Changes are coming for IBR/PSLF?

[a runner]

"art history major at northwestern that accrues 200k for a bachelors..... yes I can see that as a problem"

That's not possible because undergraduates are limited to $57k in federal loans. IBR/PAYE was not designed with professional school in mind, that's why it will be changed. After all why should a pharmacist who works at a "non-profit" hospital get their loans forgiven tax free after 10 years while the one working in a for profit operation doesn't? The idea behind PSLF was to get bright undergraduates into fed/state gov jobs that are typically low paying and unglamorous.

"Intent" of the law doesn't matter, it's what's actually written that counts, and the rules are the rules. You can't fault people or demonize them for following the rules as written, regardless of your feeling that the rules shouldn't be the way they are.

If the law was not designed with professional students in mind, then they would have been excluded. You can argue that the law was poorly written but you can't argue that the law intends something it does not actually say.

Also you are wrong about the $57k limit. That is just for dependent children attending college. Many people do not fit that mold. And then there is interest accrual that can easily increase even a dependent child's balance well past $57k.

---

Members don't see this ad.

 

[a runner]

BMB, I can't believe you are still harping on this issue all these years later.

It's one thing to work to overturn the law for future borrowers (which I agree would be a good idea), but it's another thing to use scare tactics to try and dissuade people from using a program that would potentially benefit them.

 

[BMBiology]

BMB, I can't believe you are still harping on this issue all these years later.

It's one thing to work to overturn the law for future borrowers (which I agree would be a good idea), but it's another thing to use scare tactics to try and dissuade people from using a program that would potentially benefit them.

I am posting some facts and my analysis. Whether or not you think it is useful, that is up to you to decide. It is your decision. Your life. I predicted the government is going to put a cap and that's what the obama administration had proposed.

 

[BMBiology]

"Intent" of the law doesn't matter....If the law was not designed with professional students in mind, then they would have been excluded. You can argue that the law was poorly written but you can't argue that the law intends something it does not actually say.

Actually it matters greatly. The governement can justify putting a cap and not grandfathering it in by saying they are merely closing a loophole.

 

[a runner]

Actually it matters greatly. The governement can justify putting a cap and not grandfathering it in by saying they are merely closing a loophole.

I disagree. Then everyone could have their own "private interpretation" of laws, reading things into them that don't exist.

"Loophole" is just political doublespeak for people to use when they don't like laws as written and want them changed.

 

[confettiflyer]

I'm in the camp that believes there are no such things as loopholes. Closing a loophole = just brand new legislation. Laws are what they are. Loopholes = carve outs = exemptions = special interest requests. Lawmaking is so intently watched by interested parties that there's very rarely an "oops no one on earth meant for this to be in there or for this to happen."

And intent? The only time this is important is in the Supreme Court. Otherwise, it's everyone's opinion battling it out.

If I remember reading the original paper OP posted...law students/institutions were at least involved in the rule making process (likely legislative process as well).

 

[Trent Steele]

I think the only people that would be against this program are those that are butthurt that they never knew of it to take advantage. They certainly never spoke a word of it to anyone when we were in school, its not like they are advertising the think all over the interwebs.

 

[BMBiology]

^ big deal...IBR/PAYE will cost you more in the long run. The only advantage is PSLF

 

[BMBiology]

NEW Nov 2014 Q&A: https://studentaid.ed.gov/sites/default/files/public-service-loan-forgiveness-common-questions.pdf

Here it is! I told you there is nothing that would prevent Congress from changing or ending PSLF. You are high on weed if you think Congress is going to forgive six figure debt to well paid healthcare professionals. Sooner or later, there will be a cap.

5 Can I be certain that the PSLF Program will exist by the time I have made my 120 qualifying payments?

The U. S. Department of Education (ED) cannot make any guarantees regarding the future availability of PSLF. The PSLF Program was created by Congress, and, while not likely, Congress could change or end the PSLF Program.

 

[Monsterdaddy]

Hi Folks, it's been some time since I last posted (graduated last year). My prior background is finance and I have made several presentations regarding this program at my pharmacy school. IBR/PAYE/PSLF are really valuable programs so I'd like to clear up a certain misconception.

