Obama's plan for student loan relief...

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I appreciate Obama's help regarding this, even though the interwebs seems to think that student loan interest rates should be like 3%.

What I would really like is:
income max increased or eliminated for writing off student loan interest on taxes

Even better, being able to write off some/all of student loan principal...but there are probably huge unintended consequences with **** e.g. more liberal arts majors who will work at Starbucks for life. And the Republicans would probably reject it anyways as "govt interference in education" or some dumb ****.
 
This is only an immediate band-aid with bad long term probabilities. Think Law of Unintended Consequences: People now have to pay less and more will be forgiven. This will most likely increase tuitions even more and more people will take out loans. It will once again increase the overall outstanding balance and only cause the problem to get even bigger.

Government manipulation in credit is what caused a lot of the problems that we are now facing and they want to keep doing it? And I am not just directing this at Obama (although I have a problem with executive branch overreach but thats a whole other topic). I blame all the Congresses going back 20 years. They need to stay the hell out of the markets or we will end a third world country...
 
What people need to realize is that any debt "forgiven" after 20 years on this program will be treated as taxable income... So, after paying 10% income for 20 years, that will leave many low income earners with a degree with TONS of debt remaining after compounding interest rates that are up tp 8.5%.

So say they forgive $200,000 in remaining debt (likely to still have huge debt remaining after using an extended payment plan due to huge interest) after 20 years, on that DAY you are "forgiven" they whack you with an income tax bill, so 28% of 200k..... equals A TON of money left. You do the math.

I don't see how this plan will fix anything unless they make it so this "forgiven" amount will not be taxed. Look it up. Write and tell them how you feel.
 
Trent Steele said:
What people need to realize is that any debt "forgiven" after 20 years on this program will be treated as taxable income... So, after paying 10% income for 20 years, that will leave many low income earners with a degree with TONS of debt remaining after compounding interest rates that are up tp 8.5%.

So say they forgive $200,000 in remaining debt (likely to still have huge debt remaining after using an extended payment plan due to huge interest) after 20 years, on that DAY you are "forgiven" they whack you with an income tax bill, so 28% of 200k..... equals A TON of money left. You do the math.

I don't see how this plan will fix anything unless they make it so this "forgiven" amount will not be taxed. Look it up. Write and tell them how you feel.
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People would not be able to pay their income taxes that year, and would basically need to take out a loan to do it. Somewhat similar situation happened to a friend of mine who won a motorcycle in a raffle. That's $12k income, on a college student who works weekends at minimum wage. He did get hit hard that year, but if he wasn't able to sell it and get the cash, he would've been in quite a bit more trouble.
 
Trent Steele said:
What people need to realize is that any debt "forgiven" after 20 years on this program will be treated as taxable income... So, after paying 10% income for 20 years, that will leave many low income earners with a degree with TONS of debt remaining after compounding interest rates that are up tp 8.5%.

So say they forgive $200,000 in remaining debt (likely to still have huge debt remaining after using an extended payment plan due to huge interest) after 20 years, on that DAY you are "forgiven" they whack you with an income tax bill, so 28% of 200k..... equals A TON of money left. You do the math.

I don't see how this plan will fix anything unless they make it so this "forgiven" amount will not be taxed. Look it up. Write and tell them how you feel.
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You can avoid this tax by reducing assets and increasing debt during the year that forgiveness arrives. This has been discussed extensively on law student forums. Also you only have to pay tax to the extent that you are able (solvent) (unlike wage income tax). This is implemented this way because the govt is assuming if someone is having debt forgiven, they may not have enough money to pay the tax, so you oftentimes wouldnt have to pay anywhere near what the tax is on paper.
 
