10 yr + out in practice, what are you doing about your student loan?

[greasemonkey]

For those that have been out 10+ years, how are you managing your student loan? Did you opted for pay-as-you-earn and plan to have the loan forgiven in 20 years? Did you re-finance and paying down the loan as fast as you can? How are you faring? If you are planning on the 20 years forgiveness program, what is the tax on the amount to be forgiven looking like?

It just dawned on me that if I pay-as-I-earn, the loan would likely continue to grow and by the time I hit the 20 year forgiveness, I might be looking at paying tax on a crazy large amount, and the tax might end up the same as the current cost of the loan. Give me your thoughts. I'm I looking at this wrong?

---

Members don't see this ad.

 

[Podstar]

For those that have been out 10+ years, how are you managing your student loan? Did you opted for pay-as-you-earn and plan to have the loan forgiven in 20 years? Did you re-finance and paying down the loan as fast as you can? How are you faring? If you are planning on the 20 years forgiveness program, what is the tax on the amount to be forgiven looking like?

It just dawned on me that if I pay-as-I-earn, the loan would likely continue to grow and by the time I hit the 20 year forgiveness, I might be looking at paying tax on a crazy large amount, and the tax might end up the same as the current cost of the loan. Give me your thoughts. I'm I looking at this wrong?

IMO a 20 year repayment plan will keep you in debt for 20 years when you are trying to start a family, buy a house, etc. I plan to pay off my loans 3 years out of residency living like a student, so I can live debt free and accumulate wealth before I am 50. Just for a quick fun example, if I make 120k my first 3 years out (which is terrible and you should be making more) and my wife makes 50k a year, then I would put 100k a year towards loans and live off 50k or so that is left after taxes. After 3 years of ~100k my debt will be gone. I suggest reading the White Coat Investor and watching the Dave Ramsey Show.

Edit: these numbers are extremely conservative and I will likely make more and my wife will likely make more, so realistically I could pay off my loans faster than 3 years or we could live a better than 50k lifestyle while I pay them off in 3 years.

 

[AttackNME]

A few years in, no specific plan but just gonna put as much money into it as possible after putting money into savings, retirement, and emergency fund. For the first batch of people in public service loan forgiveness, I've read that less than 1% were successful in getting their loans forgiven, and some of those successful had to get a lawyer to go up against the federal government and fight to get their loans forgiven. With those odds and the current political climate, I don't think I can trust the government will forgive my loans in 10 years.

 

[greasemonkey]

IMO a 20 year repayment plan will keep you in debt for 20 years when you are trying to start a family, buy a house, etc. I plan to pay off my loans 3 years out of residency living like a student, so I can live debt free and accumulate wealth before I am 50.

Thank you for responding, but I'm seeking opinions from those with 10+ year out practicing for a reason. I don't know if you are still in school or residency, but wait until you finish residency and practicing for a few years, then let me know if you still think you can pay off your student loan in 3 years. It's nice that you are so ambitious.

 

[greasemonkey]

A few years in, no specific plan but just gonna put as much money into it as possible after putting money into savings, retirement, and emergency fund. For the first batch of people in public service loan forgiveness, I've read that less than 1% were successful in getting their loans forgiven, and some of those successful had to get a lawyer to go up against the federal government and fight to get their loans forgiven. With those odds and the current political climate, I don't think I can trust the government will forgive my loans in 10 years.

Did you refinance then if you are trying to pay it off as much as you can afford?

 

[AttackNME]

Did you refinance then if you are trying to pay it off as much as you can afford?

Initially no, only consolidated and got onto the income based repayment plan to meet pslf requirements. If you refinance you will no longer qualify. Well two years later they are still manually recounting my payments (something about the payment numbers not matching up, I've always gotten vague answers and to call back in a few months) and still haven't been given word of being officially accepted into pslf. I have had colleagues get on it so maybe I have an unlucky problem, but knowing that the government and just furlough people for months with no pay doesn't give me confidence that they will take care of me. So once I make bigger payments if it looks like I'm still doing ok in life with family and finances then I'll look into refinancing after meeting with my financial counselor.

