Are you on low monthly payments and saving up for the loan forgiveness tax bomb?

[London22]

Anyone with high loans amount or anyone you know doing the loan forgiveness over 25 years or paying them off right away?
I'm talking 200-250k+ loans when combined with undergrad.

Financial aid website says it ends up coming out to the same amounts of money paid off other than the tax bomb at the end if you choose the forgiveness route.

Depending on situation, I think the forgiveness route might be the better option since it cuts the monthly payment down by over half over 25 years instead of big payments for 10 years during your prime. Although you'll have to sit there and be patient as they built up for 25 years before they're forgiven.

Thoughts?

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[KHE]

I would not rely on that. Laws can be changed with the stroke of a pen. Plus, there's a certain unethicalness to intentionally not paying a debt incurred.

 

[percyeye]

If you have $250K worth of loans from Optometry school and undergrad which is pretty common nowadays and you choose the standard 10 year repayement plan your loan payment per month will be ~$3000. I wish I could pay that $3,000 per month but after taxes that amount is way too much when I have a house, wife, kid etc. If I were single for the next decade then I would hit the loans hard but most don't have the option and do the smaller income based amount.

 

[London22]

If you have $250K worth of loans from Optometry school and undergrad which is pretty common nowadays and you choose the standard 10 year repayement plan your loan payment per month will be ~$3000. I wish I could pay that $3,000 per month but after taxes that amount is way too much when I have a house, wife, kid etc. If I were single for the next decade then I would hit the loans hard but most don't have the option and do the smaller income based amount.

Thanks for this info!

I would not rely on that. Laws can be changed with the stroke of a pen. Plus, there's a certain unethicalness to intentionally not paying a debt incurred.

I see your point with the laws but that seems like a huge stretch to call it unethical. For some people the forgiveness plan is the only feasible option they have and they still have to make many required payments still. They're just lowered by about half since it's based on your income and spaced out between 25 years instead of 10. They also get taxed on forgiveness, so if someone intentionally paid the minimum amount the whole time then they just get an even higher tax bomb later on down the line.
~$1.2k payment each month for 25 years = $360k total paid off + $120k tax bomb if 400k are forgiven = $480k paid total
vs
~$3.6k each month for 10 years = $432k
If it's actually legit then I don't see why not for some people that can't afford the standard.

 

[Ryan_eyeball]

I feel horrible for new grads coming out with that much in student debt. Really $1.2k/month over 25yrs or $3.6k over 10 years? Mine is locked in at $520 over the next 18 years, and doubt it'll get paid off sooner than scheduled. Most of the 12 years I've paid on it has already been interest, and now almost $400 of every payment goes to principal.

Ask most OD's how much Eyemed, VSP, Superior, Spectera, Davis have raised reimbursements in the past 15 years?

 

[GlowInTheDark]

If you’re even entertaining the idea of going to optometry school and getting >$200k in debt you need to really really really evaluate your life goals.

Your salary isn’t going to equip you to pay off your loans for a very long time and by the time you’re even practicing you’re going to be staring at about $40k in interest that has already built up.

 

[GypsyHummus]

I mean, as an OD, you are grossing like 110-130K/year, which is like 80-90K? Thats what, 7K/month?

Live off of 2K/month and pay the 5K/month in debt. Thats like 60K/year, you will be debt free in 5 years with 250K in debt. Not hard to live off of 2K/month. I did it and could still afford everything I needed.

 

[Aconite]

I'm doing this. It actually ends up being cheaper to pay the tax bomb in 20 years, than it is to pay the standard repayment in 10 years.

 

[GlowInTheDark]

I mean, as an OD, you are grossing like 110-130K/year, which is like 80-90K? Thats what, 7K/month?

Live off of 2K/month and pay the 5K/month in debt. Thats like 60K/year, you will be debt free in 5 years with 250K in debt. Not hard to live off of 2K/month. I did it and could still afford everything I needed.

The fact that people find this acceptable and will still enter the profession is a harbinger of how bad things will get in 10-15 years.