type b pharmD said:
You can avoid this tax by reducing assets and increasing debt during the year that forgiveness arrives. This has been discussed extensively on law student forums. Also you only have to pay tax to the extent that you are able (solvent) (unlike wage income tax). This is implemented this way because the govt is assuming if someone is having debt forgiven, they may not have enough money to pay the tax, so you oftentimes wouldnt have to pay anywhere near what the tax is on paper.
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interesting.... link? I have a hard time believing that govt will not get the money from you one way or another... increasing debt to avoid debt... only in America
 
Trent Steele said:
interesting.... link? I have a hard time believing that govt will not get the money from you one way or another... increasing debt to avoid debt... only in America
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http://www.backtaxeshelp.com/tax-on-debt-settlement.html

http://www.irs.gov/individuals/article/0,,id=179414,00.html

http://www.facebook.com/topic.php?uid=18274939375&topic=15368

In my understanding, it is implemented this way because if it wasnt, people would just declare bankruptcy to avoid the IRS tax bill on the forgiveness. The way the solvency thing works in real simple terms is that you only will owe the IRS tax according to how many assets you have at the time the tax is levied.

Example: if you have a 150k mortgage and still owe 120k on it, and have no other assets except your 30k home equity, and you get 500k in student loans forgiven, you only owe taxes on $30,000 of this forgiveness, making your total tax bill only around $5k

It pays to understand that debt forgiveness tax is very different from wage income tax.
 
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IBR fo' life, yo...

[YOUTUBE]http://www.youtube.com/watch?v=F9Wh8dMvOQM&feature=related[/YOUTUBE]
...or face the capitalized interest gangsta :meanie:
 
PharmDstudent said:
IBR fo' life, yo...

[YOUTUBE]F9Wh8dMvOQM[/YOUTUBE]
...or face the capitalized interest gangsta :meanie:
Click to expand...



so lets assume I get a job making 100k then --> I dont qualify for IBR b/c my loans arent high enough... i just estimated mine to be 80k, which I'm pretty sure they'll be closer to 60k....

But. lets say I buy a pharmacy, and through income sheltering get my income to like 60k...then I would qualify....but if my income ever increases or I leave the IBR system- I'm pretty well screwed, right? Loan capitilzation- etc.
 
fauxden said:
so lets assume I get a job making 100k then --> I dont qualify for IBR b/c my loans arent high enough... i just estimated mine to be 80k, which I'm pretty sure they'll be closer to 60k....

But. lets say I buy a pharmacy, and through income sheltering get my income to like 60k...then I would qualify....but if my income ever increases or I leave the IBR system- I'm pretty well screwed, right? Loan capitilzation- etc.
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Well, capitalization would work in your favor, but yes, if your income to debt ratio increases, you'd be booted out.
 
CuriousPharmD said:
Saw this article....

http://www.msnbc.msn.com/id/45039424/ns/politics-white_house/

sounds promising...what does this mean for us? lower monthly payments?
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I think this is focused for majors that can't find a job or their job don't pay them much! our salary is decent so 10% of it is still what people used to pay and in 20 years you probably would pay it off anyway with 10%. Ofcourse this depends on how much loan a pharmacist have it can range from $55K-$325K!

Overall, I think he should've bailed us out and not the big corporation, because the money doesn't get to average people when the big companies get the money, they hold on to it or take it offshore...where as if students where bailed out they are starting their life so they would go out and buy a house, car, marry and spend a lot of money and get this economy going!
 
veyep said:
Overall, I think he should've bailed us out and not the big corporation, because the money doesn't get to average people when the big companies get the money, they hold on to it or take it offshore...where as if students where bailed out they are starting their life so they would go out and buy a house, car, marry and spend a lot of money and get this economy going!
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I think you don't understand why the banks were bailed out 😉
 
Trent Steele said:
What people need to realize is that any debt "forgiven" after 20 years on this program will be treated as taxable income... So, after paying 10% income for 20 years, that will leave many low income earners with a degree with TONS of debt remaining after compounding interest rates that are up tp 8.5%.