 

[greasemonkey]

knowing that the government and just furlough people for months with no pay doesn't give me confidence that they will take care of me.

I understand your concern and I'm with you. Hence, I'm now thinking of scrapping the idea of paying the minimum on pay-as-you-earn then have it forgiven after 20 year deal. I'm hoping I get enough good feedback from those who have been out longer than me to make this decision. I want to refinance now if I decide to pay this off ASAP, so that I'm not being ripoff any longer with this ridiculous %7 interest rate. I mean I was able to get a mortgage loan for 4% and a car loan for 3%, why should I pay 7% interest rate on student loan?

 

[air bud]

I understand your concern and I'm with you. Hence, I'm now thinking of scrapping the idea of paying the minimum on pay-as-you-earn then have it forgiven after 20 year deal. I'm hoping I get enough good feedback from those who have been out longer than me to make this decision. I want to refinance now if I decide to pay this off ASAP, so that I'm not being ripoff any longer with this ridiculous %7 interest rate. I mean I was able to get a mortgage loan for 4% and a car loan for 3%, why should I pay 7% interest rate on student loan?

You can refinance now and do a 5 year loan and get 3.5 percent. Do a variable . You can refinance bas many times as you want if rates go up. A fixed rate is really just you buying insurance. The loan can only go up so much per year, it's not like it jumps from 4 to 10. Gets those paid of ASAP. The lower rate for a shorter term loan gives you even more incentive. You want to pay off in 20? That's going to be 5.5 or more percent these days. Forget plsf. Refinance private and out of crappy 6.8+government. PM me for more details if you want

 

[FootGuy1]

<1 year out of residency. Started paying student loans off during residency. Started with 250k 3 years ago, now we have 80k left. plan on paying it off by October this year, so just over a year after residency. Definitely refinance with SOFI also, went from 6.8 to 4.1. Pay large chunks to your loans

 

[air bud]

<1 year out of residency. Started paying student loans off during residency. Started with 250k 3 years ago, now we have 80k left. plan on paying it off by October this year, so just over a year after residency. Definitely refinance with SOFI also, went from 6.8 to 4.1. Pay large chunks to your loans

That is awesome. Good job. I wish I was paying my sooner but doesn't make sense for me since my employer pays 20k a year. So I did some math and am paying them based on a 15 year amortization. But when they make the last 20k payment at year 5 it zeroes out. I pay a higher rate to have that payment on 15 year rate (although paid off in 5) but it still makes sense in the long run.

 

[DYK343]

I'm not a big fan of PSLF but that article is click bait title.
A vast majority did not meet the requirements and it says this in the article. But the title is misleading.
It was the first year available. Not everyone had made 120 on time payments and therefore have to reapply at a later date. 10 years is not the same as 120 payments.
Lets see how it progresses but I would not throw in the towel on PSLF based on that article alone
There is an interesting White Coast Investor podcast on it

Here is the clickbait article. Follow the rules and it should be forgiven.
More than 40,000 people have applied for public service loan forgiveness — 206 were approved

 

[greasemonkey]

The rules and requirement for PSLF are strict and complicated. I'm wondering if anybody has gotten the 20 year forgiveness or planning to go that route.

 

[streetsweeper]

5 years out now. I got somewhat screwed because I did the PSLF plan initially. My original job was for a nonprofit organization. The new job I switched to was considered for profit and those interest kept piling up. Long story short, I refinanced with SoFi on the 10 year plan. My terms were very clear and concise. Much happier...not worried about the political climate anymore. Just suck it up and pay it off.

 

[air bud]

For those of you trying to do PLSF - from the white coat investor - put the difference of whatever your normal payments should be based on paying off in 3 or 5 years into a savings account/money market fund/YMMV. Then if it doesn't end up working out for whatever reason, you still have that money saved and can apply it to your balance.

