school explosion, you had to choose between UCSF, UOP, and USC. UCSF was the lone public school and tuition there is $35k/yr for in-state. By comparison, I went out of state and paid ~$28k/yr at a private school.
 
BMBiology said:
You are not counting for social security to be there but you are counting the government to forgive your student loans? LOL
Click to expand...

Even if forgiveness disappears, they can't exactly force the money out of you. At debt to income ratios that we have (ie: upper middle class), for many people there is absolutely no way they are going to pay off the loans. One way or another the govt is taking the hit on this .. either by forgiving it through a program, forgiving it upon death, capping interest accrual, or offering sweetheart repayment deals. There's just no way around it. My situation is a prime example. If forgiveness disappears, 50 years down the line, when the balance is $4,000,000.00, and I am either dead, living abroad, or retired and technically have no income, the govt is going to eat it. Forgiveness is just a way of reducing the ugly-factor, and sweeping the student loan "scam" factors under the rug so that nobody makes a gigantic fuss over being swindled for their education cost.
 
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