So say they forgive $200,000 in remaining debt (likely to still have huge debt remaining after using an extended payment plan due to huge interest) after 20 years, on that DAY you are "forgiven" they whack you with an income tax bill, so 28% of 200k..... equals A TON of money left. You do the math.

I don't see how this plan will fix anything unless they make it so this "forgiven" amount will not be taxed. Look it up. Write and tell them how you feel.
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IBR coupled with PSLF are not taxed the way traditional forgiven/discharged debt is typically taxed.

Source: http://www.ibrinfo.org/files/Treasury_response_levin.pdf

However, you are correct that the current laws state that debts discharged via IBR only (after 20 years) ARE subject to tax. My question is...even if you go with IBR, most pharmacists clear 100k/yr, is it realistic that a pharmacy grad will even have a balance at 20 years?

Smart money says a new grad with tons of debt should go work for a non-profit and have their balance discharged via PSLF. Luckily, most hospitals seem to be non-profit anyway.
 
type b pharmD said:
You can avoid this tax by reducing assets and increasing debt during the year that forgiveness arrives. This has been discussed extensively on law student forums. Also you only have to pay tax to the extent that you are able (solvent) (unlike wage income tax). This is implemented this way because the govt is assuming if someone is having debt forgiven, they may not have enough money to pay the tax, so you oftentimes wouldnt have to pay anywhere near what the tax is on paper.
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wouldn't the lender just issue you a 1099 for the forgiven amount? that'll go right into your calculated income and the only way to offset that is via using the same strategies you did for reducing your income taxes (which i'm hoping you already did).

unless forgiven debt is calculated some other way i'm not thinking of right now...otherwise this isn't making any sense to me.
 
confettiflyer said:
wouldn't the lender just issue you a 1099 for the forgiven amount? that'll go right into your calculated income and the only way to offset that is via using the same strategies you did for reducing your income taxes (which i'm hoping you already did).

unless forgiven debt is calculated some other way i'm not thinking of right now...otherwise this isn't making any sense to me.
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you file a form 982, following irs code 108 which acts to reduce the tax owed to the extent of insolvency.

http://www.irs.gov/pub/irs-drop/rr-08-34.pdf

Form 982-

http://www.irs.gov/pub/irs-pdf/f982.pdf
 
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I think any pharmacist taking advantage of IBR and actually having anything forgiven is abusing the system. We make enough money to cover what any REASONABLE person would spend on a pharm.D. I think we as a society have come to associate these government programs with free money which is entirely not the case. We as a country will at some point have to pay for the things we are doing now. I work for a non profit rural hospital so I qualify for income based repayment forgiveness after 10 years which, if i did, would save me about $30,000. I refuse to do this as a matter of principle mainly (and the strong belief that this program will not be around in 10 years and I'll be stuck with an extra $25-30 grand in interest instead). I pay the debt I've accrued just like everyone else should. Its your own fault if you spent $200,000 on a degree that only can earn you $115,000 a year.
 
Why would anyone trust the government do keep its word in this? A lot of things can change in 10/20 years. Did you not see them take away subsidized Stafford loans for graduate school just this year?

I don't know, I personally don't want to have to rely on the government and fear that they can take it all away with a stroke of the pen.
 
confettiflyer said:
Smart money says a new grad with tons of debt should go work for a non-profit and have their balance discharged via PSLF. Luckily, most hospitals seem to be non-profit anyway.
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👍 Amen to that! In fact, that's exactly what I plan on doing. I think around 80% of hospitals are non-profit, so the odds are definitely in my favor.

I like the change from 15% to 10%. The 10% actually ends up being more like 7% for a family of four that earns $120k per year:

$22,350 (poverty line for family of 4) * 1.5 = $33,525
$120,000 - $33,525 = $86,475 of "discretionary income"
$86,475 * 10% = $8,648 per year in total payments
$8,648 / $120,000 = 7.2% of income

Not bad if you ask me. Regardless of how much I take out in loans, I can expect to pay $720 per month on repayment while grossing $10,000 per month and be student loan free after 10 years of working at a hospital (residency included), and pay no taxes on the forgiven amount. Can we say moral hazard?