PSLF Grandfathering
Many people have pointed out that even though future changes to PSLF may occur, that the current people in the program should be grandfathered in. Well, I would like to be more certain of this so I found this article and this section:

... both Minsky and Jarvis think it’s extremely unlikely that any change to the program would affect current debtors. Instead, current debtors would likely be grandfathered in to the current capless system.

They point to the fact that the promissory notes students sign specifically mention potential forgiveness programs—meaning it might be illegal to simply pull an about-face. What’s more, they say, it’s hard to imagine such a blatant act against people who may already be several years into the PSLF program, which would amount to pulling the rug out from underneath a generation of public service workers. Student debt website Educated Risk also sites an education department spokesperson, speaking on background, as saying the proposal would not affect current borrowers.

So I pulled up my own promissory notes (MPN) at the studentloans.gov website and here's what I found under Section 21:

"A public service loan forgiveness program is also available. Under this program, the remaining balance due on your eligible Direct Loan Program loans may be cancelled after you have made 120 payments on those loans (after October 2, 2007) under certain repayment plans while you are employed in certain public service jobs."

I was surprised to see this very clear language. The MPN is a legal contract so I think the case for grandfathering is very strong. I would go check your promissory notes and see if the language has changed (I signed mine in 2010.)

So in 8 years I fully expect $400,000 in principal and accrued interest to be forgiven tax-free.

P.S. If your MPN is different, would you mind posting the relevant section so we can compare changes?

 

[BMBiology]

"A public service loan forgiveness program is also available. Under this program, the remaining balance due on your eligible Direct Loan Program loans may be cancelled after you have made 120 payments on those loans (after October 2, 2007) under certain repayment plans while you are employed in certain public service jobs."

As pointed out by confettiflyer, the main word is "may". In addition, who cares what the so called experts say when the Department of Education has posted this in their November 2014 Q & A:

Can I be certain that the PSLF Program will exist by the time I have made my 120 qualifying payments?

The U. S. Department of Education (ED) cannot make any guarantees regarding the future availability of PSLF. The PSLF Program was created by Congress, and, while not likely, Congress could change or end the PSLF Program.

I also think the Department of Education is misleading some students. They know the Obama administration had already proposed a $57.5 k cap on the forgiveness amount so to say changes are "not likely" is not exactly accurate. The obama administration had also proposed including spouse income when calculating repayment. These two proposals target high income earners who also tend to have more debt. Just remember this is the same administration that ended subsidize student loans for graduate and professional students.

The fact is, even with the $57.5 k cap, most people who are enrolled in PSLF will not be affected. Their student loan will be forgiven by the government as promised. $57.5 k is still a lot of money.

Nobody likes to hear bad news but I believe the signs are there. I don't believe it will end well for some of you.

 

[Monsterdaddy]

As pointed out by confettiflyer, the main word is "may". In addition, who cares what the so called experts say when the Department of Education has posted this in their November 2014 Q & A:

Are you kidding me? Two expert lawyers plus a legal document issued to thousands of student borrowers vs. an informational Q&A pdf (which doesn't even state anything that wasn't already obvious)?

Hmm, which one do you think has more credence in a legal challenge?

 

[BMBiology]

Are you kidding me? Two expert lawyers plus a legal document issued to thousands of student borrowers vs. an informational Q&A pdf (which doesn't even state anything that wasn't already obvious)?

Hmm, which one do you think has more credence in a legal challenge?

Just look at the bio of the so called expert lawyers. They are knee deep in debt. That's like asking your barber if you need a haircut.

Again, the Q&A is directly from the Department of Education. Who else is more credible?

I can understand why some people are finding this difficult to swallow. I don't have any student loans left so I don't have a dog in this fight. OK, I prefer not to pay more taxes in the future but I think I have presented the facts and it is up to you to come to the right conclusion. You can max out your student loans and hope the government will forgive it one day or you can be cautious with the debt you are taking as I have been preaching.

 

[confettiflyer]

We've known from the start that PSLF could be subject to legislative action, up to and including limitation/cancellation. If you look at the Federal Register for the rule making process for CCRA 2007, it's clear that the DOE was not in the position to issue contractual guarantees within the MPN under the scope of this legislation that authorized PSLF, hence the permissive language of "may" vs. "shall" when referencing that program.

