$$IBR Income Based Repayment $$

[organdonor]

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I was sent an email from my schools financial aid officer. A couple years back, this legislation was passed regarding repayment of federal student loans. Basically, the programs works like this

Once you start paying back your loans, your maximum required repayment per year is calculated as 15% of your discretionary income*

*Discretionary income is 150% of the poverty line for your size family.

After 25 years, the balance is forgiven. OR after 10 years in a public service** the balance is forgiven

**Any hospital that is non profit (nearly all) is a public service. So are many other organizations

Very nice slideshow here *BOOKMARK THIS ONE PEOPLE*
https://admin.na5.acrobat.com/_a719980293/updatedmed2010/
Also some IBR information here
http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp
For poverty line info
http://aspe.hhs.gov/poverty/09poverty.shtml
Lets do some quick and dirty calculations.

Dr. Average takes out $45,000x4 years of medical school=180,000
Dr. Average does a 4 year residency*** where he is paid $45,000/year
*** we'll do some other ones in a bit
Dr. Average gets paid 200,000/year when he finishes residency.
He has no kids and no wife

Dr. Average, if he begins paying back his loans during residency (you would want to do this) must pay (.15)(45,000-16,300)=4,305/year

After his 4 years of residency, he has paid back 4,305x4=17,220.



For the next 6 years he must pay (.15)(200,000-16,300)=27,555/year

After 6 years of working he has paid back an additional 27,555x6=165,330
By now, he has accrued interest at least equal to another year of medical school. 45,000

After 10 years, the balance is forgiven.

Total repayment =165,330+17,220=182,550
Total loan+interest=180,000+45,000=225,000

These numbers are rounded off and most are close to averages. For more specific numbers, view the slideshow which you should have bookmarked by now.

Another example. Dr. CTS wants to be a cardio thoracic surgeon.

same 180,000 debt after med school, but he requires a 5 year surgical residency and a 3 year CT fellowship, during which time he makes an average of 50,000.
.15(50,000-16,300)=5,055/year
5,055x8=40,440

He gets a job making 250,000.
He must repay 2 years at .15(250,000-16,300)=35,055/year
35,055x2=70,110

His balance is also forgiven after ten years.
He has accrued (roughly) the same 45,000 interest.

Total loan+interest= 180,000+45,000=225,000
Total repayment=40,440+70,110=110,550

My brain hurts from all this math.
Your welcome.😀

 

[45408]

**Any hospital that is non profit (nearly all) is a public service. So are many other organizations

My school's senior accountant said that this perk is likely to disappear or be significantly modified.

 

[TooMuchResearch]

...But after residency, Dr. Average probably will no longer be eligible for IBR.

Are there examples of borrowers who are eligible for IBR and for borrowers who are not?


Example 1 - Based upon the IBR repayment formula a borrower with a family size of one and an AGI of $30,000 would have an IBR calculated payment amount of $172 per month. If this borrower had total student loan debt of $25,000, the calculated monthly repayment amount under a 10-year standard plan with an interest rate of 6.8 percent would be $288. Since the $172 IBR calculated amount is less than the 10-year plan amount of $288, the borrower would be eligible to repay under IBR at a monthly amount of $172. However, if this borrowers total educational loan debt was only $10,000 the 10-year calculated amount would be $115 per month, which is less than the IBR amount of $172. Thus, the borrower would not be eligible for IBR.
Example 2 - A borrower with a family size of four and income of $50,000 would have an IBR calculated monthly payment amount of $212. If this borrower had total student loan debt of $20,000 the calculated monthly repayment amount under a 10-year standard plan with an interest rate of 6.8 percent would be $230. Since the $212 IBR calculated amount is less than the 10-year plan amount of $230, the borrower would be eligible to repay under IBR at a monthly amount of $212. But, if this borrowers total educational debt was $15,000, the 10-year calculated amount would be $173 per month which is less than the IBR amount of $212. This borrower would not be eligible for IBR.
For more information on other repayment plans and calculators, click here.

 

[organdonor]

My school's senior accountant said that this perk is likely to disappear or be significantly modified.

