loan+ life

[suzyp]

Hi everyone
I am a long time reader,but this is my first post here. I need some advice. I am a pharmacist with a family ( 2 kids ) I have only been out of school for 3 years. I have a lot of loans $171K. When I first graduated I was only able to find part time work and still have stayed with that place for 2 years now. I love spending time with my kids I have really enjoyed my life in the past few years. I am raising them exactly the way I want to and they are my main priority. But I have been so worried about the loans for the past few days. Up until now I was perfectly fine I was paying my minimum payments( I have IBR) I was not worried about my loans,but I feel like at this rate they will never be paid off.What should I do ? Put kids in day care. (live in NYC in a not too great neighborhood- cant trust most day cares) and work full-time? OR pay minimum payments and just wait for loans to get paid off whenever they do. OR wait until kids are school age then go full time...This all may sound stupid to some of you I am looking for some good advice though. Really appreciate your comments



Thanks

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[BidingMyTime]

Definitely go full time when your children are school-age, at a minimum. I would recommend paying more than the minimum now, if possible. Is your spouse able to help? I don't know the cost of good NYC daycares, compared to the salary you make as a pharmacist....I would suggest you look up the numbers for those and then see what the difference is, it will probably give you a better idea if its worth it to you.

 

[suzyp]

thanks for your reply. MY husband can help a little but not too much. Good day cares cost ALOT!! I had asked a few.

 

[deleted390966]

There's another type of repayment plan called Pay As You Earn: https://studentaid.ed.gov/repay-loans/understand/plans/income-driven

 

[suzyp]

is my situation common? AND will i eventually be able to get out of debt given it may take me 10 -15 years? I hope my debt will not be triple what it is now..
is PAYE better than Income based??( im gona read that article now but maybe you guys can explain it )

 

[kvl1027]

I'm in a similar situation. I graduated in 2010 with 147K, now I owe 162K. I'm making a very substantial salary and I'm finally in a position that my principle is going down instead of up. I made the decision I was just going to deal with the interest and live a little. My wife is a stay at home and I wanted to keep it that way. Now my boys are 6 and 8 and she is working on her Real Estate license.

The trade off was for me to pay more in interest and allow my wife to raise my kids and I'm glad I did. A financial adviser would likely disagree with that move as financially it's probably not the best decision. Keep in mind that if you continue to make the minimum payment, any amount that is not paid by year 20 or 25 (depending on your repayment schedule) will be written off. However, the portion written off will be taxed as income (equivalent to your NET worth).

You will pay more in the long run, but it's a trade off. Only you can truly know what's best for you and your family.

 

[confettiflyer]

Figure out your priority and go from there. Despite all the rhetoric you'll read on this site about loan debt and repayment, it really boils down to what you want out of life and what's important.

If I were in your shoes, I'd keep paying the minimum and raise your kids as you have been seeing that you're happy with that result. Money will eventually come, loans will eventually get paid (if anything that'll be delayed), but your kids will grow up regardless of your financial situation. So go ahead and wait and enjoy parenthood.

 

[suzyp]

OMG thank you guys for the great replies..this is putting my mind at ease. I did always figure that I might some day regret not paying my loans faster, but if I ignore my kids and make them secondary I will regret it everyday and in the future as well. Once they are grown up there is no turning back. they are my priority and I am not always gona be part time just till they are in school. now i can actually sleep tonight and stop taking my xanax.. lol

 

[Gombrich12]

Don't pay your loans off, if no one pays them what is the government going to do? Enroll in IBR/PAYE and coast.

 

[trailerpark]

Don't pay your loans off, if no one pays them what is the government going to do? Enroll in IBR/PAYE and coast.

typical democrat...

 

[confettiflyer]

typical democrat...

View attachment 187595

Good thing IBR (+ PSLF) was enacted by a very republican George W. Bush.

 

[mustang sally]

is my situation common? AND will i eventually be able to get out of debt given it may take me 10 -15 years? I hope my debt will not be triple what it is now..
is PAYE better than Income based??( im gona read that article now but maybe you guys can explain it )

I think your situation (in having a large debt) is common. I've been working full-time for 2 1/2 years now. When I first started paying on my loans the total was around $180k, now I've only paid it down to $163k. It seems like I should have been able to pay more off by now, but the interest rate kills me.

