How to save over $100k on your student loans

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IBR is awesome... I just got my latest statement with my nice small payment. It's great to not have to worry about that while I'm home with the new baby. :love:
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pezdispenser said:
But the problem of focusing on deductions is that, sure you can get tax benefits by deducting a lot of 'necessary' or 'baseline' expenses, but if you want to have some 'fun money' like to go out and buy a Herve Leger dress or other luxury items, you eventually have to move up to a higher income level, which will disqualify you from some deductions. Well, that's more of my personal opinion, and I'm comfortable paying the taxes I do now. Not oppressive, but still have some social safety net. Being in a state without income tax helps A LOT though, like Texas or Florida. If I were in California or NY, I'd probably have the opposite view...

You have to borrow more than roughly two times your expected salary, for anything to be leftover after 25 years. Even if there is something leftover, you are exactly right in that the interest over 25 years, or the tax on the amount forgiven will not make it worthwhile.
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I guess people can always LIE about their AGI just like they are planning a scheme to get out of paying their student loans. :rolleyes: I am not surprised about that.

Yeah I need my Herve Leger and Louis Vuitton....so I guess I won't qualify for these deductions! LOL...

So Texas is the better state to live in then? I am in Texas now so I guess I better stay here. :laugh:

TWO TIMES your salary? Yeah...I only have 80K to 90K so def not worth it for me. So you have to borrow at least 240K or more for it to be worth it and I don't see how anyone can do that...you can only borrow a MAX of 33K a year (8500K sub loans and 24500 unsub loans =33K a year...any other loans will NOT be qualified for IBR....so 33K X4 = 132K) How the hell does anyone get 240K? That's insane!

KARM12 said:
The funniest thing is that you all assume that these benefits will still exist x yrs down the road...
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That's my point and exactly why I borrow UNDER 100K (any smart person would have done the same) and pay the debt off ASAP. But these people won't listen...they think borrowing 200K+ will allow them to make a "profit" down the road. :laugh:
 
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SHC1984 said:
I guess people can always LIE about their AGI just like they are planning a scheme to get out of paying their student loans. :rolleyes: I am not surprised about that.

TWO TIMES your salary? Yeah...I only have 80K to 90K so def not worth it for me. So you have to borrow at least 240K or more for it to be worth it and I don't see how anyone can do that...you can only borrow a MAX of 33K a year (8500K sub loans and 24500 unsub loans =33K a year...any other loans will NOT be qualified for IBR....so 33K X4 = 132K) How the hell does anyone get 240K?:
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They are not exactly lying about reducing the AGI but as you can see it is not easy to reduce your AGI and you need to spend money to do it. If it is then everyone would have done it already. Nobody wants to pay more taxes. In short, if you make 120 k a year and you owe 250 k in federal student loan then after 25 years, nothing is forgiven. But, you will end up paying a lot more than 250 k (more than $375,000 over a 25 year period). Even if a portion of your student loan is forgiven after 25 years, it would be taxed.

The financially smart thing to do is to pay back your student loan ASAP so you can free up your money and have it work for you. I have paid back my loans and I just purchased my first house. However, if you have financial hardship and you can't pay back the monthly payment then you should get on IBR so your credit score is not ruined.
 
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I started undergrad and took out my first loan in 2008 and so far all of my loans are federal (stafford in undergrad and federal loans for pharm school), hopefully I am eligible for this plan (which it looks like I am). It would be nice to go on this system and just make larger payments if my finances allow. The key would be to put aside some money each month to ensure that there is enough to pay off the IRS the extra tax once the loan is forgiven and counted as income.
 
SHC1984 said:
Yeah I need my Herve Leger and Louis Vuitton....so I guess I won't qualify for these deductions! LOL...

