Public loan forgiveness program to be capped at $57,500 under new budget proposal

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One thing to note is that in California it's very hard for a physician to be employed by a non-physician group due to how the law is set up. Essentially anything governing the physician's work both clinically (treatment, referrals, etc) and administratively (record keeping, contracts, employment decsions regarding nursing/allied health staff when it comes to clinical competence, etc) must be made by a physician since it's considered to be a part of the practice of medicine. Corporations are not licensed to practice medicine.

http://www.mbc.ca.gov/Licensees/Corporate_Practice.aspx

"
The following types of medical practice ownership and operating structures also are prohibited:

  • Non-physicians owning or operating a business that offers patient evaluation, diagnosis, care and/or treatment.
  • Physician(s) operating a medical practice as a limited liability company, a limited liability partnership, or a general corporation.
  • Management service organizations arranging for, advertising, or providing medical services rather than only providing administrative staff and services for a physician's medical practice (non-physician exercising controls over a physician's medical practice, even where physicians own and operate the business).
  • A physician acting as "medical director" when the physician does not own the practice. For example, a business offering spa treatments that include medical procedures such as Botox injections, laser hair removal, and medical microdermabrasion, that contracts with or hires a physician as its "medical director."

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One thing to note is that in California it's very hard for a physician to be employed by a non-physician group due to how the law is set up. Essentially anything governing the physician's work both clinically (treatment, referrals, etc) and administratively (record keeping, contracts, employment decsions regarding nursing/allied health staff when it comes to clinical competence, etc) must be made by a physician since it's considered to be a part of the practice of medicine. Corporations are not licensed to practice medicine.

http://www.mbc.ca.gov/Licensees/Corporate_Practice.aspx

"
The following types of medical practice ownership and operating structures also are prohibited:

  • Non-physicians owning or operating a business that offers patient evaluation, diagnosis, care and/or treatment.
  • Physician(s) operating a medical practice as a limited liability company, a limited liability partnership, or a general corporation.
  • Management service organizations arranging for, advertising, or providing medical services rather than only providing administrative staff and services for a physician's medical practice (non-physician exercising controls over a physician's medical practice, even where physicians own and operate the business).
  • A physician acting as "medical director" when the physician does not own the practice. For example, a business offering spa treatments that include medical procedures such as Botox injections, laser hair removal, and medical microdermabrasion, that contracts with or hires a physician as its "medical director."
+1

Most states (not sure what %, haven't done the research) have laws like these on the books. Essentially, hospitals cannot directly employ physicians in most states, and that is one of the reasons why physicians have to set up physicians groups as partnerships or professional corporations as the middle man between each individual physician and the hospital.
 
Look it up if you don't believe me. Find me an example of a doctor working at a non-profit hospital that you think qualifies for PSLF, other than government (federal, state, county, city) run hospitals. I'll give a few examples and sources while you try:

Kaiser Permanente: non-profit hospital run by a non-profit foundation, but each physician practicing at any of their hospitals does not qualify, I assure you. Look at their Wikipedia page http://en.wikipedia.org/wiki/Kaiser_Permanente.

..."Permanente Medical Groups are physician-owned organizations, which provide and arrange for medical care for Kaiser Foundation Health Plan members in each respective region. The medical groups are for-profit partnerships or professional corporations and receive nearly all of their funding from Kaiser Foundation Health Plans. The first medical group, The Permanente Medical Group, formed in 1948 in Northern California."...

If you don't believe wikipedia, look up their business filings. They are professional corporations (for-profit by definition):
http://physiciancareers.kp.org/kaiser-home.html
http://www2.sos.state.oh.us/pls/bsqry/f?p=100:7:0::NO:7:P7_CHARTER_NUM:586493
http://kepler.sos.ca.gov/

You think religiously-affiliated hospitals are any different? I doubt it. Here's just one example that I know of, Mercy Hospitals. All physicians are employed by Mercy Medical Group, which has various subsidiaries such as Mercy Doctors Medical Group, Inc. and Mercy Medical Group of Specialists, Inc. I'm telling you, search the secretary of state website I listed above. Talk to any medical director that works at a hospital or better yet, a hospital administrator. They will tell you. If you are a physician and work at a non-government run hospital, with rare exception, your employment does not qualify for PSLF.

My wife works as a physician for Mercy Clinic, which explicitly states in her contract that the physicians' group is non-profit (I would provide you with a copy of that contract but that seems a little extreme.) FedLoan Servicing has already verified her employment with Mercy Clinic as a qualifying 501(c)3.

http://501c3lookup.org/mercy_clinic_east_communities/

http://www.faqs.org/tax-exempt/MO/Mercy-Hospital-St-Louis-Mercy-Hospitals-East-Communities.html

Maybe in California and Texas where state laws prohibit direct employment of doctors by hospitals, this is the case. But, at least in Missouri, I think you are incorrect.
 