I have IBR as well. One thing that I do is that once my minimum payment is fulfilled, I put all of my extra money towards the Grad Plus loans since they have the higher interest rates (obviously this only works if you're paying more than the minimum). Also, I'm starting to be more diligent now about paying a few extra hundred dollars here and there if I have money that I'm not using. Honestly, it still feels very insignificant when I'm putting $200 towards a $163k balance, but it seems to be the only thing I can do. I also don't want to put all my money towards paying off my debt and neglect other financial goals such as retirement (some people on this board have a different opinion about this).

Good luck! And definitely go full-time when you are able!

 

[zelman]

...Keep in mind that if you continue to make the minimum payment, any amount that is not paid by year 20 or 25 (depending on your repayment schedule) will be written off...

Isn't that only the case if you work for a non-profit?

 

[Monsterdaddy]

Isn't that only the case if you work for a non-profit?

You're thinking of PSLF which is forgiveness after just 10 years working full-time at a non-profit/public institution.

In the OP's case, she is part-time at a for-profit. I don't believe she is eligible for PAYE based on the year she graduated but she can do IBR and have the balance forgiven in 25 years (but will need to report the forgiveness as taxable income at that time -- don't stress too much over this.)

Suzy, I believe the best course of action for you and your family is to continue what you are doing and not worry about repaying the loan which I think you will find extremely difficult and stressful. (And I am from NYC so I understand how expensive daycare can be.) Even if you go full-time when your kids are older, you may find that you are just too far behind with accumulated accrued interest.

So if repaying the loan is not a viable reality then assume you will just have to get it forgiven in another 23 years. The plan should be to minimize payments. I would recommend contributing as much as you can to a 401(k)/deductible IRA (every dollar you put in saves you 15 cents in loan payments -- no brainer in my opinion.) I am also assuming you are filing taxes separately to enable having just your income to be used for calculating the loan payments?

Again, the loan programs may change for better or worse in the future.

 

[suzyp]

I think your situation (in having a large debt) is common. I've been working full-time for 2 1/2 years now. When I first started paying on my loans the total was around $180k, now I've only paid it down to $163k. It seems like I should have been able to pay more off by now, but the interest rate kills me.

I have IBR as well. One thing that I do is that once my minimum payment is fulfilled, I put all of my extra money towards the Grad Plus loans since they have the higher interest rates (obviously this only works if you're paying more than the minimum). Also, I'm starting to be more diligent now about paying a few extra hundred dollars here and there if I have money that I'm not using. Honestly, it still feels very insignificant when I'm putting $200 towards a $163k balance, but it seems to be the only thing I can do. I also don't want to put all my money towards paying off my debt and neglect other financial goals such as retirement (some people on this board have a different opinion about this).

Good luck! And definitely go full-time when you are able!

thank you for the reply... i wish i had a better idea of my loans and payments while I was in school. I was just thinking I am getting this big shot degree

 

[suzyp]

. Keep in mind that if you continue to make the minimum payment, any amount that is not paid by year 20 or 25 (depending on your repayment schedule) will be written off. However, the portion written off will be taxed as income (equivalent to your NET worth).

You will pay more in the long run, but it's a trade off. Only you can truly know what's best for you and your family.

Is there any guarantee that loans will be forgiven after 20 years??? Should I even bring that into the calculation? I mean it is in writing somewhere that those who graduated at this time the law will remain that same for us. I just dont want be 50 and still have student loans that are not gona be forgiven b/c of law changes...then ill be screwed for the rest of my life...

 

[suzyp]

You're thinking of PSLF which is forgiveness after just 10 years working full-time at a non-profit/public institution.

In the OP's case, she is part-time at a for-profit. I don't believe she is eligible for PAYE based on the year she graduated but she can do IBR and have the balance forgiven in 25 years (but will need to report the forgiveness as taxable income at that time -- don't stress too much over this.)