The only thing I'm worried about now is since Obama is publicizing IBR so much and bringing it down to 10%/20 years, the masses will be using it, whereas before it was under the radar. I would tell people about it and they didn't even believe me. Now it's gonna be all politicized which will probably doom it when we eventually hit full speed austerity. My hope is I'll be done with my 10 years of PSLF by then, or at least they'll only axe new people from joining the program and spare the people who are already in the program.
 
awval999 said:
You will have a ~$100K/year job. They won't let you declare insolvency, why would they?
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insolvency in this case only means you had more debts than assets on the day that the loan was forgiven, it doesn't mean insolvency in the colloquial sense. you will be taxed on the amount up to the value of your assets, basically .

My earlier posts were extremely unclear. This should explain things better hopefully


IRS Code 108 -- Tax on Debt Forgiveness
http://www.law.cornell.edu/uscode/26/108.html
 
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vash1012 said:
I think any pharmacist taking advantage of IBR and actually having anything forgiven is abusing the system.
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You're entitled to your opinion, but I consider ABUSING the system to be intentionally lying, withholding information, getting some kind of benefits you don't actually qualify for, or breaking the law somehow without getting caught. The program is intended to help pharmacists who make over $100k too, otherwise they would have put an income cap on the program. Besides who is to say someone who took out $200k for an 8 year pharmacy education while supporting a family is abusing the system any more than a single person who takes out $80k for a college degree in something worthless to society? So no, I don't think it is fair to say someone who is utilizing a program that was designed in such a way to help them is "abusing the system." Is the system fair, moral, justified, or even constitutional? That's up for debate, certainly, but since our country already redistributes wealth on a massive scale and has utterly shredded the constitution in so many ways, it's kind of a moot point.
 
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I can picture the television ad now.

Ominous voice: "While you and your family are struggling to pay the bills, Obama (insert President at the time) will allow the GOVERNMENT to forgive millions of dollars of student loans to doctors, lawyers and bankers. Is it fair that at a time when we can't pay our soliders that we allow an atrocity like that? In fact Obama (or President at that time) will not even allow the IRS to collect taxes on the forgiven amount. Tell Obama (or President at that time) that we just CAN'T AFFORD IT"

Paid for by opposing party at that time.
 
type b pharmD said:
insolvency in this case only means you had more debts than assets on the day that the loan was forgiven, it doesn't mean insolvency in the colloquial sense. you will be taxed on the amount up to the value of your assets, basically .

My earlier posts were extremely unclear. This should explain things better hopefully


IRS Code 108 -- Tax on Debt Forgiveness
http://www.law.cornell.edu/uscode/26/108.html
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Home equity? Savings accounts? Cars?

Also, I obviously cannot read that. It is written is legalese.
 
awval999 said:
I can picture the television ad now.

Ominous voice: "While you and your family are struggling to pay the bills, Obama (insert President at the time) will allow the GOVERNMENT to forgive millions of dollars of student loans to doctors, lawyers and bankers. Is it fair that at a time when we can't pay our soliders that we allow an atrocity like that? In fact Obama (or President at that time) will not even allow the IRS to collect taxes on the forgiven amount. Tell Obama (or President at that time) that we just CAN'T AFFORD IT"

Paid for by opposing party at that time.
Click to expand...

Insolvency exclusion for debt forgiveness is a fundamental part of the tax code. If it didnt exist, debtors would/could simply file bankruptcy to eliminate the tax on forgiven debt. It is not a matter of politics.
 
type b pharmD said:
Insolvency exclusion for debt forgiveness is a fundamental part of the tax code. If it didnt exist, debtors would/could simply file bankruptcy to eliminate the tax on forgiven debt. It is not a matter of politics.
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Look, we obviously disagree.