How would you change it without defeating the purpose of the program? A non profit hospital is about as "public service" as it gets.

I can see some legislators/tax people having an "Oh sh&^" moment when they realize they/us/taxpayers are taking a 100,000 hit on each surgeon that graduates.

I'm not saying the program is ethically/morally/fiscally in the right, I'm just saying that it exists and you would have to be insane not to take advantage of it if possible.

 

[DavidMD2B]

My school's senior accountant said that this perk is likely to disappear or be significantly modified.

"
WASHINGTON, D.C. – Today, President Obama signed the Health Care and Education Reconciliation Act of 2010, which delivered a significant down payment on the President’s ambitious agenda to make higher education more affordable and help more Americans earn a college degree.
This legislation strengthens the Pell Grant program, invests in community colleges, extends support for Historically Black Colleges and other Minority Serving Institutions, and helps student borrowers manage their student loan debt by capping repayments at 10% of their discretionary income. These efforts will be fully paid for by ending the government subsidies currently given to banks and other financial institutions that make guaranteed federal student loans and free up nearly $68 billion for college affordability and deficit reduction over the next 11 years."


Check out the full article:


http://www.whitehouse.gov/the-press...istoric-health-care-and-education-legislation

 

[organdonor]

...But after residency, Dr. Average probably will no longer be eligible for IBR.

from the GLadvisor slideshow slide 11, seconds 10-25.

It is important to note that once you're in the IBR program you can remain in the program for the life of the loan REGARDLESS OF YOUR INCOME and your monthly repayment will never exceed the standard payment (i.e. what you would pay without IBR) amount that is set once you enter IBR

 

[organdonor]

"
capping repayments at 10% of their discretionary income.
http://www.whitehouse.gov/the-press...istoric-health-care-and-education-legislation

This only applies if you assume new loans after july of 2014. It still applies to a few on here though.

New borrowers who assume loans after July 1, 2014, will be able to cap their student loan repayments at 10 percent of their discretionary income and, if they keep up with their payments over time, will have the balance forgiven after 20 years. Public service workers – such as teachers, nurses, and those in military service – will see any remaining debt forgiven after just 10 years

 

[jojoshabadoo]

from the GLadvisor slideshow slide 11, seconds 10-25.

before you break your abicus on your calculations

you pay a big ass tax bill on the forgiven debt

also doctors are often not direct employees of a non-profit that they work in, but a group practice that would not count and paying over 25 years would not be worth it, too much interest

don't get peoples hopes up and research you ****, who knows how much you'll be gettin paid and whether you want to have a private practice

 

[organdonor]

before you break your abicus on your calculations

you pay a big ass tax bill on the forgiven debt

also doctors are often not direct employees of a non-profit that they work in, but a group practice that would not count and paying over 25 years would not be worth it, too much interest

don't get peoples hopes up and research you ****, who knows how much you'll be gettin paid and whether you want to have a private practice

From the GLadvisor slide show, slide 9, seconds 25-33

...and since this is not a taxable event, the pre-tax equivalent savings is actually greater than $250,000

Good point on the not being direct employees of the non-profit, I hadn't thought of that. Although I'm sure you can agree with me that many also ARE employed through them.

I'm relatively certain that as you said starting up your own practice you would not be eligible for this program. I don't recommend counting on this program, but know that it is there and if you qualify, use it.

As far as salary information, of course you are right and I don't know how much you or I will make. I reviewed the information here http://www.cejkasearch.com/compensation/amga_physician_compensation_survey.htm for approximate starting salaries. The CTS one seemed kind of bloated so I brought it down. Of course, that brings up a good point. If you make substantially more, say for a spinal surgeon, it may not be worth it anymore because of the high amount you would pay back for those last years. I did these examples as a generalization and (a little selfish here, I must say) what I think I might want to do.

 

[organdonor]

I don't agree with it, and I also don't think people should anticipate where they will practice so far ahead of the game. Don't expect the government to take care of your debt, they can and will change the terms whenever. Look at how we can't defer repayment during residency. If it looks to good to be true, it is.

