Loan forgiveness vs expensive med schools

[HIFU]

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Hi all,

I am kinda confused about this... so let's say we all take advantage of the loan forgiveness program, which we will pay 10% of our salary starting residency. The rest of the loan will be forgiven after 10 years of payments. Then does it matter how expensive med school is? Am I missing something?

 

[deleted480308]

Hi all,

I am kinda confused about this... so let's say we all take advantage of the loan forgiveness program, which we will pay 10% of our salary starting residency. The rest of the loan will be forgiven after 10 years of payments. Then does it matter how expensive med school is? Am I missing something?

1.....the likelihood it will actually exist in 10 yrs
2.....the likelihood that it doesn't get capped (already proposed to cut off <60k)
3.....the "forgiven" amount is taxable as income so you get a $150k tax bill when it forgives

 

[neekzg]

I haven't done a ton of research but I don't think current programs forgive all of your debt after x years. It is usually capped at a certain amount they will forgive/pay off

 

[deleted480308]

I haven't done a ton of research but I don't think current programs forgive all of your debt after x years. It is usually capped at a certain amount they will forgive/pay off

Ibr/paye/plsf are not currently capped

 

[neekzg]

Ibr/paye/plsf are not currently capped

So currently after x amount of years all (undergrad+med) is forgiven?

 

[Okazaki Frag Grenade]

I thought the forgiveness kicked in at 25 years, not 10. But maybe I'm thinking of a different program

 

[HIFU]

I thought the forgiveness kicked in at 25 years, not 10. But maybe I'm thinking of a different program

I think the official rule is after 120 payments, which is pretty much 10 yrs.


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[zero0]

I think the official rule is after 120 payments, which is pretty much 10 yrs.


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That only applies to PSLF, after which they drop the remaining debt at no charge. However, the predominating opinion is that this program won't be available to physicians in the future. PAYE/IBR/REPAYE on the other hand have the 25 year term, after which your debt is dropped, but the amount dropped gets filed under your income for that last year and you're expected to pay taxes on it accordingly. Financially, it just makes more sense to pay off your loans as soon as you can in that situation. With interest factored in and having to pay taxes at the end, it really doesn't save you any money in the long run.

tl;dr No, there's really no easy out for heavy loan burdens and you should take out loans responsibly.

 

[Mansamusa]

So currently after x amount of years all (undergrad+med) is forgiven?

No, the forgiven amount is treated as taxable income.

Marco Rubio proposed increasing the time to 30yrs, 10% income, then forgiven tax free. That is an idea that has been thrown out there, but who knows what changes will occur