 

[air bud]

Also, for those of you in the points game and realized that hard pulls do nothing to your credit....you can refinance as much as you want and whenever you want. I have refinanced 3 times, made about 1700 in bonuses after taxes for doing it. The smart thing to do is apply that money towards the principal, or do other stuff with it. For those of you worried about your credit score - you don't know what you are talking about. I have opened 10 credit cards over the last 6 months, applied for a mortgage, refinanced my student loans twice...and score has gone up 10 points (above 760 these days - no difference between 720 and 850).

For those of you interested, I have referral links where we both get nice bonuses.....PM me

 

[DYK343]

The rules and requirement for PSLF are strict and complicated. I'm wondering if anybody has gotten the 20 year forgiveness or planning to go that route.

To directly quote the article:

With the help of student loan expert Mark Kantrowitz, we’ve addressed some of the most common misunderstandings about the program that trip people up.

These are the program’s three basic requirements:

1. Your loans must be federal direct loans.
2. Your employer must be a government organization at any level, a 501(c)(3) not-for-profit organization or some other type of not-for-profit organization that provides public service.
3. By the end, you need to have made 120 qualifying, on-time payments in an income-driven repayment plan or the standard repayment plan.

Believe it or not, that’s just the basics.

 

[hematosis]

Not sure how some of you shaved big chunks off during residency but thats awesome. I consolidated during residency and entered the REPAY program asap. that knocked my interest from 6.8 to 3.4 (not exacly 3.4, but the government pays 50% of your unsubsidized loan interest and 100% of your subsidized) I'd let the government make their payment at the end of every month and then i'd dump 1k every month. after three years i knocked about 20% of the total loan. i did the same thing during fellowship which set me back a year (big mistake, dont do a fellowship if you have a **** ton of loans) once i got my job (salary > 250k in a hospital, i made huge dumps on my loan. after three years out it was paid off.

Its possible to pay these off in three years. i did it even with a fellowship. The key is to get a decent job. if youre going into private practice..forget it. you'll end up with these loans for 20 years...

Its so nice not have these loans anymore. that extra 10k a month is now invested

 

[air bud]

Not sure how some of you shaved big chunks off during residency but thats awesome. I consolidated during residency and entered the REPAY program asap. that knocked my interest from 6.8 to 3.4 (not exacly 3.4, but the government pays 50% of your unsubsidized loan interest and 100% of your subsidized) I'd let the government make their payment at the end of every month and then i'd dump 1k every month. after three years i knocked about 20% of the total loan. i did the same thing during fellowship which set me back a year (big mistake, dont do a fellowship if you have a **** ton of loans) once i got my job (salary > 250k in a hospital, i made huge dumps on my loan. after three years out it was paid off.

Its possible to pay these off in three years. i did it even with a fellowship. The key is to get a decent job. if youre going into private practice..forget it. you'll end up with these loans for 20 years...

Its so nice not have these loans anymore. that extra 10k a month is now invested

You left out the part about living like a resident (mostly) for those 3 years. Makes all the difference in the world. Not living in a high cost of living area with a 5k a month mortgage, a 1k payment on your raptor or tesla etc.

As long as we are talking about paying off loans, for those of you with questions about loans vs investing, there are lots of variables. However think of paying off loans as getting a guaranteed 5 percent or whatever rate you have vs possible turmoil in the upcoming stock market.

 

[Creflo]

Dave Ramsey baby steps.

 

[DrMaseofBase]

For those that have been out 10+ years, how are you managing your student loan? Did you opted for pay-as-you-earn and plan to have the loan forgiven in 20 years? Did you re-finance and paying down the loan as fast as you can? How are you faring? If you are planning on the 20 years forgiveness program, what is the tax on the amount to be forgiven looking like?

It just dawned on me that if I pay-as-I-earn, the loan would likely continue to grow and by the time I hit the 20 year forgiveness, I might be looking at paying tax on a crazy large amount, and the tax might end up the same as the current cost of the loan. Give me your thoughts. I'm I looking at this wrong?

