IBR Making Med School Affordable?

[jdwmont]

I was wondering if medical residency counts toward the IBR 10yr non-profit cancellation period, anyone know? Additionally, wouldn't IBR and the 10yr cancellation of loans make primary care doable for anyone, no matter the debt level? Typing in $380k in debt and $150k in income into the IBR calculator yielded a monthly payment of $1,670. Seems doable to me.

Comments?

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[siliso]

Yes, residency does count.
I just saw this presentation which I think lays everything out quite well. V. reassuring.
http://www.gladvisor.com/medicalpresentation

 

[eforest]

This sounds too good to be true; when something sounds too good to be true it usually is. There has to be a catch somewhere.

 

[jdwmont]

Awesome! I can't believe there isn't more of a discussion re: IBR!

 

[J ROD]

Yeah, I already planned to work for the govt so I will take advantage of all of this!!!

Forget joining the army.....

 

[badasshairday]

I thought the IBR is only for subsidized loan. The forgiveness of the loans is only subsidized loans, correct? Not true for unsub.

 

[badasshairday]

I thought the IBR is only for subsidized loan. The forgiveness of the loans is only subsidized loans, correct? Not true for unsub.

also if you are married, and your spouse works, you probably won't qualify.

 

[illegallysmooth]

I thought the IBR is only for subsidized loan. The forgiveness of the loans is only subsidized loans, correct? Not true for unsub.

No, unsubsidized federal direct loans are also eligible.

It is important to note there is a point on the low end up of the debt:income ratio at which IBR will not be the best repayment option. It's really only beneficial for those who don't mind working in eligible positions AND have a very substantial loan burden relative to their income.

 

[Scrub MD]

I typed the IBR in for myself and it seemed okay at first. But when I get out of residency and not work for the government (hopefully that will still be an option), but even if I do to try to get the 10 year IBR forgiven after 10 years. The last 5 years I will be paying 2800/month (my 10 year standard repayment plan max for 200,000 in loans) equals 168,000 plus the 16800 or 40800 (280 for making 50,000 or 680 for making 80,000) depending on if my wife keeps working, they factor that into your income for repayment amount) I will be paying 185000 or 208800. The 15,000 forgiven hardly seems worth taking a public job that pays half of the private amount. My loans will be consolidated at 6.8%, glad the government thought students were getting to keep of interest rates a few years back.

 

[progter]

the new IBR rules only affect FIRST TIME BORROWERS who borrow after July 1 (or 30) 2014

 

[jdwmont]

Yeah, but only paying the 15% is still a great deal. Really surprised there isn't more talk about IBR, what with so many concerns about rising tuition. Also, the fact that IBR seems "too good to be true" is a sign of how terribly students have been treated in the US. IBR doesn't seem too good to be true to me. It seems like a moderate and ultimately sane solution to the student loan crisis.

 

[J ROD]

No matter what....I think it is a better option during residency than forbearance.

 

[jdwmont]

No kidding. It is great to get some prof school financing news that is good for once. Hopefully this is the start of a trend...

 

[TMP-SMX]

Long-term it is much cheaper to do IBR while eligible during residency and then switching to a standard 10 year plan after when you are no longer eligible. Depending on spouse's income it can make a significant difference in the amount of extra interest that accrues. Though obviously it is possible to make payments during forbearance which is advised to at least pay off interest accruing (but not yet capitalized) for the tax credit. The interest accruing during residency (Roughly $950 a month for a loan total of $160,000) would average about the same as the IBR payments (roughly $850 for a family of two) if the combined spouse and student AGI is $90,000. The upside of IBR is that subsidized loans are still not accruing interest vs. the forbearance option for three years so that saves a few hundred a month.

The worst-case scenario is straight up entering standard repayment during residency after your grace period because it capitalizes at that point rather than at the end of the forbearance/IBR period plus your payments are nearly $1800 a month if your loans are roughly $160,000 on a 10-year standard plan.

So in my opinion, if you are eligible depending on spousal income during residency, it is most financially sound to be in IBR during residency and once an attending switch to a standard payment plan with which it will take roughly 13 years to pay off the total amount of loans assuming a burden of roughly $160,000 and an AGI out of residency including spousal income (after 3 years) of $265,000.