BMB and I have argued this ad nauseum and my position is that it is a calculated risk that I am assuming that such a program will still benefit me in under 10 years time. I'm a big boy, I know what I'm doing, and after reading the history of the legislation, knowing the budget process of DC, as well as the historical precedence in changes to IDR plans & HEA in general, the risk benefit ratio pans out for me.

 

[BMBiology]

Just keep in mind that the PSLF Program has changed since it was first introduced in 2007. Back then there was no income based repayment (IBR) and PAYE, which is more generous than IBR. These programs have added to the cost of PSLF. Tuition for graduate and professional schools have also skyrocketed since 2007. In addition, since there is no cap on Gradplus loan and since they believe their loans will be forgiven, these students are borrowing more and more money.

The breaking point is already here. Congress can forgive all of these loans and face a backslash from the public or Congress can screw over well paid working professionals (a small number of borrowers). I believe it will be the latter. It may not be soon but as the amount grows and grows, there will be more pressure on Congress to act.

 

[BMBiology]

BMB and I have argued this ad nauseum and my position is that it is a calculated risk that I am assuming that such a program will still benefit me in under 10 years time. I'm a big boy, I know what I'm doing, and after reading the history of the legislation, knowing the budget process of DC, as well as the historical precedence in changes to IDR plans & HEA in general, the risk benefit ratio pans out for me.

That is what I like about Confettiflyer. He, at least, acknowledges the risk he is taking and he is not putting his head in the sand while hoping things will be alright. I think we both agree that changes are coming. Whether or not it will be retroactive for those who are already enrolled in the program is still up in the air.

 

[BMBiology]

Another way for the politicians to change the program is to limit public and non profit organizations that would qualify for PSLF. For example, they can get rid of university hospitals, Kaiser....places where recruiting employees has never been a problem.

This way the program is still intact and technically speaking, they are not going back on their promise.

 

[confettiflyer]

Just keep in mind that the PSLF Program has changed since it was first introduced in 2007. Back then there was no income based repayment (IBR) and PAYE, which is more generous than IBR. These programs have added to the cost of PSLF. Tuition for graduate and professional schools have also skyrocketed since 2007.

Point of order here... PSLF itself has *not* changed since its inception in 2007. Also, it was that same legislation (CCRA) that established IBR (which was not implemented until 2009). So IBR + PSLF was the original legislation, they were born together.

PAYE (aka New IBR in the paper above) came into play from the Obama administration through a separate act of Congress. PSLF was made to "accept" PAYE as a legitimate payment plan to take advantage of the benefit (this is the change you're referring to).

 

[Monsterdaddy]

You guys are misinterpreting the "may" part of the language. As in you "may" apply for deferment, the may is your option under your rights. But it doesn't matter:

Direct Consolidation Loan Promissory Note
Section 17, Borrower Rights & Responsibilities Statement

"A Public Service Loan Forgiveness program is available that provides for the cancellation of the remaining balance due on your eligible Direct Loan Program loans after you have made 120 full, on-time, scheduled monthly payments (after October 1, 2007) on those loans under certain repayment plans while you are employed full-time by certain public service organizations."

No "may" here. Also note how specific the language is here. Why did they did even bother to put this in the MPN in the first place? Apparently, commentators felt including this in the MPN may prevent the benefit from being eliminated in later legislation. (See here, long article just search for "incorporate the public")

Even so, new legislation can always try to eliminate grandfathering but the basis for a successful legal challenge has already been embedded into the MPN. And there really isn't much economic or political benefit to not allow grandfathering.

Furthermore, during the minor panic in the proposed $57,500 cap the ED answered several questions that affirmed that grandfathering the benefit would have occurred if the legislation had passed. (See here or here.)

There really is very little objective risk to current borrowers (new borrowers is another story.) You you can go about your "sky is falling" dance all you want but please, don't try to compare a Q&A to a legal document again.

 

[BMBiology]

^^ you know you are citing bloggers right?

Again, the link to the DOE Q&A is the clearest indication that any changes to PSLF may or may not be retroactive but that decision lies with Congress.

 

[BMBiology]

You guys are misinterpreting the "may" part of the language. As in you "may" apply for deferment, the may is your option under your rights.

Right, when did you become a legal scholar?

 

[BMBiology]

This is why the PSLF program is in danger:

So in 8 years I fully expect $400,000 in principal and accrued interest to be forgiven tax-free.

