How to factor in job offer with student loan forgiveness?

[CaptainCool]

How much do you think the added value per year of taking a rural health job with loan forgiveness after 10 years would be if you have student loans around 250,000? Is it as easy as saying it’s basically an extra 25k a year to compare with other offers?

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[Podnasty]

It would be at least 40k extra per year pretax. Refinance student loan 250k, 10 year @ 3% would be 2414/month. You would be paying that amount after taxes. If you roughly pay 30% in taxes then you reach that amount. Not sure if loan forgiveness would be taxable so that may change your numbers.

 

[DYK343]

How much do you think the added value per year of taking a rural health job with loan forgiveness after 10 years would be if you have student loans around 250,000? Is it as easy as saying it’s basically an extra 25k a year to compare with other offers?

are you doing PSLF? Because if so you still have to make a monthly loan payment. Someone can correct the exact amount but I think its 15% of your discretional income. That would take $$$ away from your estimated 25k a year. Also cant guarentee it will actually be forgiven.

 

[heybrother]

I sort of wonder if this is as valuable for you as you think. Below are 10 year payment plans based on $250K and interest rate. These were created using a mortgage calculator.

$250K at 3% - monthly payment $2414 - yearly payment $28968 - total $289682
$250K at 4% - monthly payment $2531 - yearly payment $30372 - total $303735
$250K at 5% - monthly payment $2652 - yearly payment $31824 - total $318197
$250K at 6% - monthly payment $2776 - yearly payment $33312 - total $289682

I think the real question is ...what is your salary. Presumably this is a qualifying facility in a rural area which means ...its a hospital? If you make sufficient money - there may not be a win here.

I no longer familiarize myself with all the different payments plans but historically they were all some variation of 10-15% of your salary via IBR. If you make $225K (and a friend of mine had a base greater than that first year at a rural critical access) you are going to pay either $22,500 (10%) or $33,750 (15%). for the year. Your income will also evolve/change/increase hopefully through time which could increase your IBR payment. The end result is that if your IBR payment meets the 10 year payment plan - I think you are just on a 10 year payment plan at that point.

So consider my example above - let's just say its a 10% payment on $225K You pay $22500 in payments/interest and there's $6K+ change that wasn't covered if your interest rate was 3%. Ok If your income never changes at the end of 10 years you basically multiply that $6K by 10 and that's what is forgiven.

I think the big take home here is - what is your salary. What will your salary be etc.

The other joke about all of this is - the value of the forgiveness increases the closer you get to the pay-off day. We can talk about yearly values but if you work 9.99 years for a rural facility that you hate and on day 3569 or whatever they fire you and you never get a qualifying job again you'll have lost the whole value of the forgiveness.

Which raises questions like - would it have been better to just have paid along the way, kept yourself flexible etc.

PSFL requires 10 years - any chance your residency was done at a qualifying non-profit? Then you'd have 3 years already under your belt and the math would be more beneficial since you'd have 3 years of payments at resident level income.

The big winners of this sort of thing are long fellowship surgeons. ie. 7-9 years paying 10-15% of $60K is a lot more favorable. You're essentially going to be paying 10-15% of actual attending level pay. Other winners would theoretically be a low paid podiatrist with enormous debt though theoretically if they are qualifying they shouldn't be low paid.

 

[DYK343]

I believe it would be a NHSC loan forgiveness program, I obviously need to look into that more. Interesting about the PSFL, I assumed they were guaranteed

Trump and Betsy tried to get rid of it but failed.
I think they did get rid of it for new borrowers but people who took out loans during the years PSLF was a thing were grandfathered in?

I doubt Biden will disolve PSLF as it was an obama thing but who knows what can happen.

I dont trust the government. They change with every new administration and we dont really know what is in the future. Over 10 years you technically could have 3 different presidents who want to change student loans and PSLF program. Its a risk.

Like HeyBrother said most residencies count towards 3 years payments.

For some people it may make financial sense to take the risk. Just make sure you really look at all angles before carrying debt for 10 years that may not actually be disolved when you get to the finish line.

 

[Feli]

Are you talking IHS? You get $25k or so which comes out to a little over $18k after taxes. You can do that every year until your loans are paid off.

Are you talking PSLF or some other program where you work at non-profit or govt hospitals? That is quite variable... need to make sure you qualify (type of loans, employer tax status, etc), make sure you stay there the proper timespan, and make sure that it gets approved (far too many fall through at the end). It would honestly be worth an attorney or other specialist consult; it would suck to do 7 or even 10yrs at a place you basically picked for forgiveness potential... only to have it bounced. Also, the consensus with a lot of MDs is that you can do better making more in private group/hosp than trying for PSLF jobs... for DPMs, who knows?

 

[air bud]

not sure if you can stack, but don't see why not. My system offers 100k over 5 years, so 20k a year. It is a reimbursment, so on your anniversary date you show you paid 20k last year, they the reimburse you 20k. The problem is that is taxed as income, and you used post tax money to pay your loans...so it comes out to about 15k a year (depending on state taxes). Better than a kick in the head I guess.