You feel that it's worthwhile to limit your practice to non-profit employment and manage your finances in a way to limit growth of income, savings and net worth for a governmental program that may or may not be there 10 years from now. Many people live their whole lives this way. And that's fine. It's not for me. I don't want to have a swinging sword over my head for 10 years and worrying about who is elected, government finances and politics. There is enough things to worry about in life and in pharmacy for that matter.

I have ~$100K in loans after my first year of payment. These loans will be gone before 10 years, because I will make them be gone. I will work for it. In the next 10 years I want to own a house, own a car and invest (both taxable and retirement). I am not going to manipulate my future in that way by lowering income, working less and relying a government program.

You feel like the risks outweigh the benefits. It's a free country, go for it. I don't want to have to worry if the IRS hounds me down in Year 10. I don't want to worry if an R or a D is President in 2021.

To each their own.
 
Kansas Pharmer said:
This is only an immediate band-aid with bad long term probabilities. Think Law of Unintended Consequences: People now have to pay less and more will be forgiven. This will most likely increase tuitions even more and more people will take out loans. It will once again increase the overall outstanding balance and only cause the problem to get even bigger.

Government manipulation in credit is what caused a lot of the problems that we are now facing and they want to keep doing it? And I am not just directing this at Obama (although I have a problem with executive branch overreach but thats a whole other topic). I blame all the Congresses going back 20 years. They need to stay the hell out of the markets or we will end a third world country...
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I actually agree with you as to the government should not be involved at all in credit markets. The main culprit here is obviously the Fed. Their interventions and interest rate manipulations make this whole student loan thing look like pennies in comparison.

As to the tuition increasing, you can bet your Pharm.D. from a diploma mill it will. Imagine millions of students knowing beforehand that it doesn't matter how much in loans they take out, it only matters how much money they make (as long as they qualify, but every 18 year old will think they'll qualify, then get in so much debt that it will be a self fulfilling prophecy). It could drive tuition up to the point where an ever increasing percentage of students out of necessity must use IBR. At saturation, you basically get to the point where higher education becomes free, but you have to pay a 10% tax on your income for X amount of years. A form of socialism if you will. I think that's the plan all along (in fact it proves Bush was a big government statist too... since he started this.. oh wait, Iraq, Afghanistan, TARP, Medicare Part D, and the Patriot Act already proved that, duh!). Anyways, the ones who will suffer most as always are the responsible ones (or the upper middle class who have their parents pay for everything and drive brand new BMWs to school) since their tuition will rise because of increased demand and less elasticity of demand due to the moral hazard (kind of like how booze and gas will still get bought no matter the price, except for different reasons).
 
awval999 said:
Look, we obviously disagree.

You feel that it's worthwhile to limit your practice to non-profit employment and manage your finances in a way to limit growth of income, savings and net worth for a governmental program that may or may not be there 10 years from now. Many people live their whole lives this way. And that's fine. It's not for me. I don't want to have a swinging sword over my head for 10 years and worrying about who is elected, government finances and politics. There is enough things to worry about in life and in pharmacy for that matter.
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Theres a big difference between limiting income growth savings and net worth, and limiting taxable income, savings, and net worth.. We only live once , and you are for better or worse, married to this economic system we've been born into. It just makes sense to do what is financially wisest at the time, considering future risks, gains, losses, probability of outcomes, and to work with the strategies that are available to us. Everyone obviously needs to consider their own situation and decide what is the best mix of risk/reward for them in structuring their finances
 
awval999 said:
I don't want to have a swinging sword over my head for 10 years and worrying about who is elected, government finances and politics.
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Yeah, it's not like you have to worry about that stuff when you run a business or a pharmacy. Nah, it doesn't matter who gets elected, government finances, and politics. None of that affects government regulations on small businesses, personal income taxes and other taxes, pharmacist wages, whether Wags and CVS decide to start laying off, Medicare/Medicaid reimbursement rates, whether we get paid for cognitive services, and the future of pharmacy. The government doesn't affect these things at all.

