Physical Therapy & IBR (Income Based Repayment) Program

[GuyWithAQuestio]

Hey all,

I was actually intent on looking for scholarships today when I read an article regarding the whole fix that Obama's administration is trying to do for the cost of loans nowadays. I started reading more about it and found it to be quite interesting. With the cost of PT school's going up now that a good number of programs are DPT, I wanted to get people's take on it with the more expensive schools.

If you're unfamiliar with the federal IBR program, it started up in 2009 (I believe). From what I understand, if you have federal loans (Unsubsidized Stafford, Subsidized Stafford, Grad PLUS, etc..... but NOT Parent PLUS), and your loans greatly outweigh your income, the government will allow you to cap your monthly loan payment at 15% of your take-home pay (that's after taxes). If you do not default on payments, after 25 years your debt (principle and interest) is completely forgiven. This is changing in 2014 when it'll be a 10% cap and 20 year period. Also, if you work in public service (which, I believe hospitals are... and where a good number of us would be working afterwards), instead of 25 or 20 years, they'll eliminate it after 10 years!

More details about IBR can be found here: http://www.ibrinfo.org/

So for a hypothetical situation (in order to run some numbers), I imagine the total cost of attendance for USC or St Augustine is around $150k (that's books, tuition, rent, cost of gas, etc). Yeah.... pretty high up there.

If one were to take out loans, you're probably looking at around about $1400/ month for 30 years.

The PTs that I know are making about $58k - $65k annually (that's out in NC). Take home pay (after taxes) appears to be around $3,700/ monthly according to this paycheck calculator.

Of course, all that is before you pay your rent/ mortgage, food bill, etc.

Plugging in that your Annual Gross Income in the IBF calculator as $65k with $150k at 7.6% interest rate (averaging the Grad PLUS and Staford Loan rates) in debt says "yep, you're qualified", and then says that you can pay $610/ month.

A couple of "woah, nellies" on this:
1 - You have to make sure you haven't defaulted on any loans (not a big deal as I don't think any of us are planning on that)
2 - over the 10 to 25 years, you'd be paying less, so you'd have a higher amount of principle there that would accumulate more interest.... which, if for some reason you were kicked out of the program you'd have more debt to pay.

So, assuming that you planned on making every payment and originally planned on paying over 30 years one of these high, high loans, how does this NOT seem like a better deal?

We're trying to get into an industry to help people... but its hard to do that with the cost nowadays. This seems like incentive from the government. Even more so to work in public service areas after you're out.

I feel like my logic has to be flawed some how. Anyone more familiar with this? What am I missing?

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[DancerFutureDPT]

sounds great to me, but too good to be true?

THere's always the possibility that even if this is 100% correct as it stands, the gov't is always changing and they could change the law at anytime. Not sure if you're 5 years into the program if you'd be grandfathered in, or if they change it before we're out of school then I think we'd be SOL.

 

[trichic]

The IBR sounded really good, until I put my info into the calculator. As a single person, the monthly payments don't seem so bad. If you get married, you will have to include your spouse's income, unless you file separate income taxes. With a spouse's income, my payments tripled. With the calculated payment, I would have my student loans paid off way before the 25 years were up. For my situation, I don't see a benefit.

From what I read on the website, as your income rises (or you get married or your spouse's income rises), so does your minimum payment. So, if you are one of those on the forum that intends to work full time and do home health, etc. as a second job, this plan may not work out for you.