Suzy, I believe the best course of action for you and your family is to continue what you are doing and not worry about repaying the loan which I think you will find extremely difficult and stressful. (And I am from NYC so I understand how expensive daycare can be.) Even if you go full-time when your kids are older, you may find that you are just too far behind with accumulated accrued interest.

So if repaying the loan is not a viable reality then assume you will just have to get it forgiven in another 23 years. The plan should be to minimize payments. I would recommend contributing as much as you can to a 401(k)/deductible IRA (every dollar you put in saves you 15 cents in loan payments -- no brainer in my opinion.) I am also assuming you are filing taxes separately to enable having just your income to be used for calculating the loan payments?

Again, the loan programs may change for better or worse in the future.

This is what I was thinking that kids will need be more when they are in school age and if I am not there they might feel neglected. BUt at a younger age they really don't know the difference. I mean they do know but it really doesn't have a negative impact on their personality.
Interest is what I am concerned about is there anyway to get lower interest?
I cant believe how many decisions I'm regretting at this time main one going to pharmacy school even though I love my career and profession. Mainly for the price of becoming a pharmd I am paying now and will pay (seems like) forever

 

[Monsterdaddy]

Check your MPN (master promissory note). Mine has the following verbage:

"Income-Based Repayment Plan – Under this plan, your required monthly payment amount will be based on your income during any period when you have a partial financial hardship. Your monthly payment amount may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If you repay under this plan and meet certain other requirements over a 25-year period, you may qualify for cancellation of any outstanding balance on your loans."

The program itself is almost certain to change in the future but current borrowers should be grandfathered based on the above language, and the legal principles of equity.

 

[suzyp]

another idea I had was getting a full time job( if i can even find one) and putting in everything I make for a few years into loans( 60k-70K). My husband taking care of the living expenses and living in absolute poverty. what do you think is that doable?

 

[suzyp]

Check your MPN (master promissory note). Mine has the following verbage:

"Income-Based Repayment Plan – Under this plan, your required monthly payment amount will be based on your income during any period when you have a partial financial hardship. Your monthly payment amount may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If you repay under this plan and meet certain other requirements over a 25-year period, you may qualify for cancellation of any outstanding balance on your loans."

The program itself is almost certain to change in the future but current borrowers should be grandfathered based on the above language, and the legal principles of equity.

My IBR has to be redone yearly so you think Ill still be ok

 

[Monsterdaddy]

another idea I had was getting a full time job( if i can even find one) and putting in everything I make for a few years into loans( 60k-70K). My husband taking care of the living expenses and living in absolute poverty. what do you think is that doable?

Probably need to assess more information. I asked you if you file taxes as married, filing separately to lower your loan payments. You can PM me if you don't feel comfortable sharing the information. I assume your husband works but does not make as much as you do? This information is helpful because you want to lower your payments as much as possible and excluding your husband's income from the IBR calculations help (15 cents for every dollar of his income to be exact) unless he makes very little income. Also, do you put away money for retirement, i.e. 401(k)

I think you are worrying too much. I work full-time and part-time too as a floater and plan on getting my loans forgiven under PSLF in 8 years. I am raising 5 kids and my wife does not work. My opinion has been that the time you spend with them when they are young are extremely important.

I would: 1) take care of family, 2) take care of retirement, and 3) pay off loans, in this order. As for work, seek full-time employment with a non-profit first. Also, PSLF only requires 30 hours per week of work across any number of non-profit/public jobs -- even non-pharmacy jobs count so two part-time jobs that add up to 30 hours is good for PSLF -- (just need a lot more recordkeeping). PSLF is just 10 years vs. another 23 years for you.

 

[suzyp]

Probably need to assess more information. I asked you if you file taxes as married, filing separately to lower your loan payments. You can PM me if you don't feel comfortable sharing the information. I assume your husband works but does not make as much as you do? This information is helpful because you want to lower your payments as much as possible and excluding your husband's income from the IBR calculations help (15 cents for every dollar of his income to be exact) unless he makes very little income. Also, do you put away money for retirement, i.e. 401(k)

I think you are worrying too much. I work full-time and part-time too as a floater and plan on getting my loans forgiven under PSLF in 8 years. I am raising 5 kids and my wife does not work. My opinion has been that the time you spend with them when they are young are extremely important.