I can't look at your slide so quote it but if you are referring to the bill for tax forgiveness, it's not a done deal yet.

peace!

You don't think that doctors are employed through hospitals? I truly think you raise some good points, but I'm not sure this is one of them.

I too can easily foresee the government "renegotiating" terms of the agreement. I guess my point is that this program can't really COST you money, and it just might SAVE you money. I know that I won't and I hope others don't count on this. Just a little glimmer of hope is all. As it stands now, I feel like I've presented a pretty good picture of the program. My financial aid advisor apparently agrees, since he sent me the link and I've pretty much just repeated what it says.

 

[DrBowtie]

You don't think that doctors are employed through hospitals? I truly think you raise some good points, but I'm not sure this is one of them.

I too can easily foresee the government "renegotiating" terms of the agreement. I guess my point is that this program can't really COST you money, and it just might SAVE you money. I know that I won't and I hope others don't count on this. Just a little glimmer of hope is all. As it stands now, I feel like I've presented a pretty good picture of the program. My financial aid advisor apparently agrees, since he sent me the link and I've pretty much just repeated what it says.

Vast difference between a salaried hospital employee model and an independently contracted physician when it comes to IBR.

 

[organdonor]

Vast difference between a salaried hospital employee model and an independently contracted physician when it comes to IBR.

There absolutely is. He just disagreed when I said that some doctors are salaried from the hospital. Both models exist, and the one is vastly superior under the IBR program as it now stands.

 

[jojoshabadoo]

There absolutely is. He just disagreed when I said that some doctors are salaried from the hospital. Both models exist, and the one is vastly superior under the IBR program as it now stands.

I didn't, I disagreed that most were, these #s I don't know and I don't know if anyone does except the IRS

I just wouldn't bank on this **** so stop chasing your tail

there's no free lunch or loophole unless you are on an Indian reservation or in ****in Baghdad, no 100k lunch unless that, ur debts more than 45k times 4 too cause that **** compounds in school and durin residency, yes u can pay interest but not easy

maybe do IRB during residency then bounce

 

[organdonor]

I didn't, I disagreed that most were, these #s I don't know and I don't know if anyone does except the IRS

Ok so for some doctors if the program stays how it is it will be a viable option.

I just wouldn't bank on this **** so stop chasing your tail

I agreed with you the first time you said it. I still do.

ur debts more than 45k times 4 too cause that **** compounds in school and durin residency,

I know, that's why I included it in my calculations.

maybe do IRB during residency then bounce

Well good. I hope that you and I can take advantage of a system like this. If I can help one person, even you, by making this thread and informing people of a program to help them pay their debt, the number crunching was worth it. When you get a chance, view the slideshow. It says that once you begin IBR you are in it for the life of the loan. I don't know where they get it from, but GLadvisor seems like a reputable company. Good enough for my school's financial aid department to listen to them.

 

[Geekchick921]

Can I just say that I refuse to worry myself about this yet? Assuming I get in this cycle, it'll be a little more than 5 years from now before I would start paying off my loans. I anticipate any number of changes to rates, policies and programs between then and now. Whatever the case may be today, it probably won't be like this in 2015. I think it's silly.

I'm just planning to go to the school that will result in my getting the least amount of debt when I graduate and figure it out closer to that time.

I WILL, say, however, that I think I'd rather aggressively pay down my debt in, say, 10 years, than make smaller payments for 25 and have the rest of my debt forgiven. I think I will be a lot happier paying it off sooner than having that debt and more payments hang over my head for 15 extra years.

 

[45408]

How would you change it without defeating the purpose of the program? A non profit hospital is about as "public service" as it gets.

I can see some legislators/tax people having an "Oh sh&^" moment when they realize they/us/taxpayers are taking a 100,000 hit on each surgeon that graduates.

I'm not saying the program is ethically/morally/fiscally in the right, I'm just saying that it exists and you would have to be insane not to take advantage of it if possible.

You just exclude people making over a certain dollar amount, for one.

Plus, the loan forgiveness has some pretty steep stipulations about not taking any time off (this would be difficult for many women who plan to have children) and consistent employment (difficult if you try to change jobs).