Good news!

[Aznfarmerboi]

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http://www.nytimes.com/2009/06/30/education/30college.html?hpw

I have read about this in the past few weeks but it is official as of today. This bill finally lowers the ******ed minimum 6.8 percent set by Bush on federal loans to 5.6 percent now and to 3.4 percent by 2012.

In addition, it allows borrowers to tie their loan payments to their income (15 percent) and after a borrower has been paying for 25 years, the loan is dissolved.

The only catch is this is not applicable to private loans...

 

[Kirbypuff]

http://www.nytimes.com/2009/06/30/education/30college.html?hpw

I have read about this in the past few weeks but it is official as of today. This bill finally lowers the ******ed minimum 6.8 percent set by Bush on federal loans to 5.6 percent now and to 3.4 percent by 2012.

In addition, it allows borrowers to tie their loan payments to their income (15 percent) and after a borrower has been paying for 25 years, the loan is dissolved.

The only catch is this is not applicable to private loans...

Nice.

 

[FunnyHunny]

Awesome!

 

[gsinccom]

thanks

 

[CopToEM]

Hey this is pretty sweet! Thanks for passing it along!

 

[Sparda29]

Ah ****, I'll graduate when that 3.4% hits. But really, they shouldn't charge interest at all.

 

[CopToEM]

Also, it's not just a flat 15% of your income. The article says:

The extended payment program, called “income-based repayment,” limits what borrowers have to pay to 15 percent of the difference between their gross income and 150 percent of federal poverty guidelines

So, my understanding of that would be this:

Salary: $100,000.00
Single-Person Household Poverty Income Level: $10,830.00

different between their gross income and 150 percent of federal poverty

150-percent of $10,830.00 = $16,245.00
$100,000.00 - $16,245.00 = $83,755.00

15% of that would be $12,563.25 which is your total amount paid PER YEAR.

Divide that by 12 and we get $1,046.94 per month.

This math can be verified by using the calculator here: http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRCalc.jsp



What this means is that your loan payment can never be required to exceed the amount shown above REGARDLESS of the amount you owe on your loans after college.

In addition, federal loan forgiveness has been expanded upon to cover the public service sector.

If you work in public service and have reduced loan payments through IBR, your remaining balance after ten years in a public service job could be cancelled if you made loan payments for each month of those ten years.

 

[Kirbypuff]

Ah ****, I'll graduate when that 3.4% hits. But really, they shouldn't charge interest at all.

Technically, if I'm not mistaken, as long as you're making a lot of money and paying a lot of taxes, all the interests you pay for school comes right back to you in tax returns. 😀

 

[SHC1984]

http://www.nytimes.com/2009/06/30/education/30college.html?hpw

I have read about this in the past few weeks but it is official as of today. This bill finally lowers the ******ed minimum 6.8 percent set by Bush on federal loans to 5.6 percent now and to 3.4 percent by 2012.

In addition, it allows borrowers to tie their loan payments to their income (15 percent) and after a borrower has been paying for 25 years, the loan is dissolved.

The only catch is this is not applicable to private loans...

Too bad its too late for us. 🙁

 

[BanBidil]

Undergrad loans only.

 

[extra07extra]

Also, it's not just a flat 15% of your income. The article says:



So, my understanding of that would be this:

Salary: $100,000.00
Single-Person Household Poverty Income Level: $10,830.00


150-percent of $10,830.00 = $16,245.00
$100,000.00 - $16,245.00 = $83,755.00

15% of that would be $12,563.25 which is your total amount paid PER YEAR.

Divide that by 12 and we get $1,046.94 per month.

This math can be verified by using the calculator here: http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRCalc.jsp



What this means is that your loan payment can never be required to exceed the amount shown above REGARDLESS of the amount you owe on your loans after college.

In addition, federal loan forgiveness has been expanded upon to cover the public service sector.

Excellent. I will be taking out the maximum loans possible to pay for everything LOL! So it doesn't matter what I owe in the end as long as I make the capped payments for the 25 years because everything else will be paid off by the government afterwards? I also plan to have a large family too!

 

[CopToEM]

So it doesn't matter what I owe in the end as long as I make the capped payments for the 25 years because everything else will be paid off by the government afterwards? I also plan to have a large family too!

It won't matter. If you make the capped payments every month you'll never make it to 25 years worth of payments! That would put you paying back $314,082.00.

I've not been able to figure out exactly how the loan forgiveness works. I don't know if you have to pay the maximum expected amount or if you simply have to pay for 25 years on time.

I have found out it's VERY strict. If your payment is ever 15 days late you are immediately ineligible for loan forgiveness. There's lots of other stipulations as well.

