$500,000 in debt

[ASGD1983]

This all sounds like you have a well-thought-out plan to shoot yourself in the foot as soon as you get out of school. Refinance? Are your loans federal or private? The only situation in which your plan makes financial sense is if every bit of your loan debt (or the vast majority of it) is from private loans. With your stated planned income, a person who had that much in federal loans would simply enroll in an income-driven repayment program and have a huge portion of that money forgiven. You have also taken 40% off the top in taxes, and that is very unlikely--even in the states with the highest income taxes you wouldn't approach $96,000 in taxes. Your payment on an income-driven repayment plan would be more in the range of $1200-1800 per month, or less...followed by outright forgiveness of hundreds of thousands of dollars. If you DO have that much in private loans, then...ouch. That sucks. But I don't want people who might stumble across this to think that your scenario is the only option. Read Ben White's Medical Student Loans for plenty of info about repayment options and planning: Student Loans | Ben White

You are absolutely correct. There are ways to have income driven repayment or loan forgiveness.
All my loans are private loans (not eligible for any federal loans, I'm not US citizen). So my situation is worst outcome that can ever be in this country for a medical student. I just wanted to show that even in this very bad situation - it's absolutely doable and you can live comfortably.

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[RangerBob]

I make decent money, have kids and claim 1. My taxes were 50k last year and I live in a high tax state.
Just for reference.

NEVER EVER refinance your student loans into private loans. You will no longer qualify for any loan forgiveness and they still won’t be forgiven in bankruptcy.

If they are already private loans that don’t qualify for NHSC or PSLF then fine, but if they do... those are better options.

There are lots of great reasons to refinance into private loans. The main one being if you're not going to PSLF and want to bring your average interest rate from 6.8 down to 4, 3, or even 2.5 percent (the lowest I've seen).

You lose some benefits, sure, But you can save a lot of money.

 

[Prncssbuttercup]

There are lots of great reasons to refinance into private loans. The main one being if you're not going to PSLF and want to bring your average interest rate from 6.8 down to 4, 3, or even 2.5 percent (the lowest I've seen).

You lose some benefits, sure, But you can save a lot of money.

Right now there is no benefit unless the loans are already private. Given that people are getting 18 mo of no interest and no payments, and each month qualifies for PSLF, it’s definitely not worth it currently.
But again, I am FM with 500k in debt and I specifically sought out a job where I’d qualify for both NHSC and PSLF options.

 

[RangerBob]

Right now there is no benefit unless the loans are already private. Given that people are getting 18 mo of no interest and no payments, and each month qualifies for PSLF, it’s definitely not worth it currently.
But again, I am FM with 500k in debt and I specifically sought out a job where I’d qualify for both NHSC and PSLF options.

Do current “payments” still count towards PSLF? They did when Congress extended the interest freeze, but I’m not sure if they counted when Trump/Biden did it unilaterally.

Regardless, for many consolidating right now may not be the best time, but there are plenty of reasons to consider consolidating soon. If you’re not eligible for PSLF, rates are as low as they’ll ever get, and incentives are high. If you’re looking at 5 or 10 years to pay off your loans, you win in the long run. If you only have two years left then it’s likely not south it. My wife and I are looking at consolidating most of our $350k in loans. It would cost us an extra $4k in interest the next few months, but save us about $36k over the life of the loan. Not too shabby.

With all the proposed stimulus measures out there, we never know if rates are going to go up a fair amount due to inflation. Yet, we also don’t know what forgiveness measures, if any, may be introduced. We’d all love to have a crystal ball, but ultimately we all have to analyze our own situation carefully and see what will work the best.

 

[Prncssbuttercup]

Do current “payments” still count towards PSLF? They did when Congress extended the interest freeze, but I’m not sure if they counted when Trump/Biden did it unilaterally.

Regardless, for many consolidating right now may not be the best time, but there are plenty of reasons to consider consolidating soon. If you’re not eligible for PSLF, rates are as low as they’ll ever get, and incentives are high. If you’re looking at 5 or 10 years to pay off your loans, you win in the long run. If you only have two years left then it’s likely not south it. My wife and I are looking at consolidating most of our $350k in loans. It would cost us an extra $4k in interest the next few months, but save us about $36k over the life of the loan. Not too shabby.

With all the proposed stimulus measures out there, we never know if rates are going to go up a fair amount due to inflation. Yet, we also don’t know what forgiveness measures, if any, may be introduced. We’d all love to have a crystal ball, but ultimately we all have to analyze our own situation carefully and see what will work the best.

Yes, each month is counting as a payment even if no payment is received.
It’s glorious for me.

Again, people who are in different situations need to talk to their own financial advisor about their unique situation.