For example, while US Gov will ultimately pay $700k for my PharmD . I will pay around 150k. The opportunity to get student loans to sit around and not attend class allowed me to invest in my retirement already through small business....The on paper debt is a farce, which, I would hope anyone who has participated in higher ed scam would realize

Pharmacists, on average, only make $120,000 a year but yet, these two idiots think it is perfectly normal to borrow 3-4x their salary. Why would they care right? They would be paying the same amount regardless if they had borrowed 100 k or 300 k so why not max out their loans and put the tab on the tax payers? Makes me wonder how many of you are out there.

 

[a runner]

Right, when did you become a legal scholar?

The operative word in the disputed MPN text is "IS" where it says PSLF "is" available to the borrower in the first sentence.

The word "may" is being used to grant permission. As in "you may enter now." It is clearly not being used as a substitute for the common word "might" because the previous sentence establishes that PSLF "IS" available to the borrower, so this should make it clear the word "may" does not then cast doubt on what was just established in the previous sentence!

"May" in all legal documents I've ever read typically is being used in this definition:
used to express opportunity or permission

When being used to express possibility, that will be clear from the context. For example, if it were expressing possibility, it would state something like "this loan may, at the discretion of the department of education, be cancelled after..."

 

[owlegrad]

Are we really debating the meaning of the word "may"? Que a Bill Clinton joke.

 

[a runner]

Pharmacists, on average, only make $120,000 a year but yet, these two idiots think it is perfectly normal to borrow 3-4x their salary. Why would they care right? They would be paying the same amount regardless if they had borrowed 100 k or 300 k so why not max out their loans and put the tab on the tax payers? Makes me wonder how many of you are out there.

Blame the government for creating such ludicrous incentives. In fact, blame them too for getting into the student loan business in the first place, which caused tuition and loans to get out of control and necessitate this program. But don't blame those who are legally working within the system that's in place.

 

[BMBiology]

^^ the government is to blame and is the primarily reason why tuition has skyrocketed. However, that is not a justification as to why I have abused the program.

That is not the point of this thread anyways. Yeah we can argue back and forth as to who is responsible but at the end of the day, does it matter? I would rather discuss the facts and tell you what my crystal ball is showing.

 

[Monsterdaddy]

I have two years of law school at a top 10 institution when I contemplated a JD/MBA degree. I don't expect you to understand how laws work or how to interpret statutes which is why I tried to educate you. Maybe for naught since you cling to your silly Q&A. Do you practice pharmacy with Google over Facts & Comparisons too?

A key concept I was trying to explain was grandfathering but it's completely lost on you. Your amazing crystal ball aside, the fact is grandfathering is an equitable concept that is usually applied when people have relied on current law and would therefore be harmed when a law is changed. When grandfathering is not applied, it is because a greater harm would occur. This is not the case here.

Your facts are mostly irrelevant to the discussion. Pharmacist salaries vs. amount borrowed is an opinion of yours and obviously shared by few (ask any new student entering pharmacy school). Since the majority of students are graduating pharmacy school with 200-300K in debt (just looking at the two Arizona schools alone), you can stop wondering how many of us are out there because we are now legion and will be for the near future.

And don't compare me to type B, he's an outlier as far as I am concerned. All the recent graduates at my hospital are all doing IBR/PAYE on the PSLF track. If that makes you butthurt then consider we'd also all be making 10%+ more money working for profit retail. I know that for certain since I also float at a grocery store.

 

[Monsterdaddy]

Another way for the politicians to change the program is to limit public and non profit organizations that would qualify for PSLF. For example, they can get rid of university hospitals, Kaiser....places where recruiting employees has never been a problem.

This way the program is still intact and technically speaking, they are not going back on their promise.

Really, I think the RPh at Kaiser would disagree. Here is another education point for you. That type of language is completely "unlegislatable" since you are basically discriminating against institutions whose mission is the same as other non-profits but they just do the job better. Is that fair?

Any changes would not only have to grandfather participants and be non-discriminatory but practical to administer.

If I were to propose a change, I would divide the student loan balance into two parts: 1) tuition, books and fees, vs. 2) living expenses. About half of my loans were for living expenses and I don't see a good reason to forgive this portion of my loans. This addresses the issue of students taking out more money to spend on frivolous expenses. It's easy to administer since schools already are charged with calculating this number and can just report it to ed.gov.