 

[CopToEM]

Undergrad loans only.

Right. However, the income based repayment plan does cover GradPLUS loans.

What federal student loans are eligible to be repaid under an IBR plan?


Any Stafford, Grad PLUS or Consolidation loan made under either the Direct Loan or FFEL program is eligible for repayment under IBR, EXCEPT loans that are currently in default, parent PLUS Loans, or consolidation loans that repaid a parent PLUS Loan. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training).

 

[extra07extra]

Right. However, the income based repayment plan does cover GradPLUS loans.

Where does it say it's for undergrad loans only? Besides, I thought GradPLUS loans were for graduate/professional students. Does that mean we can't use this IBR program for the loans we take out for pharmacy school? 😕

 

[extra07extra]

If you make the capped payments every month you'll never make it to 25 years worth of payments! That would put you paying back $314,082.00.

The capped payments depend on how much you make and your family size. Please correct me if I'm wrong since I haven't done the math but if you had a lower income and a huge family, I'd imagine you could actually be paying back substantially less than you owe even after 25 years (or 10 years if you chose to work in public service).

 

[Aznfarmerboi]

It won't matter. If you make the capped payments every month you'll never make it to 25 years worth of payments! That would put you paying back $314,082.00.

I've not been able to figure out exactly how the loan forgiveness works. I don't know if you have to pay the maximum expected amount or if you simply have to pay for 25 years on time.

I have found out it's VERY strict. If your payment is ever 15 days late you are immediately ineligible for loan forgiveness. There's lots of other stipulations as well.

It depends. While you will most likely to break even on a pharmacist salary, you can easily pay 400k on student loans spread over 30 years with your monthly payments increasing toward the end of the loan. Hence you do come out ahead.

Also, this is a guarantee for a lot of students out there (not just pharmacy) who wants to go into military pharmacy or into public interest such as IHS or FDA. It helps them out because they do not have to worry as much because no matter what, student loan payments should not be more than 15 percent of their income.

Lets just say I want to be a military pharmacist. I am graduating with 160k of debt. The military will give me 120k to pay that debt spread over 4 years (80k after taxes). I apply that 80k toward private loans that are not covered under this bill.

That should leave me with about 70k of mostly elgible loans that are covered under this government plan. Since I start out with around 40k, I dont have to worry about using most of that income to pay the interest alone on the 70k principle thanks to the new bill. After 25 years, I dont have to worry about the bank garnishing my pension check to pay off that 70k.

 

[VancTheTank]

.

 

[Aznfarmerboi]

You are mistaken.



You might qualify if you work part time, or if you get married and your husband earns less than you. Even so, the most student loan interest you can currently claim is $2,500.

Of course this part of the tax code could always change...

Well... if you work in a hospital making 90k like WVU, max out your 401k (16k), FSA, etc... you might be able to apply for this tax deduction. Otherwise, it can pretty hard.

Another thing you can do is work 30 hours for CVS to qualify for FT benefits and work off the books for independents.

 

[VancTheTank]

.

 

[Pharmacy Kid]

Where does it say it's for undergrad loans only? Besides, I thought GradPLUS loans were for graduate/professional students. Does that mean we can't use this IBR program for the loans we take out for pharmacy school? 😕

http://www.finaid.org/loans/historicalrates.phtml

[FONT=ARIAL, HELVETICA]2008-09 through 2011-12: Cut subsidized Stafford loan interest rates for undergraduate students to 6.0%, 5.6%, 4.5% and 3.4%, with a return to 6.8% in 2012-13. These cuts are available only to undergraduate students, not graduate students, and only for subsidized Stafford loans, not unsubsidized Stafford loans. Those loans remain at 6.8%. 👎.

 

[Aznfarmerboi]

Maybe. If salaries decline in the not too distant future, even more possible. I guess you could work illegally too, if that's your thing.

I was really disagreeing with the statement that "all the interest you pay comes right back to you". It will never all come back to you. You just get to claim a tax deduction, meaning ~30% of that $2,500 might come back to you.

Although I dont advocate doing things illegally, I think you will agree that pharmacists for the most part get the worst of both worlds. Our incomes are too much to qualify for simple tax deductions but not enough to buy a house.

When you factor in that our kids probably wont get any financial aid for their higher education because of our paycheck despite the taxes that we pay, I will more than glady do whatever I can to pay the least amount of taxes possible. Hell, if the poor do it to qualify for medicaid and if the rich do it, why shouldnt I...

 

[CopToEM]

.

 

[metrarx]

....

 

[Kirbypuff]

You are mistaken.



You might qualify if you work part time, or if you get married and your husband earns less than you. Even so, the most student loan interest you can currently claim is $2,500.