So Texas is the better state to live in then? I am in Texas now so I guess I better stay here. :laugh:
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lol I thought that would get your attention. You would love it here in South Florida. There's this place called Worth Avenue in Palm Beach and it's just like Rodeo Drive, Beverly Hills with all those high end shops like Herve Leger and LV. :)

I haven't been to Texas much. Just suggested it because it is a big state with no income tax, which could potentially mean $10,000 more in your pocket to buy dresses and handbags. There are other pharmacists on here who seem to like it there though.
SHC1984 said:
TWO TIMES your salary? Yeah...I only have 80K to 90K so def not worth it for me. So you have to borrow at least 240K or more for it to be worth it and I don't see how anyone can do that...you can only borrow a MAX of 33K a year (8500K sub loans and 24500 unsub loans =33K a year...any other loans will NOT be qualified for IBR....so 33K X4 = 132K) How the hell does anyone get 240K? That's insane!
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Some schools have a higher cost of attendance, so when you reach the Stafford loan limit, they get Grad plus loans, which also qualify for IBR.
SHC1984 said:
That's my point and exactly why I borrow UNDER 100K (any smart person would have done the same) and pay the debt off ASAP. But these people won't listen...they think borrowing 200K+ will allow them to make a "profit" down the road. :laugh:
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If only everyone were like you SHC... :laugh:
 
pezdispenser said:
Some schools have a higher cost of attendance, so when you reach the Stafford loan limit, they get Grad plus loans, which also qualify for IBR.
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Unfortunately, the interest rate for grad plus is 7.9% and they would need to do a credit check on you first. If you don't qualify for grad plus, then you may need to get private loans which have a much higher interest rate and can't be included in income based repayment.
 
pezdispenser said:
Some schools have a higher cost of attendance, so when you reach the Stafford loan limit, they get Grad plus loans, which also qualify for IBR.
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Yup, I maxed out grad plus each year of pharmacy school. Dumb because I didn't really need much of that other than for gas, tolls, etc. But I maxed it out anyway so I could actually have some fun while in pharmacy school.
 
Sparda29 said:
Yup, I maxed out grad plus each year of pharmacy school. Dumb because I didn't really need much of that other than for gas, tolls, etc. But I maxed it out anyway so I could actually have some fun while in pharmacy school.
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What does that translate to in terms of total loan balance?
 
All4MyDaughter said:
What does that translate to in terms of total loan balance?
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~$260,000 from my P1-P4 years alone. I think I took out about 30K/year during undergraduate. I wish I went to Hofstra instead of LIU instead for undergraduate. I had a full scholarship there, plus it's the craziest party/sex school in the NYC area unless NYU has topped them.

There is a rumor that in Washington Square Park that there is this statue that turns its head each time a virgin female passes by. This of course, never happens since most of the denizens of Washington Square Park are NYU students.
 
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BMBiology said:
They are not exactly lying about reducing the AGI but as you can see it is not easy to reduce your AGI and you need to spend money to do it. If it is then everyone would have done it already. Nobody wants to pay more taxes. In short, if you make 120 k a year and you owe 250 k in federal student loan then after 25 years, nothing is forgiven. But, you will end up paying a lot more than 250 k (more than $375,000 over a 25 year period). Even if a portion of your student loan is forgiven after 25 years, it would be taxed.

The financially smart thing to do is to pay back your student loan ASAP so you can free up your money and have it work for you. I have paid back my loans and I just purchased my first house. However, if you have financial hardship and you can't pay back the monthly payment then you should get on IBR so your credit score is not ruined.
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The loans forgiven after 25 years on IBR is taxed. The loans forgiven after PSLF (10 yrs) is NOT taxed. This makes the 10 yr PSLF a much better deal than the 25 yr IBR plan.
 
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Pharmacy Kid said:
The loans forgiven after 25 years on IBR is taxed. The loans forgiven after PSLF (10 yrs) is NOT taxed. This makes the 10 yr PSLF a much better deal than the 25 yr IBR plan.
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Good luck getting one of these jobs so the government will forgive your loans after 10 years. I am sure everyone will be gunning for one.
 
BMBiology said:
You owe $380,000?! Marry rich, my friend...marry rich.
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Ehh. I might be awarded a nice amount in my lawsuit against a driver who rear-ended me a few months back. I'm probably gonna need knee surgery and another year or two of PT. I guess I'd use the $$ to pay back some of the loans.
 
Sparda29 said:
Ehh. I might be awarded a nice amount in my lawsuit against a driver who rear-ended me a few months back. I'm probably gonna need knee surgery and another year or two of PT. I guess I'd use the $$ to pay back some of the loans.
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Won't that go for your medical bills? Or does your state allow you to recover for "pain and suffering?" That varies by state, and I don't feel like looking up NY law. :p

Also have you started repayment yet? What does the monthly obligation look like on that much debt?
 