I paid mine off before 10 years out. I had about $200k after undergrad and podiatry school. Fair warning..... I'm a Dave Ramsey guy and don't carry any debt except my house which I expect to pay off in about 4-5 years

 

[malleolusman]

For those that have been out 10+ years, how are you managing your student loan? Did you opted for pay-as-you-earn and plan to have the loan forgiven in 20 years? Did you re-finance and paying down the loan as fast as you can? How are you faring? If you are planning on the 20 years forgiveness program, what is the tax on the amount to be forgiven looking like?

It just dawned on me that if I pay-as-I-earn, the loan would likely continue to grow and by the time I hit the 20 year forgiveness, I might be looking at paying tax on a crazy large amount, and the tax might end up the same as the current cost of the loan. Give me your thoughts. I'm I looking at this wrong?

Don't know what your interest rates are now for these loans, but when I graduated a few years back they were 6.8 and 7 percent. I landed a decent job, and as soon as I did, I refinanced with SoFI at 4%, and paid heavy into them. No fancy car, no fancy pad. Paid everything in 5 years. You will pay now or you will pay later, might as well get it over with fast and then invest stress free.

 

[azfootdoc]

So you might not find a lot of people in the group you're looking for. What I mean by this is I graduated CCPM/CSPM 2004 and residency 2007. At that time many of us were able to lock in crazy low rates for 30 yrs. I'm currently at 2.75% for 30 yrs. I have 17 years left to pay but at those rates I would be stupid to pay it off sooner. That said I am taking a different approach. I am well compensated and good a pretty big bump in pay this most recent contract. I am trying to pour as much money as I can into investment/retirement. The problem I'm running into is I've maxed out 401k, HSA and other tax favored vehicles so I'm looking at deferred comp or other means to shelter my money. I love Dave Ramsey and think his ideas are great but for me I would rather live a comfortable lifestyle while still plowing 20-25% of my comp into savings. If all goes well by the time I make my last loan payment at 60 I will have saved/grown my retirement to 4 million (in today) dollars. At this point I can work if I want or not.

 

[greasemonkey]

So you might not find a lot of people in the group you're looking for. What I mean by this is I graduated CCPM/CSPM 2004 and residency 2007. At that time many of us were able to lock in crazy low rates for 30 yrs. I'm currently at 2.75% for 30 yrs. I have 17 years left to pay but at those rates I would be stupid to pay it off sooner. That said I am taking a different approach. I am well compensated and good a pretty big bump in pay this most recent contract. I am trying to pour as much money as I can into investment/retirement. The problem I'm running into is I've maxed out 401k, HSA and other tax favored vehicles so I'm looking at deferred comp or other means to shelter my money. I love Dave Ramsey and think his ideas are great but for me I would rather live a comfortable lifestyle while still plowing 20-25% of my comp into savings. If all goes well by the time I make my last loan payment at 60 I will have saved/grown my retirement to 4 million (in today) dollars. At this point I can work if I want or not.

Thank you for your insight. I agree with your take on this based on the interest rate difference. For me at this time, refinance would be very stress full on my finance since I recently took on a mortgage. I think I'll keep doing the Pay-as-you-earn and save up for the tax bomb at the end so I can enjoy life now.

 

[Apolo106]

Thanks for the input. I applied for PLSF a year ago and I am on the REPAY plan, do you know if the payments that I made during my residency will count toward these 120 payments even though it was done prior to my PLSF enrollment? I tried calling emailing myfedloan but haven't heard back. Thanks.

 

[GreenHousePub]

Don't know what your interest rates are now for these loans, but when I graduated a few years back they were 6.8 and 7 percent. I landed a decent job, and as soon as I did, I refinanced with SoFI at 4%, and paid heavy into them. No fancy car, no fancy pad. Paid everything in 5 years. You will pay now or you will pay later, might as well get it over with fast and then invest stress free.

Mine was - no **** - 8% before I joined the military and had them dropped down to 5.75. I can't believe they can get away with doing interest rates that high on them.

The beauty of the PSLF is that my loans from 2009 don't qualify so even if I got the PSLF I would still owe 75k.