Of course this part of the tax code could always change...

Dang it! I guess I'm going to have to attempt to pay loans during the summer and work my butt off. Sadness.

 

[CopToEM]

You're in the wrong topic.

Plus we already have percocet without apap. It's just plain oxycodone

Wow, dunno how the hell I did that. Hahaha.

 

[SHC1984]

Dang it! I guess I'm going to have to attempt to pay loans during the summer and work my butt off. Sadness.

LOL...what will be smart is to avoid any loans that have interest accruing DURING school. Those will suck when you come out. If you have to take those loans make sure you pay for the interest EVERY MONTH. There is a option where you select pay for interest while in school. Make sure you do that...if you don't you are in for a HUGE shock when you come out. 😱

 

[confettiflyer]

sucks, our loans are still at 6.8. My undergrad loans were consolidated to 2.6% AND they're on deferment until I graduate.

 

[Transformer]

LOL...what will be smart is to avoid any loans that have interest accruing DURING school. Those will suck when you come out. If you have to take those loans make sure you pay for the interest EVERY MONTH. There is a option where you select pay for interest while in school. Make sure you do that...if you don't you are in for a HUGE shock when you come out. 😱

Yup, pay for the interest accrued by getting a part time intern job. That's probably what I'm gonna do.

Too bad the lowering in interest rate is only for undergraduate loans. Our stafford loans stay at 6.8%.

 

[Kirbypuff]

LOL...what will be smart is to avoid any loans that have interest accruing DURING school. Those will suck when you come out. If you have to take those loans make sure you pay for the interest EVERY MONTH. There is a option where you select pay for interest while in school. Make sure you do that...if you don't you are in for a HUGE shock when you come out. 😱

Yup mami, I plan on doing that. Sigh!

 

[tootoo30]

http://www.finaid.org/loans/historicalrates.phtml

[FONT=ARIAL, HELVETICA]2008-09 through 2011-12: Cut subsidized Stafford loan interest rates for undergraduate students to 6.0%, 5.6%, 4.5% and 3.4%, with a return to 6.8% in 2012-13. These cuts are available only to undergraduate students, not graduate students, and only for subsidized Stafford loans, not unsubsidized Stafford loans. Those loans remain at 6.8%. 👎.

Some P1's and P2's are still undergraduate students, so it will work out for some students.

 

[DoctorRx1986]

Although I dont advocate doing things illegally, I think you will agree that pharmacists for the most part get the worst of both worlds. Our incomes are too much to qualify for simple tax deductions but not enough to buy a house.

When you factor in that our kids probably wont get any financial aid for their higher education because of our paycheck despite the taxes that we pay, I will more than glady do whatever I can to pay the least amount of taxes possible. Hell, if the poor do it to qualify for medicaid and if the rich do it, why shouldnt I...

Since when do pharmacists not earn enough to buy a house? I hope you're just trying to make a point. 😱

 

[type b pharmD]

Since when do pharmacists not earn enough to buy a house? I hope you're just trying to make a point. 😱

what point?? in a lot of places, you could buy a house with a few year's pharmacist savings

 

[CopToEM]

what point?? in a lot of places, you could buy a house with a few year's pharmacist savings

Agreed. Locally, you could build a 3,000-3,500 square foot house with excellent finishes and put it on an acre of land with gorgeous views for $150,000.00 easily.

If you were frugal enough, you could save that up in a few years time of careful living.

Anyway, not on topic, just wanted to second that the statement about not being able to buy a house is very dependent on where you're at.

 

[SHC1984]

Since when do pharmacists not earn enough to buy a house? I hope you're just trying to make a point. 😱

He is right, if you are 150K in student debt it will be very hard for you to buy a house until you have pay off that loan. If you make 110K a year (take home is 60K) do you expect to make enough to buy a house (300K) and pay off a student loan (150K) and have enough money left? In your dreams! LOL...with 60K net income you will have to live in a apartment until you pay off your student loans.

 

[SHC1984]

Yup, pay for the interest accrued by getting a part time intern job. That's probably what I'm gonna do.

Too bad the lowering in interest rate is only for undergraduate loans. Our stafford loans stay at 6.8%.