 

[Neopolymath]

Right now there is no benefit unless the loans are already private. Given that people are getting 18 mo of no interest and no payments, and each month qualifies for PSLF, it’s definitely not worth it currently.
But again, I am FM with 500k in debt and I specifically sought out a job where I’d qualify for both NHSC and PSLF options.

I'm sorry but you are giving bad blanket advice. Telling people to not ever refinance their loans because YOU find it not worth it for your specific situation is ignoring all the people who aren't going to use PSLF.

Most of us won't do PSLF and most of us won't need it so you are effectively telling people to have a worse interest rate even in a job that doesn't qualify for PSLF when you say no one should ever refinance like it's some kind of boogeyman.

Edit: Saw your last post. Correct, everyone should find out what works for their situation...

 

[Prncssbuttercup]

I'm sorry but you are giving bad blanket advice. Telling people to not ever refinance their loans because YOU find it not worth it for your specific situation is ignoring all the people who aren't going to use PSLF.

Most of us won't do PSLF and most of us won't need it so you are effectively telling people to have a worse interest rate even in a job that doesn't qualify for PSLF when you say no one should ever refinance like it's some kind of boogeyman.

Edit: Saw your last post. Correct, everyone should find out what works for their situation...

“Most of us won’t need it”

How many people do you think have significant debt coming out of medical school?

That’s a super privileged load of crap.
Anyone who doesn’t see PSLF, NHSC, or the military as a possible option to pay off debt out of medical school is lucky to be in that financial situation. I would argue most people are not in YOUR financial situation.

 

[Neopolymath]

“Most of us won’t need it”

How many people do you think have significant debt coming out of medical school?

That’s a super privileged load of crap.
Anyone who doesn’t see PSLF, NHSC, or the military as a possible option to pay off debt out of medical school is lucky to be in that financial situation. I would argue most people are not in YOUR financial situation.

You are letting emotions cloud your reading. It is not controversial to say most people don't *need* PSLF. It's simple math. PSLF is an option for those that can or want to pursue a job that qualifies. Many, many people every year do just fine not taking a job like that and pay off their loans.

You are welcome to look up the average indebtedness of med students and then compare to the average salary of a primary care doc to see for yourself that one can pay this off without PSLF. I'm not doing basic math for you because I'm not the one making absurd claims here like "Most people need PSLF" and "Never refinance your loans." The onus is on you.

Do you really think most people complete PSLF? Really? The answer to this question is no and that has nothing to do with your claim that I don't understand most students have $200k+ in debt.

Edit: and once again, I suggest you choose your words carefully and stop with the logical fallacies. No one claimed the bolded. You are tilting at windmills here because you got offended by misreading someone who corrected your claim that no one should ever refinance loans. It's gonna be ok.

 

[Prncssbuttercup]

Average tuition & fees for incoming medical students is almost 60k/yr.

This is only a problem that is going to get worse.

This thread is about a person who potentially choose not to go to medical school because of debt.

There are many options to help with this amount of debt. It should not be the reason someone chooses to decline an admission.

 

[Neopolymath]

Average tuition & fees for incoming medical students is almost 60k/yr.

This is only a problem that is going to get worse.

This thread is about a person who potentially choose not to go to medical school because of debt.

There are many options to help with this amount of debt. It should not be the reason someone chooses to decline an admission.

Great, we agree on all those things. We also agree that PSLF among other things are an option to help students achieve their goals while not breaking under financial stress. Notice that at no point did I make any claim otherwise in this thread (or anywhere)...

 

[NITRAS]

Average tuition & fees for incoming medical students is almost 60k/yr.

This is only a problem that is going to get worse.

This thread is about a person who potentially choose not to go to medical school because of debt.

There are many options to help with this amount of debt. It should not be the reason someone chooses to decline an admission.

The answer to high tuition isn’t to make debt forgivable. That just encourages more increases in tuition.

 

[sixersfan]

I will be graduating med school with basically the same amount of debt as you. Is it overwhelming? God yeah... But after stressing throughout my undergrad years about how much debt I will be in after med school, I actually sat down and crunched some numbers. First, you likely won't be making enough in residency to actually make much of a principle payment on your loans, though you should be able to negate the interest. And we are in an even better situation right now with student loan interest being on hold 😀. So if you start paying large monthly payments on the principle after your residency is over you should be able to pay off your loans within 5 years, maybe less. Sounds preposterous, I know. However, from my point of view, I've never made a real salary before. I went to undergrad right after high school and med school right after undergrad. So when I'm making ~50k in residency, that is going to be like nothing I have ever experienced (LOL). My point is, after residency I can assure myself I will continue living as if I am only making 50k and put literally ever other dime toward my loans. Would rather live a few more years with a residency salary than paying more in interest. Like Dave Ramsey says, live like no one else will (aka, continue living on residency based salary a few years into attending life) so that one day you can live like no one else does (aka, not pay butt loads of interest on a long payment plan). Just wait a few more years to splurge. It'll be worth it.