Seriously though, I respect your choice not to get involved in IBR, but for some people the answer is not so easy. The fact is we all have swords swinging over our heads whether we want them or not, for various other economic and governmental reasons out of our control, all we can do is hedge against it as best we can. For me, that hedge includes using IBR/PSLF.
 
a runner said:
Yeah, it's not like you have to worry about that stuff when you run a business or a pharmacy. Nah, it doesn't matter who gets elected, government finances, and politics. None of that affects government regulations on small businesses, personal income taxes and other taxes, pharmacist wages, whether Wags and CVS decide to start laying off, Medicare/Medicaid reimbursement rates, whether we get paid for cognitive services, and the future of pharmacy. The government doesn't affect these things at all.

Seriously though, I respect your choice not to get involved in IBR, but for some people the answer is not so easy. The fact is we all have swords swinging over our heads whether we want them or not, for various other economic and governmental reasons out of our control, all we can do is hedge against it as best we can. For me, that hedge includes using IBR/PSLF.
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Exactly. I followed up that statement with something like "life and pharmacy itself is enough swinging swords."

I'm not going to add IBR to the mix.
 
type b pharmD said:
Theres a big difference between limiting income growth savings and net worth, and limiting taxable income, savings, and net worth.. We only live once , and you are for better or worse, married to this economic system we've been born into. It just makes sense to do what is financially wisest at the time, considering future risks, gains, losses, probability of outcomes, and to work with the strategies that are available to us. Everyone obviously needs to consider their own situation and decide what is the best mix of risk/reward for them in structuring their finances
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I completely agree with you on this. My personal political and economic philosophy is completely incongruent with the economic system we live in (including IBR/PSLF/federal loans in general), but it's not like I can boycott it and move to my own island by myself or start a new country with like believers. I'm not saying IBR or PSLF is for everyone, we're just trying to lay out our arguments why it makes financial and ethical sense for us to use it.

I think some people get upset because they think it's unfair or they missed the boat and had to go the harder route so everyone else should have to, but many things are unfair in our economic system and this is one way to level the playing field. For example, I think forced taxation of the sort we have is morally wrong, it is theft with the threat of violence by a gang of thieves in government that is used to maim kill and destroy. Anything I can do to help offset the hundreds of thousands of dollars I will pay in taxes in the course of my lifetime will take away from the morally repugnant things those dollars can be used to do. We may not agree with the system, but we still have to work within it.
 
awval999 said:
Exactly. I followed up that statement with something like "life and pharmacy itself is enough swinging swords."

I'm not going to add IBR to the mix.
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There's no harm in adding IBR to the mix if you plan to pay them off. The way I see myself doing it (at least currently) is using the IBR to lower my mandated payment and allowing me to pay it back at my leisure. I want to pay as much as I can as soon as I can, but I can't afford to pay $2900/mo or risk default. If I can pay $5K great, if I'm between jobs and can only afford $1K so be it. But with IBR I can make that choice, without it, there's the potential to be hamstrung. Granted a lot of this is because I went to USC and have $230K in debt, but I still hope to be out of debt in 10 years+/-.
 
So I read up a little on IBR/PSLF and I'm done arguing if it's going to be around in 10 years, but I'm trying to understand.

10 year PSFL is with non-profits, so we're looking at government jobs or hospitals.

One can do a residency (up to two years) if desired, this will lower IBR payments for those two years.

Once a pharmacist making ~$100K in hospital one would want to max out 403b to lower AGI to approximately $83K.

Using IBRinfo.org calculator with single, no dependents $83K AGI gives
$830/month payment. $830 x 12 months x 10 years = $99,600.

It seems like the only bonazna is working hospital/gov't. If you multiply it out over 20 years it's $200K total. So one would have to owe that much to see any benefit.