I would: 1) take care of family, 2) take care of retirement, and 3) pay off loans, in this order. As for work, seek full-time employment with a non-profit first. Also, PSLF only requires 30 hours per week of work across any number of non-profit/public jobs -- even non-pharmacy jobs count so two part-time jobs that add up to 30 hours is good for PSLF -- (just need a lot more recordkeeping). PSLF is just 10 years vs. another 23 years for you.

we do file taxes together .He works but doesn't make as much as me. I do put away the 5% for 401k.
I think i am worrying too much too, maybe the turning 30 crisis, but I just cant help myself
I was fine just a few days ago maybe it will go away in a few more days.
I never see any job postings for public jobs in pharmacy field at least i will keep looking though

 

[BidingMyTime]

If you repay under this plan and meet certain other requirements over a 25-year period, you may qualify for cancellation of any outstanding balance on your loans."

Key word seems to be "may". Nobody is guaranteed cancellation of their loans. Now we can all debate politically if and how its likely to change, but it doesn't change the fact that there is a risk involved. Already there are people who are retiring....who are having their SS garnished to pay their college debt. So yes, I think people should have a reasonable plan to pay off their debt. But in the ops case, if most of her salary is going towards child care, plus the emotional cost of not being home with her young children, I think it may be better for her to wait a few years before she starts seriously paying down her debt. But I think that should always be the plan for people, to pay off their debt as soon as reasonably possible.

 

[confettiflyer]

Before this turns into another monster PSLF thread, I don't think it's wise for the OP to completely change course and career setting, jump into FT/near-FT work, and give up raising the kids in her current way. Because even if we assume this is a good idea, it require 30+ hrs/week that will likely end up 40 hrs/week as a new job and is the opposite of what we sortof decided a few posts back.

 

[BidingMyTime]

I was fine just a few days ago maybe it will go away in a few more days.
I never see any job postings for public jobs in pharmacy field at least i will keep looking though

Not all "public service" jobs are going to be easily identified in a newspaper ad. Working for a non-profit hospital in what is considered an "underserved" area, may qualify you for loan-forgiveness. Granted there probably aren't any hospitals like this within driving distance of NYC, so this probably isn't going to be a viable option for you. But to explore it, rather looking for a newspaper ad, I would find out which employers (if any) within driving distance of you would qualify for forgivness, Then send in (and keep active) your resume to those places (regardless of whether or not they are currently hiring.)

 

[confettiflyer]

Not all "public service" jobs are going to be easily identified in a newspaper ad. Working for a non-profit hospital in what is considered an "underserved" area, may qualify you for loan-forgiveness. Granted there probably aren't any hospitals like this within driving distance of NYC, so this probably isn't going to be a viable option for you. But to explore it, rather looking for a newspaper ad, I would find out which employers (if any) within driving distance of you would qualify for forgivness, Then send in (and keep active) your resume to those places (regardless of whether or not they are currently hiring.)

It doesn't have to be underserved, just organized as a 501(c)(3) non-profit and that's who your employer is (not a carve out for profit entity)

 

[suzyp]

Key word seems to be "may". Nobody is guaranteed cancellation of their loans. Now we can all debate politically if and how its likely to change, but it doesn't change the fact that there is a risk involved. Already there are people who are retiring....who are having their SS garnished to pay their college debt. So yes, I think people should have a reasonable plan to pay off their debt. But in the ops case, if most of her salary is going towards child care, plus the emotional cost of not being home with her young children, I think it may be better for her to wait a few years before she starts seriously paying down her debt. But I think that should always be the plan for people, to pay off their debt as soon as reasonably possible.

Thats what I am afraid of I dont want that word MAY to destroy my life. I am gona have to come up with a plan to pay it off. I was doing some calculations and if i pay my minimum balance for 300 payments with ibr I pay 135k. And I am sure I will have a lot of interest added on it if I don't pay more than minimum payments lets say for example 200k and that will be forgiven but taxed as income. The tax on that will be a lot. I have no idea how to calculate it but I am thinking like 30 to 40k. Bottom line being I will still pay almost the same amount( or CLOSE TO)my loan total now.
I will just have to pay it off sooner no other option.