I bailed on my position at PUCO 1 month before starting and ended up going to med school. My debt load is the same as it would’ve been there and my income prospects are 3-4x higher yet I still have financial regrets.

The added fact that you all find 20 years of debt payments acceptable and will hope it to be expunged is a poor sign as well.

 

[London22]

I bailed on my position at PUCO 1 month before starting and ended up going to med school. My debt load is the same as it would’ve been there and my income prospects are 3-4x higher yet I still have financial regrets.

That's great you decided to go to a field with a better ROI but those who truly aspire to become optometrists won't ditch just because they saw the MD salary. I personally know somebody who left optometry for dental school with a higher ROI and now regrets it in his 2nd year.

The added fact that you all find 20 years of debt payments acceptable and will hope it to be expunged is a poor sign as well.

lol nearly every med student I know talks to me about their plans to do PSLF to get their 450k worth of interest built loans forgiven after 10 years tax free so this is bs sorry. Optometry students have this PSLF option too as well as military, IHS, VA etc. All viable options to get out of debt fast. More competitive to secure a job with the VA but definitely achievable after a VA residency.

 

[GlowInTheDark]

That's great you decided to go to a field with a better ROI but those who truly aspire to become optometrists won't ditch just because they saw the MD salary. I personally know somebody who left optometry for dental school with a higher ROI and now regrets it in his 2nd year.



lol nearly every med student I know talks to me about their plans to do PSLF to get their 450k worth of interest built loans forgiven after 10 years tax free so this is bs sorry. Optometry students have this PSLF option too as well as military, IHS, VA etc. All viable options to get out of debt fast. More competitive to secure a job with the VA but definitely achievable after a VA residency.

You know one person that doesn’t like during the hardest year. Follow up in 4.

- PSLF is a pipe dream, and if it does work out it’s the medical side that’ll be far more likely to get it. There aren’t many 501c3 organizations for optometrists to work at. VA is an option, but slim.

- Military optometry isn’t as easy as you think. Very limited positions and scholarships aren’t always all 4 years. Solid option if you can and want that life.

- IHS pay is absolute crap and will only cover part of your tuition. Worst option of all you listed.

And no, it’s not BS. It’s a true reality that I’ve lived and you’ve apparently only read about.

You obviously all need to make your own decision and what you choose has zero impact on me. This is simply a voice of warning and caution to many who don’t fully grasp the reality of what they’re commiting to. Spare me the “it’s my passion and I’ll be so happy”...I’m not on an admission committee and wouldn’t believe you anyway.

 

[GypsyHummus]

Why do you still have financial regrets? Depending on what specialty you choose, you can make 500K/year. PCP still make about 180-220K/year

The fact that people find this acceptable and will still enter the profession is a harbinger of how bad things will get in 10-15 years.

I bailed on my position at PUCO 1 month before starting and ended up going to med school. My debt load is the same as it would’ve been there and my income prospects are 3-4x higher yet I still have financial regrets.

The added fact that you all find 20 years of debt payments acceptable and will hope it to be expunged is a poor sign as well.

 

[drumstix]

Why do you still have financial regrets? Depending on what specialty you choose, you can make 500K/year. PCP still make about 180-220K/year

cuz he's not top of his class and therefore will be a PCP making peanuts salary compared to what he'd hoped lol

 

[London22]

And no, it’s not BS. It’s a true reality that I’ve lived and you’ve apparently only read about. You obviously all need to make your own decision and what you choose has zero impact on me. This is simply a voice of warning and caution to many who don’t fully grasp the reality of what they’re commiting to. Spare me the “it’s my passion and I’ll be so happy”...I’m not on an admission committee and wouldn’t believe you anyway.

For those who are worried about negative nancy claims that PSLF is a "pipe dream" and that it will get "cancelled" then check out r/studentloans on Reddit and prepare for people calling it fear mongering. It's been debunked more times than I can count on every post about the topic this year alone.