This calculation does not account for inflation adjustments, but in real 2011 dollars it seems the max would be $99,600 total. Of course mixing in spousal income, children, etc will change all of this.
 
a runner said:
I completely agree with you on this. My personal political and economic philosophy is completely incongruent with the economic system we live in (including IBR/PSLF/federal loans in general), but it's not like I can boycott it and move to my own island by myself or start a new country with like believers. I'm not saying IBR or PSLF is for everyone, we're just trying to lay out our arguments why it makes financial and ethical sense for us to use it.

I think some people get upset because they think it's unfair or they missed the boat and had to go the harder route so everyone else should have to, but many things are unfair in our economic system and this is one way to level the playing field. For example, I think forced taxation of the sort we have is morally wrong, it is theft with the threat of violence by a gang of thieves in government that is used to maim kill and destroy. Anything I can do to help offset the hundreds of thousands of dollars I will pay in taxes in the course of my lifetime will take away from the morally repugnant things those dollars can be used to do. We may not agree with the system, but we still have to work within it.
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Exactly. Corporations and the wealthy are surely taking advantage of every single piece of tax law that they can, to the fullest extent possible, as far as minimization of assets, tax burdens, etc. In the global and societal scheme of things, yeah it is broken, but to let the system use you for its benefit is honestly more of a crime than taking advantage of the avenues that are available
 
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awval999 said:
So I read up a little on IBR/PSLF and I'm done arguing if it's going to be around in 10 years, but I'm trying to understand.

10 year PSFL is with non-profits, so we're looking at government jobs or hospitals.

One can do a residency (up to two years) if desired, this will lower IBR payments for those two years.

Once a pharmacist making ~$100K in hospital one would want to max out 403b to lower AGI to approximately $83K.

Using IBRinfo.org calculator with single, no dependents $83K AGI gives
$830/month payment. $830 x 12 months x 10 years = $99,600.

It seems like the only bonazna is working hospital/gov't. If you multiply it out over 20 years it's $200K total. So one would have to owe that much to see any benefit.

This calculation does not account for inflation adjustments, but in real 2011 dollars it seems the max would be $99,600 total. Of course mixing in spousal income, children, etc will change all of this.
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FYI, if you use the IBRinfo.org calculator, they are still assuming the 15% of disposable income rather than the new 10% unveiled by Obama, so that will change payments a bit. You can do the calculators yourself in the meantime. Just take the poverty line for your household size (1 person: $10,890; 2: $14,710; 3: $18,530; 4: $22,350... etc.) and multiple by 1.5. Subtract this from your AGI. Then multiple by 10% and divide by 12 months to get your monthly payment.

Yeah, you're right about those variables being able to make a big difference. If you're already married with kids like me, then you already know that your payments will be a little lower because of it.

With the residency, the nice thing is that those 2 years count towards the 10, so you really only have 8 years paying at the higher income in that case. In fact, during residency, you may even pay nothing or close to it if you have a lower stipend (~$35k) and kids. This is really nice for physicians who do 6-8 years of residency/fellowship training.
 
Let's say a student takes out 250k and can't find a pharmacist job or doesn't want to and lives off a 12 dollar an hour job for the next 20 years. Considering student is enrolled in IBR and pays 10% income for 20 years. What would the loan be worth after 20 years considering interest? I would think it would be a lot more than 250k but I don't want to do the math.
 
museabuse said:
Let's say a student takes out 250k and can't find a pharmacist job or doesn't want to and lives off a 12 dollar an hour job for the next 20 years. Considering student is enrolled in IBR and pays 10% income for 20 years. What would the loan be worth after 20 years considering interest? I would think it would be a lot more than 250k but I don't want to do the math.
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At what interest rate are the student loans? 2.3%, 6.8%, 8.5%?

This is the problem with the garbage man theory. If you work as a garbage man for less than the maximum of years, then work as a pharmacist and no longer qualify, your capitalized interest would be atrocious.
 