 

[Postictal Raiden]

No, unsubsidized federal direct loans are also eligible.

It is important to note there is a point on the low end up of the debt:income ratio at which IBR will not be the best repayment option. It's really only beneficial for those who don't mind working in eligible positions AND have a very substantial loan burden relative to their income.

what do you mean by direct? are staford unsubsidized "direct" loans? what about "plus" loans?

 

[siliso]

Stafford subsidized and unsubsidized, grad PLUS, and federal direct consolidation loans all qualify.

 

[gfunction]

I am a first year at a school with a huge debt load. I'll be coming out with $260k. I watched the GLA advisor video, and it sounds believable, but it does sound too good to be true.

I'm thinking of doing the air force scholarship unless this IBR + 10 year forgiveness will actually work.

I was wondering if anyone could confirm the following:

1. I assume that virtually all residencies will be considered non-profit, and from the video, it looks like the residency years will count towards the 10 years of non-profit work... but what defines a "qualifying payment"? And also, if when I am done with residency, decide to (or have to) work in a for-profit (or another non-qualifying) institution, could I still work towards the remaining 7 (or less) years on the 10-year repayment, or would those residency years be "lost?"

2. I'm also unclear on the amount of money that we are responsible for paying after residency. The GLA video and other sources that you would never be responsible for more than what you would pay with a standard 10-year repayment plan. Is this true, or is the number more/less depending on income? I know that you can be in IBR for the life of the loan, but would most people even qualify after residency?

3. Also, is there any guarantee that these programs will be available in 3-13 years?

I'm planning on coming out with $260,000 of debt and doing an orthopedics residency. Any thoughts on my situation would be helpful.

 

[Untraditional]

the new IBR rules only affect FIRST TIME BORROWERS who borrow after July 1 (or 30) 2014

What is your source for this? According to the info site

Can I use IBR to pay off older federal loans?

Income-Based Repayment is available for any federal loans in the Direct Loan or Federal Family Education Loans (FFEL) programs, regardless of when the loan was taken out.

http://www.ibrinfo.org/faq.vp.html#_Can_I_use

Seems like any federal loans will apply...?

3. Also, is there any guarantee that these programs will be available in 3-13 years?

This is the big question for me.

 

[CoffeeCzar]

2. I'm also unclear on the amount of money that we are responsible for paying after residency. The GLA video and other sources that you would never be responsible for more than what you would pay with a standard 10-year repayment plan. Is this true, or is the number more/less depending on income? I know that you can be in IBR for the life of the loan, but would most people even qualify after residency?

3. Also, is there any guarantee that these programs will be available in 3-13 years?

2. See my post below. They will be 15% for all loans dispersed before 2014.

3. No. You apply AFTER 10 years of qualifying payments, meaning, they could pull it at any time during your 10 year repayment period. Under the current language, no one is grandfathered in.

Under the current legislative language (since PSLF was signed into law in 2007), we will qualify for loan forgiveness after 10 years of working for any 501(c)3 non-profit. Possibly, even with for-profit entities since they carry out "public health" functions. This qualifications are very broad, however, and I would expect them to be further defined in upcoming years. However, this only will really help those with very high debt to income ratios or those who do long residencies since your payments are capped at 15% of income and all IBR repayment years, including residency, count towards the 10 year requirement. Lets just hope they don't change the language in the next 14 years. It would be awful to rack up a ton of debt banking on Public Service Loan Forgiveness only to have it be taken away.

Personally, however, I don't see the political will to repeal and/or replace this language anytime soon, seeing as it won't cost the taxpayers any money for 7 years. Once massive amounts of medical students start forgiving hundreds of thousands of dollas worth of debt through it, things may change.

 

[GoLytely]

The loan forgiveness thing is the government's attempt at owning you even more than it already does. The profits you'd lose by taking such a job over a private employment opportunity would likely outweigh what you'd save by having the debt absorbed.

 

[CoffeeCzar]

the new IBR rules only affect FIRST TIME BORROWERS who borrow after July 1 (or 30) 2014

Actually, you are right.

Source: (http://www.whitehouse.gov/issues/ed...on/ensuring-that-student-loans-are-affordable)

So, under current law (before Obama's changes) PSLF is available after 10 years of payments for "public service" work or 25 years of payments for any profession. IBR rates are capped at 15% of income.