 

[suzyp]

Before this turns into another monster PSLF thread, I don't think it's wise for the OP to completely change course and career setting, jump into FT/near-FT work, and give up raising the kids in her current way. Because even if we assume this is a good idea, it require 30+ hrs/week that will likely end up 40 hrs/week as a new job and is the opposite of what we sortof decided a few posts back.

you are right I am not gona change my life completely just b/c of loans, but I am gona be more active with monitoring my loan and coming up with a plan to pay it off which I was not doing before. I might want to work like an extra day a week just to put that money aside for the loan something little like that. I don't even know how the job market is out there I have not checked in the last 2 years (I have been in lala world enjoying my life and kids lol) I was hoping it will be better for someone with few years of experience.

 

[suzyp]

Not all "public service" jobs are going to be easily identified in a newspaper ad. Working for a non-profit hospital in what is considered an "underserved" area, may qualify you for loan-forgiveness. Granted there probably aren't any hospitals like this within driving distance of NYC, so this probably isn't going to be a viable option for you. But to explore it, rather looking for a newspaper ad, I would find out which employers (if any) within driving distance of you would qualify for forgivness, Then send in (and keep active) your resume to those places (regardless of whether or not they are currently hiring.)

thats good to know I will keep it in mind

 

[suzyp]

It doesn't have to be underserved, just organized as a 501(c)(3) non-profit and that's who your employer is (not a carve out for profit entity)

and it doesnt have to be a pharmacy or pharmacy related?

 

[Monsterdaddy]

and it doesnt have to be a pharmacy or pharmacy related?

I said that already LOL! Any public or 501(c)3 qualifies. Be a security guard or secretary at a public school if you want.

And again to let everyone know, "may" in legal statutes is not the same as the layman's term and should not be interpreted as "might" but as an option for you if you fulfill the requirements.

 

[spacecowgirl]

Suzy - I am a mom of 2 kids as well and while I don't have the inclination or financial ability to work less than full-time, I understand that these are precious years you can't get back. I also live in a low CoL area so daycare is reasonable which makes working easier. You can choose to stay home OR worry about your loans but don't do both. There is no prize given by Dave Ramsey at the pearly gates because you saved X dollars in your lifetime vs Y dollars. You should save enough for retirement but beyond that it's all about your goals in life. If they are to stay home more right now, there is nothing wrong with that. Yes you will be in debt longer, yes that will decrease your buying power but so what? If they are to retire early and be wealthy when you do, you need another path.

Be the best PT employee you can be to remain relevant when you do want to go FT and be the best mom you can be when you're home.

 

[suzyp]

Suzy - I am a mom of 2 kids as well and while I don't have the inclination or financial ability to work less than full-time, I understand that these are precious years you can't get back. I also live in a low CoL area so daycare is reasonable which makes working easier. You can choose to stay home OR worry about your loans but don't do both. There is no prize given by Dave Ramsey at the pearly gates because you saved X dollars in your lifetime vs Y dollars. You should save enough for retirement but beyond that it's all about your goals in life. If they are to stay home more right now, there is nothing wrong with that. Yes you will be in debt longer, yes that will decrease your buying power but so what? If they are to retire early and be wealthy when you do, you need another path.

Be the best PT employee you can be to remain relevant when you do want to go FT and be the best mom you can be when you're home.

great answer thank you for your reply. can I pm you?

 

[All4MyDaughter]

I agree with spacecowgirl - choose what you want right now. If it's to stay home with the kids, focus on that. If it's to pay off loans, then you probably need a FT job. But do the CBA. How much of your salary will daycare take up? For me it's one day per week of my FT job. I also have 2 small children but have no desire to stay home. I'm a better mom when I'm working.

I graduated 3 years ago with 180K in loans and have paid down to about 125K. We are making lots of progress by watching our budget very carefully and sending extra money to the loan company when we have it. I also work 2 part time jobs that add up to 8 to 10 hours per week.