So the forgivable portion relates to tuition. Now we cap this amount to prevent schools from overcharging. The caps are flat amounts based on the degree obtained, MD/DO is $X, PharmD is $Y, etc. So schools cannot cry foul since they can still charge whatever they want, but they might start losing students to cheaper schools.

And thus, no need to change PSLF though I think a phased forgiveness schedule starting at year 5 and going on indefinitely is better (keeps ppl in non-profits).

 

[confettiflyer]

I'll get to a computer in about 30mins and shut this legal discussion down with the force of a thousand Hulk smashes.

 

[confettiflyer]

So here we go. The interpretation of the Department of Education back in 2008 (by the time the negotiated rulemaking was completed for CCRA) made it clear as day that the terms of PSLF could be subject to change by legislative action and therefore the terminology incorporated into the Master Promissory Notes (MPNs) reflected such a possibility.

The following is taken directly from the Federal Register (Vol. 73, No. 206) dated October 23, 2008 and represents the final regulations with respect to the College Cost Reduction Act of 2007. I deleted non-pertinent portions with [...] and items in bold are my own emphasis. Pardon the formatting, the quote begins on page 63241.

Link: http://www.gpo.gov/fdsys/pkg/FR-2008-10-23/pdf/E8-24922.pdf

Many commenters urged the
Department to incorporate the public
service loan forgiveness program as a
term and condition in the Department’s
Direct Loan master promissory note
(MPN). The commenters believed that
making this change to the MPN would
prevent Congress from repealing the
forgiveness benefit after borrowers have
spent years working to meet the
eligibility requirements.
[...]
With regard to incorporating a
description of the public service loan
forgiveness benefit in the MPN, the
Department is already taking steps to
refer to the program in the MPN and
other program documents. However, the
MPN will continue to state, as it
currently does, that the terms and
conditions of the loans are subject to the
HEA as it is amended in accordance
with the effective date of those
amendments. Although there is no
history in the program of Congress
eliminating or reducing a borrower
benefit, the Department does not believe
that a reference to the public service
loan forgiveness program in the MPN
would provide the borrower with a
contractual right to the benefit should
Congress take action to eliminate that
benefit from the HEA as of a particular
effective date.



So, @BMBiology and @Monsterdaddy, there exists evidence to support both your positions. The DOE expressed an opinion that supports BMB's assertion that there is no contractual right; but it's just that, an opinion, and has not been adjudicated in a court of law as Monsterdaddy asserts.

 

[BMBiology]

^ and I don't need to go to the top 10 law school to know that.

 

[Silent Cool]

BMB, be angry at the system, not the people who use it. This kind of crap should never have been put into place. Sadly though, it has and it makes everyone suffer with higher tuition and taxes.

BOOM.

Dr. Wario hit the nail on the head.

 

[BMBiology]

And don't compare me to type B, he's an outlier as far as I am concerned. All the recent graduates at my hospital are all doing IBR/PAYE on the PSLF track. If that makes you butthurt then consider we'd also all be making 10%+ more money working for profit retail. I know that for certain since I also float at a grocery store.

In general, hospital pharmacists have always made less than retail pharmacists. Some hospital pharmacists may make more if they belong to a union. Dont make it sound like you are not taking a paycut so you can help mankind here.

 

[Monsterdaddy]

Dont make it sound like you are not taking a paycut so you can help mankind here.

Well, my colleagues and I thank you for the compliment, haha (double negative in case you are that dense.)

You are one seriously butthurt individual. You cannot realize how having PSLF may sway new pharmacists to take lower paying jobs which is the exact purpose of this program. An extra 10% which is ~$900 a month isn't chickenfeed to a new student facing a rather large loan repayment.

 

[Monsterdaddy]

So, @BMBiology and @Monsterdaddy, there exists evidence to support both your positions. The DOE expressed an opinion that supports BMB's assertion that there is no contractual right; but it's just that, an opinion, and has not been adjudicated in a court of law as Monsterdaddy asserts.

Never asserted its ever been adjudicated, only that the language exists with a legal document, the MPN. And that it is very specific. It's the basis for a legal challenge if it was ever needed.

You see, the ED obliged commentators to include PSLF in the MPN. The ED could have just said, "Hey, PSLF is a program you can use [period]" or "you can get an amount forgiven to be determined by the PSLF program at the time you apply," etc.