All4MyDaughter said:
Won't that go for your medical bills? Or does your state allow you to recover for "pain and suffering?" That varies by state, and I don't feel like looking up NY law. :p

Also have you started repayment yet? What does the monthly obligation look like on that much debt?
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Yep, we can recover for pain and suffering. Lawsuits around here tend to settle for 3x the medical costs. For me, I'm pretty sure it's gonna exceed 75k if I go through with the ACL reconstruction and cartilage transplant.

Started repayment on the private loans.
 
BMBiology said:
You owe $380,000?! Marry rich, my friend...marry rich.
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$2000+/mo min if you stretch it for......................................................................................30 years.

Sparda is going to do IBR for sure LOL :rolleyes:
 
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BMBiology said:
However, if you have financial hardship and you can't pay back the monthly payment then you should get on IBR so your credit score is not ruined.
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If someone can't pay their loans, credit score is the last thing they should be worried about. Penalties & the federal government garnishing your wages would pose a more immediate problem. Credit scores are easy to rehab in general, I remember working with clients 2 years past bankruptcy and their scores were in the 700's.

BMBiology said:
If you don't qualify for grad plus, then you may need to get private loans which have a much higher interest rate and can't be included in income based repayment.
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The standards were pretty low, if I remember correctly, the only derogs that would deny you are bankruptcy or foreclosure within 2 years.

KARM12 said:
The funniest thing is that you all assume that these benefits will still exist x yrs down the road...
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They probably will, if anything we're seeing an expansion of these programs, or at least an attempt to augment them to a wider audience. But what I would put my money on is that inflation will negate the benefit on its own as an ever larger amount is taken as a % of your income.

Inflation favors debtors, in general.

So I figure I probably won't "lose" either way. Either I hang a large chunk of my student loan balance on to the tax payers at-large, my paycheck becomes so huge that my fixed student loan payments are dwarfed, or some mix of both.
 
confettiflyer said:
Inflation favors debtors, in general.

So I figure I probably won't "lose" either way. Either I hang a large chunk of my student loan balance on to the tax payers at-large, my paycheck becomes so huge that my fixed student loan payments are dwarfed, or some mix of both.
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Inflation will be negated when supply > demand. At best, salary will stagnate from here on out. I got a crappy raise this year. Hoping your raise to track inflation when everyone wants your job is a pipe dream.
 
confettiflyer said:
If someone can't pay their loans, credit score is the last thing they should be worried about. Penalties & the federal government garnishing your wages would pose a more immediate problem. Credit scores are easy to rehab in general, I remember working with clients 2 years past bankruptcy and their scores were in the 700's.
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Don't forget, some jobs require a credit check. If you default, it is going to be on your credit report for 7 years. It is going to be hard to rebuild your score when you don't have money to spend.

confettiflyer said:
The standards were pretty low, if I remember correctly, the only derogs that would deny you are bankruptcy or foreclosure within 2 years.
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If that's the case, then why do so many people have private student loans?
 
Momus said:
Inflation will be negated when supply > demand. At best, salary will stagnate from here on out. I got a crappy raise this year. Hoping your raise to track inflation when everyone wants your job is a pipe dream.
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This is so true!!! I got a whopping 1.25% raise this year. :(
 
BMBiology said:
Don't forget, some jobs require a credit check. If you default, it is going to be on your credit report for 7 years. It is going to be hard to rebuild your score when you don't have money to spend.
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California law prohibits the use of a credit report for employment purposes except in certain circumstances which pharmacists don't meet (except possibly "managerial position").

If that's the case, then why do so many people have private student loans?
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It was a personal choice at the time, if I recall. After maxing out your subsidized and unsubsidized staffords, you can either go with A) federal GradPlus loans, X% rate, etc etc... or B) private loan (guaranteed by the federal gov't), slightly lower rate (or tied to LIBOR), etc... etc...

It wasn't until sometime in 2009 that the government decided to stop guaranteeing private loans and just become the direct lender itself.
 