One thing I wanted to say, and maybe I misread is that if you only make the minimum payment for 10 to 15 years, you will NOT pay off your loans in that time frame. Not even close. When I was on IBR during residency, the payment barely covered the interest that was accruing. I am not on IBR anymore, and chose an extended repayment plan. My payment is about $900 and I pay quite a bit extra every month. I expect to be paid off in 10 years or less, but that's with paying A LOT extra.

 

[MatCauthon]

I opted not to do the IBR/PSLF route. From what I recall, the government was looking to cap the max loan amount forgiven at 57k anyway. I cannot recall if that was PSLF or IBR. If they cap the max loan amount forgiven, a lot of you guys may be in trouble.

At the very least, make sure your principle is not increasing.
If you guys have loans under 200k, I would highly consider consolidating a portion of your loans at a better interest rate. The only caveat is that you lose access to IBR. I kicked my loans downs 75k in principle after only 2 years of payments (total payed with monthly payments was much higher than 75k). Now I see in the end goal in sight in the next 7 years with a very reasonable monthly payment of $1600. Don't give up.

If you have USC like loans at 300k plus, then you have to think about IBR/PSLF. It is too hard to kick that loan down on our salary.

 

[trailerpark]

I just signed up for the standard 10 year repayment so in 3 years I wont be like OMG I barely paid any principal, my life is overs. Instead I be like yay I'm 30% done. 10% progress per year seems reasonable to me and I'll make extra payments too.

Does anyone have Great Lakes service their loans? You like em?

 

[spacecowgirl]

I'm paying double on my loans and it is nice to see some progress. Made more sense to put money into that vs our mortgage which is at least tax deductible.

 

[sosoo]

im not sure why you don't want a full time job to begin with. when you have a huge loan and a lot of responsibilities, you kinda have to work hard while you still can. 20-25 years from now, will you still have the health to continue working? if you miss a payment b/c of job insecurities, i don't think your loan will be forgiven. do not depend on something that far fetch. a lot of things happen in 20-25 years. your best bet in my opinion is to get a full time job to get 401k benefits. let the money build up, and then later use it to pay for the loan.

 

[confettiflyer]

im not sure why you don't want a full time job to begin with. when you have a huge loan and a lot of responsibilities, you kinda have to work hard while you still can. 20-25 years from now, will you still have the health to continue working? if you miss a payment b/c of job insecurities, i don't think your loan will be forgiven. do not depend on something that far fetch. a lot of things happen in 20-25 years. your best bet in my opinion is to get a full time job to get 401k benefits. let the money build up, and then later use it to pay for the loan.

But this goes against the OP's desire to raise children, which I think is a hell of a lot more important than trying to pay down a debt sooner rather than later.

 

[sakigt]

I have kids too (well, a 2.5 yo and one on the way) and Im the mom. I work evenings/nights and when Im not home I make sure there are leftovers for them. I keep the household in check, rugs beat, milk in the fridge, I get how it is.

I work part time as well, and I had $142k in loans. Husband makes good money, not as much if I worked FT, let alone FT doing retail. We pay for daycare ;/

First of all, I dont think youre eligible for loan forgiveness, since you work part time. I know Im not (>30hrs per week I think?) Id double check that.

I pay the standard 10 year plan. Weve recently started the Dave Ramsey plan and found huge overspending happening with our seemingly thrifty budget. I bet youve got holes you need to plug as well. You need to get a handle on these loans so you can help your kids with college etc; mom to mom real talk.

 

[Monsterdaddy]

First of all, I dont think youre eligible for loan forgiveness, since you work part time. I know Im not (>30hrs per week I think?) Id double check that.

Just an FYI, the IBR 25 year and new PAYE 20 year forgiveness program does not require employment of any sort. All you need to do is qualify for IBR/PAYE by submitting income tax returns and making the payments (even if zero $) for 25/20 years.

So you could be a zero income homemaker filing income tax as married, filing separate and make zero dollar payments for 25 years and the loans go poof. (Yes, there is income reported on the forgiven amount but also ways to avoid the tax too.)

PSLF has employment requirements -- non-profit/public service AND 30+ hours/week.

 

[confettiflyer]

Interesting this article came out today

http://www.nytimes.com/2014/12/14/u...prod=nytcore-iphone&smid=nytcore-iphone-share