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+1

Most states (not sure what %, haven't done the research) have laws like these on the books. Essentially, hospitals cannot directly employ physicians in most states, and that is one of the reasons why physicians have to set up physicians groups as partnerships or professional corporations as the middle man between each individual physician and the hospital.

Most states meaning California, Texas and what others?
 
UPDATE: The department of education seems to suggest that under the president's budget proposal, the PSLF cap would only apply to new borrowers.

http://educatedrisk.org/analysis/of...ed-budget-pslf-caps-paye-benefits-limitations

While the language is a bit vague, the ed department seems to say the "cap" would only apply if existing borrowers switch from their current IBR plan to the new, extended PAYE plan. The author of this article plans to clarify the statement from the department of education, including the reference to "with minor exceptions."

1) Will the Proposed PSLF cap ($57,500) only apply to New Borrowers after July 1, 2015 (and those who opt into the new program)? Or to all borrowers? Or all borrowers that use PAYE as a repayment plan (see question #2 for clarification)?
This has been an issue of great concern for current borrowers and official clarification would be helpful. See [AskHeatherJarvis] [Boston Student Loan Lawyer Adam Minsky] and Comments in [New America Foundation]. Also, PSLF is a separate statute from PAYE, so how would ED/Congress change PSLF to only effect future PAYE borrowers? Would it create a new time period for PSLF or create new language in the PAYE program for a new PSLF program? If the PSLF statute (20 USC 1087e(m)) is changed to include the cap (without clarification), then it would appear to apply to all borrowers. Any guidance on this would help.

ED's Answer: For all new borrowers (with minor exceptions) starting with the 2015-2016 academic year the new expanded PAYE program will be the only income-based repayment plan available so the cap applies. For any other existing borrowers they retain the income-based repayment plan in their promissory note but if they choose to switch to the new expanded PAYE program, they have to accept all the conditions including the caps.
 
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+1

Most states (not sure what %, haven't done the research) have laws like these on the books. Essentially, hospitals cannot directly employ physicians in most states, and that is one of the reasons why physicians have to set up physicians groups as partnerships or professional corporations as the middle man between each individual physician and the hospital.

employed physicians represent >50% of all still-practicing phyisicians according to the AMA. So that cannot possibly be true. The only caveat to this is that the AMA counts residents as employed physicians.
 
My wife works as a physician for Mercy Clinic, which explicitly states in her contract that the physicians' group is non-profit (I would provide you with a copy of that contract but that seems a little extreme.) FedLoan Servicing has already verified her employment with Mercy Clinic as a qualifying 501(c)3.

http://501c3lookup.org/mercy_clinic_east_communities/

http://www.faqs.org/tax-exempt/MO/Mercy-Hospital-St-Louis-Mercy-Hospitals-East-Communities.html

Maybe in California and Texas where state laws prohibit direct employment of doctors by hospitals, this is the case. But, at least in Missouri, I think you are incorrect.

Thank you for adding your information. I stand corrected. My perception is colored by looking for information mostly only in the two states I'd like to practice in: Texas and California. I did a little bit more research on this and found an Office of the Inspector General report, albeit from 1991, but there are five states that essentially prohibit direct employment of physicians by hospitals: Texas, California, Ohio, Iowa, and Colorado. The link can be found here: https://oig.hhs.gov/oei/reports/oei-01-91-00770.pdf. So I suppose in the other 45 states, it may be possible to find employment like your wife has. Good job to her, especially if this PSLF holds up for the next several years, which it should at least for current borrowers.
 
employed physicians represent >50% of all still-practicing phyisicians according to the AMA. So that cannot possibly be true. The only caveat to this is that the AMA counts residents as employed physicians.

My AMA source from 2013 states that only 5.6 percent of physicians are directly employed by a hospital and 23 percent are employed by a group that is partially owned by a hospital and partially owned by physicians. I'm not how many of those 5.6 and 23 percent are actually employed by a non-profit business entity. It is likely that a large proportion of the 5.6% are, but few to none of the 23% are. http://www.ama-assn.org/resources/doc/health-policy/prp-physician-practice-arrangements.pdf
 
UPDATE: The department of education seems to suggest that under the president's budget proposal, the PSLF cap would only apply to new borrowers.

http://educatedrisk.org/analysis/of...ed-budget-pslf-caps-paye-benefits-limitations

While the language is a bit vague, the ed department seems to say the "cap" would only apply if existing borrowers switch from their current IBR plan to the new, extended PAYE plan. The author of this article plans to clarify the statement from the department of education, including the reference to "with minor exceptions."