But in fact, the ED put in the very very specific terms of the PSLF in the MPN AND put it in the Borrower's Rights Statement. That makes it much more favorable for litigation.

Now, ignore all that because the real effect of this language (and what the commentators really wanted) was to make grandfathering almost certain. The 2015 budget proposal (which was silent on granfathering) and the ED response pretty much affirmed this. The ED had to assess the ramifications, looked at the MPN and concluded grandfathering was implicit.

 

[MatCauthon]

Man, this same conversation again. I applaud confettiflyer for posting links to the actual legistlation.
I work at a hospital and was tempted to use PSLF, but I think I am going to come out better by not doing it. I really don't want to leave my fate up to a fickle government and public opinion which certainly won't be in favor of forgiving loans for surgeons, dentists, and pharmacists.

I've started getting tons of refinancing literature in the mailbox. I've actually managed to refi all of my loans to 3.5% fixed (from 6.8%) with DRB. My original loans were 195k. I worked liked crazy to kick that total down to 130k after 2 years (most new pharmacists should be doing this unless they have another amazing investing opportunity). I now have a fixed payment of $1600/month, and my loans will be completely wiped out in 7 years (total: 9 years to pay off 195k plus interest). I could be more aggressive, but there is no point with loans at 3.5%. I now have luxury of being able to invest in other areas. For me, even though I am elgible for PSLF, it just never made sense. My original payment, when I queried PSLF, was well over $2k/month.

PSLF makes way more sense for pharmacists with loan totals greater than 250-300k (IMO, one shouldn't go to pharmacy school if they rack up more than 250k in loans)

 

[BMBiology]

Well, my colleagues and I thank you for the compliment, haha (double negative in case you are that dense.)

You are one seriously butthurt individual. You cannot realize how having PSLF may sway new pharmacists to take lower paying jobs which is the exact purpose of this program. An extra 10% which is ~$900 a month isn't chickenfeed to a new student facing a rather large loan repayment.

Let's be real here. There is no shortage of pharmacists that want to work for a hospital.

Don't count your chickens before they are hatched. You still have 8 years to go.

 

[confettiflyer]

The wild cards here are employment and money. For all this talk of shortages and unemployment, most of us are indeed employed and very well compensated. The catch 22 is that the people who need PSLF the most don't qualify, they're the part-timers/per-diem scroungers whose best options are retail float (for-profit, non-qualifying).

For those that do qualify, they tend to be very well off. Non-profits include Kaiser (union, very highly compensated), University hospitals (union mostly, generally good compensation)...but the key here is in the merit raises and cost of living adjustments, which are often collectively bargained, generous, or both.

Prior to PSLF, my original plan was to allow inflation to naturally eat away at my loan balance, much like a mortgage where a home buyer at the 12-15 year mark of a 15 year mortgage would be paying much "less" money on a present-value basis than when they first took out the loan.

My point is, those who qualify for PSLF in the first place are in positions that make it likely that their IBR payments will reduce their eventual net forgiveness benefit is much less than what they had envisioned at year 1.

 

[Monsterdaddy]

My point is, those who qualify for PSLF in the first place are in positions that make it likely that their IBR payments will reduce their eventual net forgiveness benefit is much less than what they had envisioned at year 1.

I'm not sure I understand this. For people in PSLF, the eventual amount of the forgiveness is irrelevant (unless you want to taunt BMB). All that matters is minimizing the loan repayments.

If you are in PAYE then every dollar that goes into a 401(k) or deductible IRA saves you ten cents in loan repayments. Every child/dependent you have saves you about $600 per year. Every dollar spent on health insurance saves you 10 cents.

So I put $18K in 401(k), another $5.5K in an IRA for my non-working spouse, and spend about $8K for family health/dental/vision insurance plans, $2.5K in FSA (hey, I gotta pay for braces on my kids) a total of $34K in deductions to AGI and thus reducing my annual loan payments by $3.4K. Plenty of ways to reduce your payment while saving for retirement and taking care of health expenses.

Conversely, if you float (like I do), every extra dollar of income increases my loan payment by 10 cents. I really don't mind since I like doing a little retail on weekends. I agree with you that employment and money matter but I don't think it will affect any of the choices I made above.

