Graduating MS4 couple, our loan repayment strategy

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Igor4sugry

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My wife and I are graduating this spring with $430,000.00 total dept. We have $30k from private lenders (0%), and $400k in form of Stafford Loans (subsidized & unsubsidized) at 6.8%.

Our strategy is file taxes jointly and both to enroll into IBR. During residency our IBR will be relatively small. But we will pre-pay the amount of monthly interest that is accruing on this (~$1,300/mo for the unsubsidized portion, since IBR will pay for subsidized interest.)
I don't want to leave residency with $60k in interest added to my bill.

After residency we will look for [1] Hospital contracts that give loan repayment OR [2] Work for the 501c company and have loans forgiven after 120 payments. OR [3] work in some other type of arrangement to get some of these loans payed off by the employer.

Any future resident couples out there? What are your plans?
-please feel free to make any corrections to this plan.

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My wife and I are in the same situation. As far as I understand, we can file taxes jointly (and see our household AGI) and they will look at our combined total debt. They will consider your percentage of that total debt and your wife's percentage of that total debt, and use those percentages to figure out each of your payments (whatever your total IBR is calculated to be based on your household AGI). By using these percentages, you won't be paying double for each of your individual IBR payments.

We plan to do IBR throughout residency (5 years), fellowship (1-2 years), and then sign on with a 501c company for the remaining 3-4 years. Although we will save some money over the course of 10 years, I still think we will end up nearly paying off our principal loan amounts by the end of those 10 years.

The only thing I don't understand about your plan is this: why pay above and beyond the IBR amounts during residency? Isn't just a waste to pay extra if you are hoping to take part in the PSLF program?
 
The only thing I don't understand about your plan is this: why pay above and beyond the IBR amounts during residency? Isn't just a waste to pay extra if you are hoping to take part in the PSLF program?

That's assuming that the PSLF program still exists 10 years into the future and that there are not changes to the program that will affect your eligibility for it or how much can be forgiven. If it doesn't change, then yes, it is a monetary loss, but if there are changes where you can't benefit, there's a lot of added interest on the money that was not put into the loans for hopes of claiming this benefit. Somewhat of a gamble either way.
 
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The only thing I don't understand about your plan is this: why pay above and beyond the IBR amounts during residency? Isn't just a waste to pay extra if you are hoping to take part in the PSLF program?

The main reason is interest. On our $400k (and only counting unsubsidized stafford) the accruing interest will be ~$15,000/yr). So after 4 years of residency it will be another $60,000 added for a loan total of $490,000.00

Now that all of a sudden becomes quite a burden to pay, even as an attending. It will significantly eat into the paycheck.

The second reason is I want to keep my options open. What if there are no desirable PSLF jobs in the area? What if I choose to go with a private group that will offer some repayment?
And mainly, I'm not certain that the "120payment and then forgiven" program will exist. Look, they took away subsidized stafford loans, something no one saw coming.

What is your loan total?
 
The main reason is interest. On our $400k (and only counting unsubsidized stafford) the accruing interest will be ~$15,000/yr). So after 4 years of residency it will be another $60,000 added for a loan total of $490,000.00

Now that all of a sudden becomes quite a burden to pay, even as an attending. It will significantly eat into the paycheck.

The second reason is I want to keep my options open. What if there are no desirable PSLF jobs in the area? What if I choose to go with a private group that will offer some repayment?
And mainly, I'm not certain that the "120payment and then forgiven" program will exist. Look, they took away subsidized stafford loans, something no one saw coming.

What is your loan total?

We got more debt than you two - ~$500k.

I don't see how they can take away the PSLF program without having those of us who make financial decisions based on it grandfathered in. I can see a point where they say loans after 2015 are not eligible (or something along those lines).

Also, both the Repubs and the Dems have had someone in office who have not yet stopped this program...bi-partisan approval is a good sign for us.
 
We got more debt than you two - ~$500k.

I don't see how they can take away the PSLF program without having those of us who make financial decisions based on it grandfathered in. I can see a point where they say loans after 2015 are not eligible (or something along those lines).

Also, both the Repubs and the Dems have had someone in office who have not yet stopped this program...bi-partisan approval is a good sign for us.

Unfortunately, I can see how they'd take it away. It's a gamble, like anything else.
 
We got more debt than you two - ~$500k.

I don't see how they can take away the PSLF program without having those of us who make financial decisions based on it grandfathered in. I can see a point where they say loans after 2015 are not eligible (or something along those lines).

Also, both the Repubs and the Dems have had someone in office who have not yet stopped this program...bi-partisan approval is a good sign for us.

They certainly can take it away.

The reason no one has stopped it is because it has not cost a dime yet. The first payouts won't happen for a few more years. Once it starts costing money, it will theoretically be on the chopping block.
 
Ok. Everyone is so negative about IBR and the PSLF program, but what are the alternatives? Live in a cardboard box and put all your resident salary to your loans? This would barely make a dent in them anyways.

So we all do IBR and hope for the PSLF program to stick around, and if it's not, we make our loan payments with our attending salaries (which shouldn't be a huge pain in the ass considering the most we could pay per month is what our standard 10 year payments are calculated to be). Maybe our future employers give us some money towards our loans or other programs come along which lower the burden. We don't really have any other options if you ask me.
 
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Consolidate. Pay with IBR during residency. Hope PSLF or something like it is around. If not just pay full amount as an attending.