1) Will the Proposed PSLF cap ($57,500) only apply to New Borrowers after July 1, 2015 (and those who opt into the new program)? Or to all borrowers? Or all borrowers that use PAYE as a repayment plan (see question #2 for clarification)?
This has been an issue of great concern for current borrowers and official clarification would be helpful. See [AskHeatherJarvis] [Boston Student Loan Lawyer Adam Minsky] and Comments in [New America Foundation]. Also, PSLF is a separate statute from PAYE, so how would ED/Congress change PSLF to only effect future PAYE borrowers? Would it create a new time period for PSLF or create new language in the PAYE program for a new PSLF program? If the PSLF statute (20 USC 1087e(m)) is changed to include the cap (without clarification), then it would appear to apply to all borrowers. Any guidance on this would help.

ED's Answer: For all new borrowers (with minor exceptions) starting with the 2015-2016 academic year the new expanded PAYE program will be the only income-based repayment plan available so the cap applies. For any other existing borrowers they retain the income-based repayment plan in their promissory note but if they choose to switch to the new expanded PAYE program, they have to accept all the conditions including the caps.

This is GREAT news and the only fair thing to do.
 
My AMA source from 2013 states that only 5.6 percent of physicians are directly employed by a hospital and 23 percent are employed by a group that is partially owned by a hospital and partially owned by physicians. I'm not how many of those 5.6 and 23 percent are actually employed by a non-profit business entity. It is likely that a large proportion of the 5.6% are, but few to none of the 23% are. http://www.ama-assn.org/resources/doc/health-policy/prp-physician-practice-arrangements.pdf

My only explination (as I literally am going off being in the employed physicians caucus and listening to their claim, and not from having the numbers) is that the presence of so many residents has offset the numbers signficantly by their calculation.
 
ED's Answer: For all new borrowers (with minor exceptions) starting with the 2015-2016 academic year the new expanded PAYE program will be the only income-based repayment plan available so the cap applies. For any other existing borrowers they retain the income-based repayment plan in their promissory note but if they choose to switch to the new expanded PAYE program, they have to accept all the conditions including the caps.

That answer seems pretty evasive. They seem to be intentionally not answering the question directly. I'll be crossing my fingers, but I'll believe it when I see it.
 
UPDATE: The department of education seems to suggest that under the president's budget proposal, the PSLF cap would only apply to new borrowers.

http://educatedrisk.org/analysis/of...ed-budget-pslf-caps-paye-benefits-limitations

While the language is a bit vague, the ed department seems to say the "cap" would only apply if existing borrowers switch from their current IBR plan to the new, extended PAYE plan. The author of this article plans to clarify the statement from the department of education, including the reference to "with minor exceptions."

1) Will the Proposed PSLF cap ($57,500) only apply to New Borrowers after July 1, 2015 (and those who opt into the new program)? Or to all borrowers? Or all borrowers that use PAYE as a repayment plan (see question #2 for clarification)?
This has been an issue of great concern for current borrowers and official clarification would be helpful. See [AskHeatherJarvis] [Boston Student Loan Lawyer Adam Minsky] and Comments in [New America Foundation]. Also, PSLF is a separate statute from PAYE, so how would ED/Congress change PSLF to only effect future PAYE borrowers? Would it create a new time period for PSLF or create new language in the PAYE program for a new PSLF program? If the PSLF statute (20 USC 1087e(m)) is changed to include the cap (without clarification), then it would appear to apply to all borrowers. Any guidance on this would help.

ED's Answer: For all new borrowers (with minor exceptions) starting with the 2015-2016 academic year the new expanded PAYE program will be the only income-based repayment plan available so the cap applies. For any other existing borrowers they retain the income-based repayment plan in their promissory note but if they choose to switch to the new expanded PAYE program, they have to accept all the conditions including the caps.

I am currently in PAYE (enrolled in Oct of 2013). Is this telling me that my PSLF will have a cap on it? Or is this "new expanded PAYE" something different than what I have? Should I switch to IBR?
 
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Banking on these programs for high income people was always a dream. If it is not killed now, it will be killed later.
Just pay it off, preferably over 5-10 years. And, obviously, pay the high interest loans off first.
It's not hard to make reasonable and smart choices to live well and save money. When you drop the debt anchor, you will understand how freeing it is to live below your means and save real money. Then you can look into other things, like real estate and other passive income streams. 20 years after that you retire to your beach house and buy your retirement super car and laugh all the way to the grave leaving an estate to your heirs.
 
