Employers Offering Loan Reimbursement in Psychiatry

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BiscoDisco

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Hi guys...looking at my student loans and feeling a little scared. Trying to figure out what the best case scenario is for myself. I have a working spouse so combined with my residents salary, we'll be doing pretty well, especially since we're leaving California and going to a cheaper state for residency.

My question is...should I try to pay down my loans aggressively in residency (could probably put 2500 towards the loan first year, more when I'm able to moonlight pgy2+)? Or would this be silly because many employers are offering loan reimbursement, thus I'd actually be throwing this money away? If an employer offers loan reimbursement, and a new hire doesn't have loans, do they offer it as a form of signing bonus?

Any advice would be extremely welcomed.

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There are certain government jobs that can only offer loan assistance or it is just better than the bonus.

In the real world, loan assistance is taxable like anything else and no different than a bonus. You can easily reword/negotiate it in my experience.
 
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There are certain government jobs that can only offer loan assistance or it is just better than the bonus.

In the real world, loan assistance is taxable like anything else and no different than a bonus. You can easily reword/negotiate it in my experience.

How common would it be to get loan help from an employer? Should I pay less towards my loans IF this is expected?
 
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In the private world, I've seen many offers that include what are effectively bonuses for paying off loans, often associated with signing longer term contracts. Should you "wait" to receive those? My own opinion would say no as the money is all ultimately coming from the same pot.
 
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This is actually a complicated topic because it depends on your exact financial situation with options being:
1) IBR (pay, repay) with 10 years of residency +academic/non-profit work to clear your loans (who knows if this will exist then but its currently a strong option) means you absolutely want the lowest payments possible to get the most cleared.

2) Pay off loans with your salary plus employee contributions as attending. I initially thought that employee loan payoff was just fungible money (aka they could offer you a bigger signing bonus or salary if you don't have loans). For a few reasons that are not entirely clear to me, this is not necessarily the case. Your employer is very unlikely to pay all of your loans (unless your total is relatively low) and more likely to offer $xx,000 dollars per year of your contract.

Now the caveats: Present dollar value of money as a resident is MUCH higher than as an attending (that is each dollar buys you substantially more comfort or happiness). The amount you put towards loans during training is not going to make a huge difference in your financial wellbeing as long as you are reasonably frugual as an attending. As such I generally recommend the lowest payments through IBR even if you plan to just pay off the loans later. You may also have a matching retirement option as a resident which is usually a better deal than paying off loans even at 7% interest.

I highly recommend white coat investor podcast or forums for more specific financial questions.
 
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This is actually a complicated topic because it depends on your exact financial situation with options being:
1) IBR (pay, repay) with 10 years of residency +academic/non-profit work to clear your loans (who knows if this will exist then but its currently a strong option) means you absolutely want the lowest payments possible to get the most cleared.

2) Pay off loans with your salary plus employee contributions as attending. I initially thought that employee loan payoff was just fungible money (aka they could offer you a bigger signing bonus or salary if you don't have loans). For a few reasons that are not entirely clear to me, this is not necessarily the case. Your employer is very unlikely to pay all of your loans (unless your total is relatively low) and more likely to offer $xx,000 dollars per year of your contract.

Now the caveats: Present dollar value of money as a resident is MUCH higher than as an attending (that is each dollar buys you substantially more comfort or happiness). The amount you put towards loans during training is not going to make a huge difference in your financial wellbeing as long as you are reasonably frugual as an attending. As such I generally recommend the lowest payments through IBR even if you plan to just pay off the loans later. You may also have a matching retirement option as a resident which is usually a better deal than paying off loans even at 7% interest.

I highly recommend white coat investor podcast or forums for more specific financial questions.
This plus Perkins and Private loans usually don't have an IBR option. I would be much less comfortable if I was trying to make my 10-year standard repayments on those loans right now. Hence, forbearance/deferment.
 
The VA's loan assistance program, EDRP, is not taxable. I don't know if that is true for other government loan assistance programs.
Word is they might be increasing the total amount. Have you heard this? So far, I only know of $24K/year for 5 years.
 
Do yourself a huge solid and at least make your interest payments in residency to avoid capitalization at the end of the deferment/forebearance period. Paying interest on interest is brutal. I'm several years in to repayment and STILL have a few that I haven't even begun to hit the principal yet.
 
Do yourself a huge solid and at least make your interest payments in residency to avoid capitalization at the end of the deferment/forebearance period. Paying interest on interest is brutal. I'm several years in to repayment and STILL have a few that I haven't even begun to hit the principal yet.

This is my goal. Between my wife's salary and myself, we should be able to afford to pay the interest on my loans (roughly 1300/month). At least the loan wont get bigger this way.

BUT, when I can start moonlighting, would it make sense to throw that money at the principle to get it paid off as fast as possible? My program has some pretty decent moonlighting options, both internally and externally. Pulling in an extra 5k a month shouldn't be too difficult. Am I better just investing that money in the hopes I find a job that does employer loan reimbursement?
 
This is my goal. Between my wife's salary and myself, we should be able to afford to pay the interest on my loans (roughly 1300/month). At least the loan wont get bigger this way.

BUT, when I can start moonlighting, would it make sense to throw that money at the principle to get it paid off as fast as possible? My program has some pretty decent moonlighting options, both internally and externally. Pulling in an extra 5k a month shouldn't be too difficult. Am I better just investing that money in the hopes I find a job that does employer loan reimbursement?

It’s hard to answer without being a bit psychic enough to know where you want to work in the future.

If you work at the VA or join the Coast Guard, I’d maybe recommend not even paying the interest after reviewing their plans some more.

If you work in the private practice world, I’d recommend paying it off ASAP. I did this.
 
Do yourself a huge solid and at least make your interest payments in residency to avoid capitalization at the end of the deferment/forebearance period. Paying interest on interest is brutal. I'm several years in to repayment and STILL have a few that I haven't even begun to hit the principal yet.
I found out recently that not paying some of my forbearance interest will not only capitalize when full repayment starts but will also put my account in arrears. Don't have to pay it at any specific time during the forbearance, but do have to pay it before it's over.
 
Also, how difficult is it to find a job that qualifies for PSLF as a new psychiatrist?
 
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