👍 that my plan as well.
I wonder why people are not lowering interest for graduate students! why be so mean to us! 🙁

 

[DoctorRx1986]

I don't know...call me naive or whatnot, but I figure if a pharmacist can't afford a house/condo after earning a six-figure salary, what can we say about the majority of people making significantly less than $100 k (say around 40 k or about average) and their ability to afford a home? I know of many people who make about average money and they're homeowners. If a pharmacist can't afford a house/condo, then that says something about the quality of living in this country. Doesn't seem to make sense entirely to me either as young couples in my pharmacy class in their early 20s are taking out loans and buying houses. In fact, though some live on campus, many are moving out and purchasing condos together. Maybe I am misinterpreting...do you guys mean a pharmacist is unable to afford a home shortly after graduating with all the unpaid debt? If that is the case, then I certainly agree; however, if the pharmacist has already paid off his/her student loans, I don't see how they can't afford a nice house or condo. Who knows...

 

[IrishHammer]

He is right, if you are 150K in student debt it will be very hard for you to buy a house until you have pay off that loan. If you make 110K a year (take home is 60K) do you expect to make enough to buy a house (300K) and pay off a student loan (150K) and have enough money left? In your dreams! LOL...with 60K net income you will have to live in a apartment until you pay off your student loans.

Where in God's name are you living that nearly half of your paycheck gets put into taxes before you even see it?

 

[SHC1984]

Where in God's name are you living that nearly half of your paycheck gets put into taxes before you even see it?

I am taking into account 401K, savings for retirement, health insurance, dental insurance, opt insurance, life insurance, and TAXES. So yes, its about 60K after you account all the above.

 

[Transformer]

Where in God's name are you living that nearly half of your paycheck gets put into taxes before you even see it?

United States of America!


SHC is right. After taxes and other expenses, the average pharmacist makes is around 60k to 70k. There are other factors such as marital status and tax write offs, etc, but that's the general trend I see.

In terms of buying a house or condo, it really depends on location (affects how expensive the homes will be), how many years you've worked as a pharmacist (to qualify for a home loan), and how much money you and your spouse saved up for a down payment or a deposit on a home.

 

[VancTheTank]

.

 

[SHC1984]

Absolutely true.

Its also true that a pharmacist with a 100K+ debt will be living in a apartment until all that debt is pay off as well. It sucks but its true. There is no way a pharmacist can buy a house before that debt is paid off, unless he or she gets help from parents or spouse...

 

[SHC1984]

United States of America!


SHC is right. After taxes and other expenses, the average pharmacist makes is around 60k to 70k. There are other factors such as marital status and tax write offs, etc, but that's the general trend I see.

In terms of buying a house or condo, it really depends on location (affects how expensive the homes will be), how many years you've worked as a pharmacist (to qualify for a home loan), and how much money you and your spouse saved up for a down payment or a deposit on a home.

60K to 70K is pretty much just after taxes and 401K and health insurance.
Thats not including rent, bills, car, gas, food, car insurance (biggest bit*h), student loans, other debt etc.

After you take into account all of those things, then you are left with what? 10K maybe, if that. 🙄

 

[Transformer]

60K to 70K is pretty much just after taxes and 401K and health insurance.
Thats not including rent, bills, car, gas, food, car insurance (biggest bit*h), student loans, other debt etc.

After you take into account all of those things, then you are left with what? 10K maybe, if that. 🙄

Keep in mind there are pharmacists out there who work an amazing number of hours. For example, the ones that go 7-on 7-off and still work 4 to 5 days on their days off. In this case, it is entirely possible to make around 140K to 150K before taxes and expenses.

Really, it's all about how you invest your money. Pharmacists make a decent living by working really hard, but it would be even better if pharmacists worked hard and smart; by investing their hard earned money in the right places.

 

[SHC1984]

Keep in mind there are pharmacists out there who work an amazing number of hours. For example, the ones that go 7-on 7-off and still work 4 to 5 days on their days off. In this case, it is entirely possible to make around 140K to 150K before taxes and expenses.

Really, it's all about how you invest your money. Pharmacists make a decent living by working really hard, but it would be even better if pharmacists worked hard and smart; by investing their hard earned money in the right places.

Very true, as a pharmacist you will never be rich. But if you can save up some money and get involved in commerical real estate, stocks/bonds, etc. then you will have a chance to be rich. The best job ever is owning a bunch of commerical buildings and renting them out. That way I can just sit on my a** and collect rent. 😉

 

[RNtoPharmD]

Some P1's and P2's are still undergraduate students, so it will work out for some students.

What about P1/P2 who had previous Bachelor. Not qualified, I guess?
Still 6.8%?

 

[CopToEM]

The best job ever is owning a bunch of commerical buildings and renting them out. That way I can just sit on my a** and collect rent. 😉

That is, until the economy bombs and all your tenants lose their businesses. Trust me, I've been there, and it sucks. It's good money but so intimidating to actually commit yourself to depend on it.