Momus said:
Inflation will be negated when supply > demand. At best, salary will stagnate from here on out. I got a crappy raise this year. Hoping your raise to track inflation when everyone wants your job is a pipe dream.
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smells of the "sky is falling" thread, oh boy.

raises at my hospital tends to be those across the board COLA things...so once you're in, you get the raise, regardless if there's 20 newly minted PharmD's banging on the door. We just won't hire them.

But if I go job hunting, on the other hand...different story, but that's more of a salary negotiation issue than a COLA adjustment issue.
 
confettiflyer said:
It was a personal choice at the time, if I recall. After maxing out your subsidized and unsubsidized staffords, you can either go with A) federal GradPlus loans, X% rate, etc etc... or B) private loan (guaranteed by the federal gov't), slightly lower rate (or tied to LIBOR), etc... etc...

It wasn't until sometime in 2009 that the government decided to stop guaranteeing private loans and just become the direct lender itself.
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I think there are people who have private loans because their pharmacy school classified part of the PharmD as undergraduate, so they were eligible for less Stafford and couldn't get Grad Plus for those years.
 
confettiflyer said:
smells of the "sky is falling" thread, oh boy.
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Yeah it's the same theme.

Bunch of actual pharmacists saying what's going on in the real world...

Bunch of students saying it can't be true! Everything is going great!

Who to believe?? :confused:
 
pezdispenser said:
Yeah it's the same theme.

Bunch of actual pharmacists saying what's going on in the real world...

Bunch of students saying it can't be true! Everything is going great!

Who to believe?? :confused:
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Unplug from the internet, have a face to face conversation with some pharmacists that you know, and get a handle on how the market is in your area. This is a much better way to go about it instead of the internet..
 
pezdispenser said:
Yeah it's the same theme.

Bunch of actual pharmacists saying what's going on in the real world...

Bunch of students saying it can't be true! Everything is going great!

Who to believe?? :confused:
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I'm an actual pharmacist, and my experience is nowhere near as dire as some of my colleagues on here have depicted. There are quite a few places hiring locally. I think we can chalk some of this up to regional differences.
 
Pharmacy Kid said:
The loans forgiven after 25 years on IBR is taxed. The loans forgiven after PSLF (10 yrs) is NOT taxed. This makes the 10 yr PSLF a much better deal than the 25 yr IBR plan.
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How hard is it to get a job that will qualify you for PSLF? If it's harder than getting a job at Costco then you are screwed! :eek:
 
SHC1984 said:
How hard is it to get a job that will qualify you for PSLF? If it's harder than getting a job at Costco then you are screwed! :eek:
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Government and nonprofit hospital will qualify. While I think a good portion of hospitals are nonprofit, keep in mind that 2/3of the pharmist work retail and hospital jobs are harder to come by.

But at the same time, keep retail and for profit places tend to pay more. So working retail may, or go for a higher paying job in for profit may be better off. Might get boo'd for being a math loving Asian, but it all comes down to numbers. Quantify as many variable as you can and do multiple scenario analysis from optimistic to pessimistic.
 
I'd say work for gov job for 20 years for 50% pension ~$60k or 30 years for 70% pension ~84k, then switch to another job $120k, you will end up getting $180k/year, or $264k when you are 46, or 56 year old :D
 
Momus said:
I'd say work for gov job for 20 years for 50% pension ~$60k or 30 years for 70% pension ~84k, then switch to another job $120k, you will end up getting $180k/year, or $264k when you are 46, or 56 year old :D
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That's the old days. Working for VA now will get you a 401k like retirement plan + pension of 1% per year of service (plus any loan forgiveness after 10 yrs). It used to be that pharmacists qualified for a $5k/yr tuition reimbursement for shortage positions but that was gone at my site the year before my residency. And good luck getting a VA position without doing a residency or have some connections.
 
Momus said:
I'd say work for gov job for 20 years for 50% pension ~$60k or 30 years for 70% pension ~84k, then switch to another job $120k, you will end up getting $180k/year, or $264k when you are 46, or 56 year old :D
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There's a per-diem pharmacist at my hospital who did this. He worked for 30 years at SUNY Stony Brook Hospital (state), retired from there with a $100,000/year pension, and works like 24 hours a week at my hospital for $75/hour so thats like another $90k/year.
 