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Banking on these programs for high income people was always a dream. If it is not killed now, it will be killed later.
Just pay it off, preferably over 5-10 years. And, obviously, pay the high interest loans off first.
It's not hard to make reasonable and smart choices to live well and save money. When you drop the debt anchor, you will understand how freeing it is to live below your means and save real money. Then you can look into other things, like real estate and other passive income streams. 20 years after that you retire to your beach house and buy your retirement super car and laugh all the way to the grave leaving an estate to your heirs.

I hope I don't get foot drop or something before I get to use said retirement super car.
 
I am currently in PAYE (enrolled in Oct of 2013). Is this telling me that my PSLF will have a cap on it? Or is this "new expanded PAYE" something different than what I have? Should I switch to IBR?

Question #2 answers it more clearly. It was asked that since there will only be a singular option (PAYE with caps) after 2015 IF THIS IS APPROVED will those on PAYE convert to PAYE with caps? The education department said no. That the promissary note is your contract and they will not invalidate it, they will let it work its why out to completion. They even add that they currently are already honoring multiple forms of IBR and ICR (other forms of repayment) under the same principle that they modified the terms at one point and did not want to force the change on the old lenders who already signed promissary notes.
 
Something else worth verifying is, as long as you have at least one pre-2015 loan, then all of your future loans (2018,2019,etc) can be put into the old PAYE PSLF programs?

I suspect there is going to be a big rush to get a token $10 student loan this fall.
 
Something else worth verifying is, as long as you have at least one pre-2015 loan, then all of your future loans (2018,2019,etc) can be put into the old PAYE PSLF programs?

I suspect there is going to be a big rush to get a token $10 student loan this fall.
wondering this too
 
Question #2 answers it more clearly. It was asked that since there will only be a singular option (PAYE with caps) after 2015 IF THIS IS APPROVED will those on PAYE convert to PAYE with caps? The education department said no. That the promissary note is your contract and they will not invalidate it, they will let it work its why out to completion. They even add that they currently are already honoring multiple forms of IBR and ICR (other forms of repayment) under the same principle that they modified the terms at one point and did not want to force the change on the old lenders who already signed promissary notes.


So if I like my current plan, I'll be able to keep it?

;)
 
I wish they would they call the "new PAYE" something different. The fact that I am currently in something also called PAYE makes me nervous.
 
Something else worth verifying is, as long as you have at least one pre-2015 loan, then all of your future loans (2018,2019,etc) can be put into the old PAYE PSLF programs?

I suspect there is going to be a big rush to get a token $10 student loan this fall.

Does not seem that way. Each loan has a master promissary loan. So you can't append new loans onto old ones quite that way.
 
Does not seem that way. Each loan has a master promissary loan. So you can't append new loans onto old ones quite that way.

Actually each loan does not have an MPN. You only need one MPN for each school you go to for each type of loan (ie. Stafford, GradPLUS). Each time you take out a new loan at that school, you do so under the existing MPN, and do not sign a new MPN. Ask yourself, when is the last time you signed an MPN for your school? For me, it was before I started year 1.
 
Actually each loan does not have an MPN. You only need one MPN for each school you go to for each type of loan (ie. Stafford, GradPLUS). Each time you take out a new loan at that school, you do so under the existing MPN, and do not sign a new MPN. Ask yourself, when is the last time you signed an MPN for your school? For me, it was before I started year 1.

I agree with you. I just wasnt very clear in my wording. Im not talking about each loan you take out per school... im talking about each "loan" (since multiple loans from the same school for the same education become one singular loan with multiple "dips"). As the comment prior to mine was saying that pople will start making micro-loans to get in prior to the date... but it wont make a differnce as you cant add unrelated loans onto unrelated promissary notes.

I should have clarified related loans for the same school do stack without a new MPN
 
Ok, I misunderstood what you were saying, I agree then. I suppose then that what people were talking about above would only work if you're already at the school you will be finishing at. So if you take out a $10 undergrad loan just to get grandfathered, you're going to have to sign a new MPN once you start med school.

Although, if the wording "new borrower" is used, I think they will grandfather all of a person's loans regardless of date, as long as the first loan was before a certain date. At least that's how they've been using the term up til now to determine eligibility for some of the new programs they've rolled out (like PAYE).
 
Right, that's what gets me. In the past, lines for repayment plans have always been drawn based on your first student loan ever, even if it was a decade ago. Now we think they are suddenly switching gears and breaking down loan repayment plans by school (MPN)?
 
This upsets me very much

I understand it's tough when you put your trust in something and it fails.

The writing has been on the wall for years though. The government has no money and is running out of the "no money" that it has. I.e. we're just printing $$$.
 
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