proposed cap for PSLF

[doctorFred]

just wanted to bring this to everyone's attention, if you hadn't heard already or hadn't seen it on the other subforums:

http://forums.studentdoctor.net/threads/pslf-proposed-cap-of-57k-2015-budget.1058539/

how many of my ED brethren are(were?) counting on PSLF in your long-term budgets? i sure was.

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[The Buff]

C'mon. I and many other people have been saying for a long time that PSLF was a pipe dream. The American public thinks doctors already make too much money. Medicare reimbursements are constantly on the verge of going down. Can you really see the government then turning around and paying off 250k in loans for hundreds of doctors? The pubic outcry would be enormous. Unfortunately this is just the tip of the iceberg. The year after it will be 40k, then 20k, then nothing. Just be glad you are a doctor and can afford to pay off your own loans.

 

[DocEspana]

Education department already weighed in. IF this passes (and most politics people believe it wont. Passing 'the budget' and passing this policy change are two different things) they will STILL honor PSLF for everyone who is currently enrolled.

 

[secants]

Best bet if to hope you're grandfathered in because I do think sooner or later the cap will come once the first round of forgiveness starts in 2017.

 

[@JackShephard]

Education department already weighed in. IF this passes (and most politics people believe it wont. Passing 'the budget' and passing this policy change are two different things) they will STILL honor PSLF for everyone who is currently enrolled.

That's a promise you can take to the bank...

 

[Mbekweni]

This is worth watching very closely. Even if you were planning to do PLSF I would still be saving very aggressively and putting that money aside due to the reasonable chance that the benefits may start to erode.

 

[TooMuchResearch]

just wanted to bring this to everyone's attention, if you hadn't heard already or hadn't seen it on the other subforums:

http://forums.studentdoctor.net/threads/pslf-proposed-cap-of-57k-2015-budget.1058539/

how many of my ED brethren are(were?) counting on PSLF in your long-term budgets? i sure was.

You were plan on working for a non-profit EM group...or maybe doing 10 years residency + fellowship w/ little to no moonlighting?

 

[doctorFred]

working at virtually any academic center qualifies, as most of them are 503(c) organizations, and most physicians are salaried hospital employees.

i should also add that (i believe) you can moonlight all you want, wherever you want, as long as you fall under "full time" qualifications for your primary employment.

 

[DocEspana]

working at virtually any academic center qualifies, as most of them are 503(c) organizations, and most physicians are salaried hospital employees.

i should also add that (i believe) you can moonlight all you want, wherever you want, as long as you fall under "full time" qualifications for your primary employment.

 

[Janders]

Yeah heck, I currently qualify having been (1) a resident (2) working for a hospital system which is a public-health not-for-profit then (3) working for a physician group which is a 503(c) non-profit...

And I haven't been jump through hoops to do it... we'll see if its still there when I quality for 120 payments...

 

[Hair Police]

1) I expected the loan forgiveness amount to be sharply curtailed right after the first class applied.

2) You still have to pay taxes on whatever's forgiven. At our income level, the taxes are so high you'd effectively pay off a third of your loan in one year.

3) If you go to the website, you can use their IBR calculator to determine your payments and your calculator and how much of your debt will be forgiven at the end. At my level of income and debt, my IBR payments scale up so high that I pay off almost everything at around 100 payments.

4) Most of our loans will be at 6-7% interest. Unless you have retirement benefits with matching, it's going to be hard to earn better than 7% returns in this economy. The best policy is likely to pay down your debt aggressively.

 

[Killa Beez MD]

2) You still have to pay taxes on whatever's forgiven. At our income level, the taxes are so high you'd effectively pay off a third of your loan in one year.

With PSLF your remaining balance is forgiven tax-free after 120 payments.

 

[DocEspana]

With PSLF your remaining balance is forgiven tax-free after 120 payments.

This is correct: directly from the PSLF website:

Are loan amounts forgiven under PSLF considered taxable by the IRS?
A3 No. According to the Internal Revenue Service (IRS), student loan amounts forgiven under PSLF are
not considered income for tax purposes. For more information, you should check with the IRS or your
tax advisor.

The confusion comes in that the PAYE (and IBR and ICR etc etc) are all 'taxed income' when the government picks up the tab at the end. But PSLF is particularly nice in that the IRS views it as non-income. They view it as the debt is truly 'forgiven' rather than 'paid down to zero'. There have been bills in the last 3/4 years that failed in the house to try to change IBR/PAYE to non-taxable income. But they never gained traction.

 

[LifetimeDoc]

The original deal was meant for law students. It'll disappear soon, when the student become lawyers sue you you of existence.

 

[Droperidol]

2) You still have to pay taxes on whatever's forgiven. At our income level, the taxes are so high you'd effectively pay off a third of your loan in one year.