So If you have ANY loans prior to 2007 then you won't qualify for the new 10% IBR??

That really sucks because I have one solitary undergrad loan from 2005...

Does anyone know if I pay off my old undergrad loan before applying for this new program whether that means I can then qualify?

All of my graduate loans are 2009-2012, and fall into the new requirements, the only thing I'm stressing over is that pre-2007 loan, ugh.
 
confettiflyer said:
California law prohibits the use of a credit report for employment purposes except in certain circumstances which pharmacists don't meet (except possibly "managerial position").
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Yes but 47 of the 50 states allow credit check for employment.
 
BMBiology said:
Yes but 47 of the 50 states allow credit check for employment.
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Meh...don't care. Not applicable to me. Besides, who the heck is defaulting/filing for bk on here? I can't recall this discussion.

good article on the effect of student loan on obtaining a mortgage:

http://www.nytimes.com/2012/04/29/re...dent-debt.html
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I think we were discussing this in the Suze Orman thread, don't know if you've been by there (my mortgage and student loan scheme). Cliff notes: I'll buy a house in 2015, I'll do so using my 2015 salary (2 pay stubs) but my debt payment on student loan is based off my 2013 income tax return as a resident, giving me an artificial advantage.


So here's the conundrum, the same one we faced with sub prime mortgages and AIG a few years ago. If student loans become a drag on the economy and thus affect your property values & constrain consumer spending, do we as a people/government intervene and make it easier to pay down loans and/or discharge debt? Or do we get tough/pull back all the incentives and programs, mark these loans to market, and get the dollars back into Treasury?

The $190B question, indeed.

Moral hazard and cutting off your nose to spite your face come to mind.
 
BMBiology said:
Yes but 47 of the 50 states allow credit check for employment.
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Has anyone here actually had a credit check for a job? I have heard of this but I have never meet anyone who was actually checked via consumer reporting.
 
Pojman said:
Has anyone here actually had a credit check for a job? I have heard of this but I have never meet anyone who was actually checked via consumer reporting.
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I did when it was legal and I worked in finance. You can check off if you want a copy of it.
 
confettiflyer said:
I did when it was legal and I worked in finance. You can check off if you want a copy of it.
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It just makes me curious because I had a couple hits from medical bills which I paid off with credit cards that created a harrowing vortex of pain/suffering a few years ago. Although it was paid and everything, it just makes me a bit uncomfortable that this could be an issue.
 
BMBiology said:
good article on the effect of student loan on obtaining a mortgage:

http://www.nytimes.com/2012/04/29/realestate/mortgages-dealing-with-student-debt.html
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This article is ******ed. My favorite part:

Another way to lower student debt is to get the borrower's family involved, though this comes with risks.

For example, Mr. Kantrowitz said, parents or grandparents could agree to take out a home equity loan and use the proceeds to pay off the student loan balances. The borrower would then repay the home equity loan, either to the parent or directly to the lender. Home equity loans usually have lower interest rates than student loans because the debt is secured, he said, adding that if the rate was at least two percentage points below the student loan rate, it could be worthwhile making the switch.
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That has got to be the dumbest idea I've read in a while. Two things:

1) Obvious...let's encumber grandma's house with johnny's student loan debt! if johnny becomes a jerk or unemployed and can't make payments, grandma's in the street!

Fine, go to your parents for food and some childcare, but don't put them on the hook for $125,000 in law school debt. Stupid.

2) I wrote this in the Suze thread, but total debt does NOT matter in mortgage underwriting, only payment. So if you artificially lower your payment, it'll give you more room vs. the full 10-year payment (discussed in the article too). Desktop underwriting cannot understand strangely amortizing loans w/balloon discharges (like IBR student loans) or even AMEX cards that are paid in full every month.

Conversely, she added, repaying student loans on time and in full would also help improve a borrower's credit score.
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So the solution to a $125,000 student loan is $125,000 in cash to pay it off. Well...duh.
 
BMBiology said:
Yes but 47 of the 50 states allow credit check for employment.
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It would be smart for employers to check credit before hiring. Bad credit = NOT dependentable and most likely lazy, unorganized, sloppy and forgetful too. (sorry to be so blunt) It would benefit the company to check that out before hiring anyone.
 
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