I just want to be able to deduct my student loan interest.
 
confettiflyer said:
IBR coupled with PSLF are not taxed the way traditional forgiven/discharged debt is typically taxed.

Source: http://www.ibrinfo.org/files/Treasury_response_levin.pdf

However, you are correct that the current laws state that debts discharged via IBR only (after 20 years) ARE subject to tax. My question is...even if you go with IBR, most pharmacists clear 100k/yr, is it realistic that a pharmacy grad will even have a balance at 20 years?

Smart money says a new grad with tons of debt should go work for a non-profit and have their balance discharged via PSLF. Luckily, most hospitals seem to be non-profit anyway.
Click to expand...


Students with over 180k in loans not working retail full time will definitely have a balance after 25 years.... especially with the reduction to 10% of income. Use the calculator at finaid.org and you'll see if this plan is right for you... less than 100k... probably not. More? Go for it. PSLF is the way to go, unfortunately my hospital is a for profit instituition 😡
 
vash1012 said:
I think any pharmacist taking advantage of IBR and actually having anything forgiven is abusing the system. We make enough money to cover what any REASONABLE person would spend on a pharm.D. I think we as a society have come to associate these government programs with free money which is entirely not the case. We as a country will at some point have to pay for the things we are doing now. I work for a non profit rural hospital so I qualify for income based repayment forgiveness after 10 years which, if i did, would save me about $30,000. I refuse to do this as a matter of principle mainly (and the strong belief that this program will not be around in 10 years and I'll be stuck with an extra $25-30 grand in interest instead). I pay the debt I've accrued just like everyone else should. Its your own fault if you spent $200,000 on a degree that only can earn you $115,000 a year.
Click to expand...


Good.... save the $30k for the rest of us sucka... not everyone had their families pay for their education or had the luxury of attending a public school...
 
Trent Steele said:
not everyone had their families pay for their education or had the luxury of attending a public school...
Click to expand...

Yeah and either way, they had to leech off of someone.. either their parents if their parents paid their school or the taxpayer if they attended a tax subsidized public school. So if the objection to IBR is based on principle to not accept "handouts" from the government yet they attended a public school, then they already broke that principle.
 
a runner said:
Yeah and either way, they had to leech off of someone.. either their parents if their parents paid their school or the taxpayer if they attended a tax subsidized public school. So if the objection to IBR is based on principle to not accept "handouts" from the government yet they attended a public school, then they already broke that principle.
Click to expand...

Well since everyone else is getting handouts, I'll take this one too. Now everyone will have a way out of pharmacy profession if they choose versus being enslaved by CVS. You don't like the B.S. that pharmacy world is pulling? No problem, now you can jump ship without having to stay due to debt.

I would have much rather seen a bailout of student loans than the bank system before. Want to stimulate an economy? Remove the 800 dollar payments a month that people have and they will go out and spend money. Do not bailout large corporate entities that endorse more regulation and further shutdown small businesses. The large corporations then outsource their work to other countries. A small business keeps the work here in the USA. Outsourcing is going to destroy the american economy.
 
PharmaTope said:
Outsourcing is going to destroy the american economy.
Click to expand...

At the risk of derailing... What scares me is that we're outsourcing the last of the steel industry. We keep a strategic oil reserve in case of war, but we aren't going to keep the manufacturing infrastructure to build the machines of war that would use the reserve?

Anyway, back to your regularly scheduled IBR-as-handout dickering. 😉
 
museabuse said:
Let's say a student takes out 250k and can't find a pharmacist job or doesn't want to and lives off a 12 dollar an hour job for the next 20 years. Considering student is enrolled in IBR and pays 10% income for 20 years. What would the loan be worth after 20 years considering interest? I would think it would be a lot more than 250k but I don't want to do the math.
Click to expand...

A lot, probably >500k
 
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