In any real estate venture you never want to put yourself in a position of depending on having renters. When, not if, the day comes that the renters are hard to come by you'll end up behind. If anything, live within the means of your profession and use the additional cash flow to have fun with.

Honestly, the best way to make additional padding money right now is by renting out mobile homes or building small apartments in college communities. By doing so, you capture two markets - the economically challenged and the students on a budget. Lots of people are moving out of rentals and back in with family because of the economy but students with loans from uncle sam generally pay rent!

 

[Aznfarmerboi]

Your paycheck will be 50-60 percent of what you make after tax. You can check out your future paycheck on salary.com.

If you make about 123k,

Biweekly, 4,730
Federal withholding 1,077
Social Security is 293
Medicare is 68.60
New York is 301
Healthcare is 40
401k is 236
FSA is 94

After taxes, that leaves you with ~2600 every two weeks or 5,200 every month or 60k every year. If you work more, you get more. If you work less, you get less.

5.2k a month expenses -

1300 for rent
1000 (for student loan interest alone. I usually pay a lot more to pay off the loan sooner)
1000 for other expenses such as gas, food, car insurance, utilities, cellphone bill, etc.

Assuming you dont care about the 120-150k student loans and just pay off the interest, you end up with about 2k a month. Sure you can buy a house and many of my friends did assuming they did not buy a nice car. However you can probably only afford around 350k (using the dont spend more than 3 times your salary rule) which is not enough for a lot of major metropolitan areas including NYC.

Also consider this, you wont have a comfortable buffer zone for emergencies and owning a piece of real estate is harder than it sounds. Property taxes in a lot of states will take a few hundred from your paycheck alone. Maintance such as lawnwork (I am still having trouble with mines) can cost a lot....

 

[Aznfarmerboi]

And yeah, you will live comfortably on a six figure income salary. However keep in mind that you will be losing a lot of government protection such as subsidized health insurance, tax deductions, etc. My technician gets 7-10k refund easily each year while I get almost zip. The health insurance that I pay for is ****ty and if I was to end up in the ER, I risk financial ruin. This is what we called the middle class crunch (upper middle class crunch in cheaper cost of living areas). Also guess how your salary will cost your kids when its time for them to go to college?

 

[SHC1984]

Your paycheck will be 50-60 percent of what you make after tax. You can check out your future paycheck on salary.com.

If you make about 123k,

Biweekly, 4,730
Federal withholding 1,077
Social Security is 293
Medicare is 68.60
New York is 301
Healthcare is 40
401k is 236
FSA is 94

After taxes, that leaves you with ~2600 every two weeks or 5,200 every month or 60k every year. If you work more, you get more. If you work less, you get less.

5.2k a month expenses -

1300 for rent
1000 (for student loan interest alone. I usually pay a lot more to pay off the loan sooner)
1000 for other expenses such as gas, food, car insurance, utilities, cellphone bill, etc.

Assuming you dont care about the 120-150k student loans and just pay off the interest, you end up with about 2k a month. Sure you can buy a house and many of my friends did assuming they did not buy a nice car. However you can probably only afford around 350k (using the dont spend more than 3 times your salary rule) which is not enough for a lot of major metropolitan areas including NYC.

Also consider this, you wont have a comfortable buffer zone for emergencies and owning a piece of real estate is harder than it sounds. Property taxes in a lot of states will take a few hundred from your paycheck alone. Maintance such as lawnwork (I am still having trouble with mines) can cost a lot....

I am going to try to pay off my 120K debt in 3 or 4 years...I will live in a apartment until all that is paid off. I think that is the best idea. Paying only 1K per month for interest only is the dumbest thing anyone can do.

Thanks for the post though it was very helpful. Its shows that a pharmacist have to marry well in order to live a good life. Just a pharmacist salary alone will bring a regular average American lifestyle. 🙄

 

[SHC1984]

That is, until the economy bombs and all your tenants lose their businesses. Trust me, I've been there, and it sucks. It's good money but so intimidating to actually commit yourself to depend on it.

In any real estate venture you never want to put yourself in a position of depending on having renters. When, not if, the day comes that the renters are hard to come by you'll end up behind. If anything, live within the means of your profession and use the additional cash flow to have fun with.

Honestly, the best way to make additional padding money right now is by renting out mobile homes or building small apartments in college communities. By doing so, you capture two markets - the economically challenged and the students on a budget. Lots of people are moving out of rentals and back in with family because of the economy but students with loans from uncle sam generally pay rent!

I thought about owning my own hotel...(paris hilton style...hehehe..j/k) But I thought about that...is that a good idea? I figure thats the best way to make $$$ but you will also have to have a lot of $$$ to start with...it takes $$$ to make money and it takes $$$ to have a good life.