If I do a lot of floating in 2015, I could get $170K in gross income which after all the deductions would leave me an annual loan payment of $8K in 2016. So you can see how much benefit reducing your AGI can help.

While I do feel bad for my classmates stuck in floater/per diem positions, I know part of it is their lack of effort in networking or communications skills. Some of the worse simply hope for a job just because they have the PharmD. The better pharmacists work on their people skills too and will always be sought after and employed. It is no coincidence that they enjoy their jobs more too.

 

[confettiflyer]

I'm not sure I understand this. For people in PSLF, the eventual amount of the forgiveness is irrelevant (unless you want to taunt BMB). All that matters is minimizing the loan repayments.

Yes and no. While I like antagonizing BMB, I'm speaking about PSLF on its own (which is indeed about the eventual forgiveness), and not IBR/PAYE (which is all about minimizing loan repayments). Obviously, PSLF is useless without its corresponding IDR plan.

If you are in PAYE then every dollar that goes into a 401(k) or deductible IRA saves you ten cents in loan repayments. Every child/dependent you have saves you about $600 per year. Every dollar spent on health insurance saves you 10 cents.

So I put $18K in 401(k), another $5.5K in an IRA for my non-working spouse, and spend about $8K for family health/dental/vision insurance plans, $2.5K in FSA (hey, I gotta pay for braces on my kids) a total of $34K in deductions to AGI and thus reducing my annual loan payments by $3.4K. Plenty of ways to reduce your payment while saving for retirement and taking care of health expenses.

I assume you mean IBR/PAYE, so no disagreement here, I maximize deductions but the IDR plans don't necessarily influence my tax planning (as in, I'm going to minimize AGI/maximize deductions anyway).

While I do feel bad for my classmates stuck in floater/per diem positions, I know part of it is their lack of effort in networking or communications skills. Some of the worse simply hope for a job just because they have the PharmD. The better pharmacists work on their people skills too and will always be sought after and employed. It is no coincidence that they enjoy their jobs more too.

No disagreement here.

To clarify though, I was saying that those who qualify for PSLF (gov't/non-profit employees) already enjoy envious job security, merit-based and/or regular advancement opportunities, and generous compensation packages that are frequently backloaded (457b, deferred compensation) or feature untaxed/tax-deferred compensation (i.e. Cadillac health plans, commuter benefits, 403b matches).

By definition, you would need to work for one of the above employers AND be employed > 30hrs/week x 10 years.

These are the individuals where a 10 year forgiveness scheme would be least useful, but the law is what it is and I would be a fool to ignore it (risks of legislative change considered).

 

[Monsterdaddy]

I see what you are saying. But I think not all PSLF qualifying institutions have those benefits.

I for one, considered the U.S. Public Health Service Commissioned Corp. Their annual compensation can be as low as $74K which is low even with that $30K sign-on bonus for a 4 year commitment. You can get posted in some of the most desolate places in the U.S. too. (I was in the middle of the Sonoran desert for a rotation). And you will not be working just 40 hours a week either. (Now if you stay 20 years and retire with the rank of Captain, then you will be doing a lot better, maybe even come out ahead moneywise vs hospital/retail.)

You're going to be grandfathered, 99.9% certain. This discussion has opened my eyes to all my fellow Midwestern pharmacist, doctors, etc. working in hospitals around Phoenix. We are ALL under IBR/PAYE and there are just too many of us around for anyone to say we haven't relied on PSLF.

 

[kvl1027]

^^^ I can't recall Pharmacy school EVER bring particularly competitive given that many matriculants are med school rejects.

If you want to place blame on someone, why don't you blame the greedy SOBs that allow tuition and fees to get increasingly higher EVER year for no good reason.

You appear to be blaming the "have nots" for wanting a better life by also assuming that they're the ones who have no intention to repay their loans back. Just as the rich have never paid their fare share of taxes, it's the folks who CAN pay ALL their loans back that are looking for gov't handouts/loan forgiveness.

I agree with most of what you said, aside from the Med School reject part. I don't recall any of my classmates having been rejected from Med School. I was on a Med School track and moved to Pharmacy when my wife got pregnant.

However, I agree that the glaring issue is increases in tuition education costs that far exceed typical inflation trends. The Administrative costs seen in places of higher education are far higher than they should be.