3) If you go to the website, you can use their IBR calculator to determine your payments and your calculator and how much of your debt will be forgiven at the end. At my level of income and debt, my IBR payments scale up so high that I pay off almost everything at around 100 payments.

It's tax free as mentioned above.
You're payment through ibr is never more than your regular payment schedule would be if you hadn't signed up for ibr. Your regular scheduled payments are set to have you pay everything off in 10 years based off of amoritization. So I definitely don't believe if you just made straight ibr payments you'd be paid off at 100 ibr payments.
The current ibr structure has you pay 15% of your income that's above poverty level during residency and then regular payments after residency.

I'm personally not doing it because my program is only three years and I knew I wasn't doing academics. In my region academics makes around 150k less than community a year. That's a ton to miss out on for 7 years.

 

[Red Beard]

working at virtually any academic center qualifies, as most of them are 503(c) organizations, and most physicians are salaried hospital employees.

i should also add that (i believe) you can moonlight all you want, wherever you want, as long as you fall under "full time" qualifications for your primary employment.

Sure, but all the income you make moonlighting increases your AGI, which in turn increases your IBR payment, which will eventually result in IBR=standard repayment, leaving nothing left to be forgiven at 10 years.

People seem to think that IBR and PAYE means that you are paying nothing or very little on your loans....not true for us. At $150k/year, you are still expected to pay $1600/month on IBR, or $192k over 10 years. There would not be much left to be forgiven for most physician borrowers.

 

[DocEspana]

Sure, but all the income you make moonlighting increases your AGI, which in turn increases your IBR payment, which will eventually result in IBR=standard repayment, leaving nothing left to be forgiven at 10 years.

People seem to think that IBR and PAYE means that you are paying nothing or very little on your loans....not true for us. At $150k/year, you are still expected to pay $1600/month on IBR, or $192k over 10 years. There would not be much left to be forgiven for most physician borrowers.

My loans were at ~225K when I graduated. The loan calculator says that in 10 years, with interest, my loan amount will be ~$400K. So even $192K would only be less than half the loan*. But with someone like myself, I'm not paying an attending salary for 10 years. I'm paying it for 6 years, at the most. I paid $0 my entire intern year (counts as 12 payments) and will be paying something like $150 a month for the next year of residency and $300 a month for the 2 years after that. And perhaps not a ton more if I end up in a fellowship. People forget that there is 1) a deduction under a certain amount of income 2) it is based on your previous years income, and last year I only worked 6 July-December and 3) its based on your functional income, not salary, so its post-taxes 10%. So the 'big repayment years' are only once I finish residency and that will be at least 4 years of payments in the books. The PSLF is a *massive* amount of money forgiven even if 10% is a pretty big sum of money to pay out for a few years.

*The problem with the calculator is it works with my resident salary and assumes my salary increases by 7% a year or something. So it slightly overestimates how much I'd pay through residency and largely undestimates how much I'd pay as an attending. So the total wouldnt be quite that high, since knocking large chunks of the debt off for 5, 6, or 7 years will really cut down on how much interest accrues. Still 192K isnt even my loan amount pre-interest.

 

[law doc madness]

If PLSF is capped the law cannot apply retroactively. Any funds disbursed prior to enactment would not be subject to the cap... If you consolidate after the cap though the consolidated loan would fall under the cap.

 

[The White Coat Investor]

W

If PLSF is capped the law cannot apply retroactively. Any funds disbursed prior to enactment would not be subject to the cap... If you consolidate after the cap though the consolidated loan would fall under the cap.

While I agree there is a good chance a cap wouldn't be retroactive, I wouldn't say it cannot be applied retroactively. Many tax laws have been changed and applied in a retroactive manner in the past. No reason this couldn't be too. Just need the political will to do so.

 

[gman33]

If PLSF is capped the law cannot apply retroactively. Any funds disbursed prior to enactment would not be subject to the cap... If you consolidate after the cap though the consolidated loan would fall under the cap.

Thinking that the government "CANNOT" change this is off base.
Whether they will or not is another story.

Just plan to have the money available to pay off the loans yourself.
If you don't have to, this will just be extra money in your retirement fund.

 

[erdoc00]

I lived like a resident for several years after residency and paid my loans off... there are few better feelings than having that weight lifted off of you. For those of you who can reasonably do this, I think there is so much benefit mentally to doing this. Financially I'm aware that it doesn't always make sense. But emotionally, knowing that you are no longer a debt slave to the government is an unbelievable feeling.

 

[la gringa]

any chance a loan consolidated in 2005 would qualify? i have a great interest rate (2.62%) but pretty high principle. also missed out on a year+ of repayment b/c of injury/in forbearance.

my 30 year repayment monthly amount isn't heinous, just aggravating to be thinking about still paying my loans in my 50's... but if you change the repayment time period, it gets awaful.