How much Interest will I owe on 250k in Loans?

[EMDO2018]

I have about 80k in Loan debt from undergrad🙁. Luckily, Most of my loans thus far are subsidized and not accruing interest. I got into a cheap school that will cost 24k in tuition fees and 14k for living expenses. I will take out about 160k over 4 years. If the interest rate is 6.8% for unsub Stafford loans how much interest will I owe at the end of med school on that 160K?

I know you can start paying back loans in residency, but can you use IBR and PSFL during residency if you are doing your residency in a not-for-profit hospital? And will those years you are in residency count towards your ten years of repayment?

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[EMDO2018]

Also I just used an IBR calculator. I plugged in 220k for income and 250k for debt and it said my monthly payment would be 2,530. The I plugged in 500k for loan debt and it gave me a monthly payment of 2,530. So if you repay based on income, why do people worry about how much debt they have?

 

[sjv]

Also I just used an IBR calculator. I plugged in 220k for income and 250k for debt and it said my monthly payment would be 2,530. The I plugged in 500k for loan debt and it gave me a monthly payment of 2,530. So if you repay based on income, why do people worry about how much debt they have?

At the end of 20 years for PAYE or 25 years for IBR, the amount forgiven is considered taxable income and you will be expected to write the IRS a check for a significant amount depending on the balance of the loan.

 

[Mad Jack]

First off, congrats on the acceptance!

Second, yes, you are PSLF eligible I'd you do your residency at a nonprofit hospital. If you did something like surgery and then began working for a nonprofit hospital or the VA post residency, you'd basically only have to put in 5 more years to have your loans forgiven, for instance. If you plan on doing EM, well compensated employed positions are much easier to come by, so doing PSLF is a pretty solid choice.

I'd recommend the new PAYE program over IBR though. Takes 10% of your income instead of 15%, and pays off after 20 years instead of 25 if you decide you want to go private practice post residency.

 

[sazerac]

With IBR (25 yr forgiveness) and PAYE (20 yr forgiveness), the profit status of your employer is irrelevant. Only PSLF (10 yr forgiveness) requires non-profit employment.

 

[Postictal Raiden]

I have about 80k in Loan debt from undergrad🙁. Luckily, Most of my loans thus far are subsidized and not accruing interest. I got into a cheap school that will cost 24k in tuition fees and 14k for living expenses. I will take out about 160k over 4 years. If the interest rate is 6.8% for unsub Stafford loans how much interest will I owe at the end of med school on that 160K?

I know you can start paying back loans in residency, but can you use IBR and PSFL during residency if you are doing your residency in a not-for-profit hospital? And will those years you are in residency count towards your ten years of repayment?

40K/year including living expenses? that's a sweet deal. I'm expecting to take out twice as much.

Assuming an interest rate of 6.8% (this could be lower or higher depending on the economy), you will accumulate ~25K of interests by the end of your medical education on the 160K principle that you take out. All in all, you will have 260-270K of debt in 2018. That's very manageable in my opinion. If I owed this "little" I would forego of IBR/PAYE since you'll end up paying more interests. I would do something like graduated repayment plant for 10-years post graduation. This will allow you to make small payments at the beginning (during residency) and it will increase each year. I used this calculator http://www.asa.org/repay/calculators/graduated/default.aspx to find out how much you'll be paying with such a plan.

It shows that for the first two years, your monthly payments will be ~1800. The following two years it will increase to ~2400. Then to 3000, and 3800, and 5600. In total, you'll end up paying ~400K. With PAYE, assuming a salary of 250K and a residency length of 4 years, you'll end up paying ~520K. That's 120K difference, but perhaps having less monthly payments extended over 20 years and inflation (120K after 20 years will be ~60K in today's money value) would make PAYE more attractive.

 

[Syndicate]

With IBR (25 yr forgiveness) and PAYE (20 yr forgiveness), the profit status of your employer is irrelevant. Only PSLF (10 yr forgiveness) requires non-profit employment.

So if I do an IM residency (3 years) and then a fellowship in cardio or gastro (3 years) at a non-profit, that means I will only have to work 4 years as an attending at a non-profit in order to have all my loans forgiven? Is the PSLF forgiven loan amount taxable?

 

[sazerac]

So if I do an IM residency (3 years) and then a fellowship in cardio or gastro (3 years) at a non-profit, that means I will only have to work 4 years as an attending at a non-profit in order to have all my loans forgiven? Is the PSLF forgiven loan amount taxable?

Yes as the law is currently written, you would only have to work four years as a non-profit employee of a hospital and your loan would vanish.

PSLF loan forgiveness is tax free. PAYE and IBR forgiveness is taxable (figure 2/3 forgiven, 1/3 immediately due in taxes that year).

Note that predicting tax law in the future is difficult. Also note that the total amount of debt forgiven thus far by PSLF is exactly $0 since the program was started in 2007 and the first people to apply for forgiveness will do so in 2017. The PSLF forgiveness is not a program that you are "enrolled in" for 10 years (it's just an event that you apply for, once, in the future when you wish your loans to be forgiven) and PSLF isn't written into your loan contract. PSLF simply exists, temporarily, at the whim of a desperate and money-starved congress. Kind of like subsidized stafford loans (remember those?).

 

[EMDO2018]

Yes as the law is currently written, you would only have to work four years as a non-profit employee of a hospital and your loan would vanish.

PSLF loan forgiveness is tax free. PAYE and IBR forgiveness is taxable (figure 2/3 forgiven, 1/3 immediately due in taxes that year).

Note that predicting tax law in the future is difficult. Also note that the total amount of debt forgiven thus far by PSLF is exactly $0 since the program was started in 2007 and the first people to apply for forgiveness will do so in 2017. The PSLF forgiveness is not a program that you are "enrolled in" for 10 years (it's just an event that you apply for, once, in the future when you wish your loans to be forgiven) and PSLF isn't written into your loan contract. PSLF simply exists, temporarily, at the whim of a desperate and money-starved congress. Kind of like subsidized stafford loans (remember those?).

Turns out I'm not eligible for PAYE. Took out my first federal loan in 2006.

 

[Postictal Raiden]

Turns out I'm not eligible for PAYE. Took out my first federal loan in 2006.

That's a bummer. IBR remains a viable option though.

 

[EMDO2018]

SO are they gonna expand PAYE?

That's a bummer. IBR remains a viable option though.

 

[Mad Jack]

No one knows. The government is kind of a mess these days, so it's hard to say.

 

[DrMidlife]

The PAYE expansion (to include loans from before 2007) was done by executive order so it's law. For now.

This is one of the executive orders that Orange Man said he is going to sue the president over. Which won't actually happen.

I think the people at studentloans.gov who are trying to keep their info accurate and current are all having nervous breakdowns and/or are updating their resumes.