That's all you can really do.
 
Consolidate. Pay with IBR during residency. Hope PSLF or something like it is around. If not just pay full amount as an attending.

Sorry to play devil's advocate, but with national divorce rate of 50% and doctor divorce rates even higher, it may be better not to intermix debts and assets. When you mix your finances, it becomes "joint." Everyone who gets married does it because they are madly in love and never imagines getting divorce. >50% ends up being wrong. If divorce occurs when one person is making more than another, courts may shift joint debt more to the person making more.
 
Sorry to play devil's advocate, but with national divorce rate of 50% and doctor divorce rates even higher, it may be better not to intermix debts and assets. When you mix your finances, it becomes "joint." Everyone who gets married does it because they are madly in love and never imagines getting divorce. >50% ends up being wrong. If divorce occurs when one person is making more than another, courts may shift joint debt more to the person making more.

A married couple can't consolidate their federal loans together anymore. The poster was referring to each person's individual federal loans.
 
A married couple can't consolidate their federal loans together anymore. The poster was referring to each person's individual federal loans.

yup

And I forgot to mention, if you are doing a long residency, you may still benefit from the IBR terms that forgive a loan balance after 25 years of payments.
 
yup

And I forgot to mention, if you are doing a long residency, you may still benefit from the IBR terms that forgive a loan balance after 25 years of payments.

thats right if you do a residency/fellowship that you dont finish till age 35 then work long and hard and still don't make enough to pay off your loans by age 60 the gov. will forgive your loans (and tax the forgiveness that year) so they at least get one more large sum out of you before you drop dead of a heart attack and are buried in a cardboard box. So....you have that to look forward too.
 
thats right if you do a residency/fellowship that you dont finish till age 35 then work long and hard and still don't make enough to pay off your loans by age 60 the gov. will forgive your loans (and tax the forgiveness that year) so they at least get one more large sum out of you before you drop dead of a heart attack and are buried in a cardboard box. So....you have that to look forward too.

Good talk. :thumbdown:
 
Good talk. :thumbdown:

anything I can do to help. People need to take a real good look at the financial burden they're going to take on before they go to medical school. Its easy to put on the rose colored glasses and convince yourself it will be allright. I mean seriously? not able to pay off loans in 25 years of working as a doctor? If thats the case you've made some serious mistakes.
 
anything I can do to help. People need to take a real good look at the financial burden they're going to take on before they go to medical school. Its easy to put on the rose colored glasses and convince yourself it will be allright. I mean seriously? not able to pay off loans in 25 years of working as a doctor? If thats the case you've made some serious mistakes.

As a physician, I think you would have to make a conscious effort to have your loan payments last 25 years. Even on IBR, I'm betting most of us would pay off our loans in much less time. When your salary no longer allows you to qualify for IBR, the payment maxes out what the standard 10 year repayment plan specifies. Thus, if you are only paying that standard 10 year repayment amount, I bet you could pay off your loans in ~12 years (12 years instead of 10 years due to the interest accrued during residency when IBR didn't cover the interest that was building each month). Plus, if you have the funds, why not pay more than that 10 year repayment amount?

Start IBR during residency to at least make a dent in the totals/stop the interest from accruing too much. Then, when you get an attending's salary, pay extra! There's no reason if you are bringing in >$10k/month that you can't pay extra (meaning >$2k/month).
 
As a physician, I think you would have to make a conscious effort to have your loan payments last 25 years. Even on IBR, I'm betting most of us would pay off our loans in much less time. When your salary no longer allows you to qualify for IBR, the payment maxes out what the standard 10 year repayment plan specifies. Thus, if you are only paying that standard 10 year repayment amount, I bet you could pay off your loans in ~12 years (12 years instead of 10 years due to the interest accrued during residency when IBR didn't cover the interest that was building each month). Plus, if you have the funds, why not pay more than that 10 year repayment amount?

Start IBR during residency to at least make a dent in the totals/stop the interest from accruing too much. Then, when you get an attending's salary, pay extra! There's no reason if you are bringing in >$10k/month that you can't pay extra (meaning >$2k/month).

yes, hence my sarcasm directed at the thought of being able to take advantage of the 25 year loan forgiveness.
 
thats right if you do a residency/fellowship that you dont finish till age 35 then work long and hard and still don't make enough to pay off your loans by age 60 the gov. will forgive your loans (and tax the forgiveness that year) so they at least get one more large sum out of you before you drop dead of a heart attack and are buried in a cardboard box. So....you have that to look forward too.

bart-scott-300x225.jpg

Can't wait!
 
My current thoughts in terms of loan repayment are to do IBR for my subsidized loans and pay off the interest on my unsubsidized loans during residency. I do not want my loan burden to balloon during post graduate training as I am looking into ~6 years of post grad training. I may possibly try to pay down some of my unsubsidized loan burden if possible during residency, however this may prove difficult, so interest alone may be what I do.

Yeah it sucks. It gets worse every year. Remember a 2 years ago they had "deferment", but they got rid of that. Remember subsidized loans? They are getting rid of that now too, so I am just glad that at least I do not need to take out any more loans. As far as this whole loan PSLF pipe dream, my money is on the government to get rid of it just like they get rid of anything that helps us deal with the burden and financial stress of educational loans. Pessimistic? No... just being realistic.
 
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