The recent changes indicate that students taking out loans STARTING in 2014 will be able to cap their IBR at 10%, from 15% for us, when they enter repayment and other professions can have debt forgiven after 20 years of payments, reduced from 25 years currently for those who don't work in "public service".

So, essentially, the law doesn't change much and, what it does change, we aren't eligible for. The Public Service Loan Forgiveness program was signed into law in 2007 and will count payments made on or after October 2007 towards the 10 year forgiveness. Meaning, 2017 will be the first year medical students can have debt forgiven under PSLF.

Public Service Loan Forgiveness was already signed into law BEFORE student loan reform was recently passed.

Hopefully that clears everything up. It had me confused.

 

[DOctorJay]

My wife makes a decent income but has loans of her own. When figuring out the AGI it penalizes us because her income looks relatively large and IBR for me will NOT take into accout her loan burden.

My paymens under IBR this year (since we filed taxes jointly) will still be less than the standard payment but nowhere near as low (actually almost 8x higher) than if we filed separately and I could report only my income.

I REALLY WISH I KNEW ABOUT THIS PRIOR TO FILING MY TAXES FOR 2009!!! I will most likely file separate next year unless the accountant says the benefit of joint outweighs the IBR payments but something to keep in mind.

 

[siliso]

You are about to get relief from the IBR marriage penalty as of July - they will calculate a joint payment amount based on your joint income, then apply it to each of your loans based on the percentage of loans you each hold.

 

[DOctorJay]

You are about to get relief from the IBR marriage penalty as of July - they will calculate a joint payment amount based on your joint income, then apply it to each of your loans based on the percentage of loans you each hold.

I understand on July 1, 2010 they will take into account spousal loan burden, however the Sallie Mae rep I spoke with said that wouldn't affect me until the following year since the calculations would have been based on my AGI from the previous year. If I could somehow wait until July to apply for this then yeah I guess it would work but I have to start paying at the end of May. IBR won't just magically change to lower my payments July 1.

 

[DOctorJay]

I just ran through the Sallie Mae calculator and if I chose the Grad choice 2 my monthly payments are actually less than IBR (remember I'm married filing joint) and my total interest paid over the life of the loan is almost HALF with Grad 2. I realize this may not be the case for most people and IBR may be all they can afford but definitely run the calculator and look at all the options because that is a lot of extra interest to pay over the life of the loan.

 

[dynx]

My wife makes a decent income but has loans of her own. When figuring out the AGI it penalizes us because her income looks relatively large and IBR for me will NOT take into accout her loan burden.

My paymens under IBR this year (since we filed taxes jointly) will still be less than the standard payment but nowhere near as low (actually almost 8x higher) than if we filed separately and I could report only my income.

I REALLY WISH I KNEW ABOUT THIS PRIOR TO FILING MY TAXES FOR 2009!!! I will most likely file separate next year unless the accountant says the benefit of joint outweighs the IBR payments but something to keep in mind.

This type of thing is going to be the mantra of students trying to get thier loans forgiven in 2017.
"AH! i needed to save my income tax returns for all those years to complete the paperwork.....I REALLY WISH I KNEW ABOUT THIS PRIOR" - no forgiveness for you!

"AH! You need me to have my payment stubs to prove all the qualifying payments....I REALLY WISH I KNEW ABOUT THIS PRIOR " - no forgiveness for you!

"AH! My IBR payment doesnt mach my end of the year AGI because my wife got a job in the middle of the year, those payments dont qualify? I allready took a private sector job offer!...I REALLY WISH I KNEW ABOUT THIS PRIOR" - no forgiveness for you!"

If i was a gov. accountant I could do this all day...and Im sure they will. But don't worry the satisfaction you get working for the public sector will more than outweigh the negatives.

 

[thedrjojo]

Plus, the PSLF only counts on DIRECT LOANS! So us with Sallie Mae, if we want it, we have to consolidate with DL to qualify. But for me, who will do GS 5 years + 2 years research (likely paid by residency) + 2 years fellowship + likely academic career, this will work out splendidly... I think Direct Loans already considers spousal loans in their IBR so you don't have to wait to june for that consideration if you consolidate. My wife has LDS though which can be deferred for all of residency (and are all subsidized), so it doesn't make sense for her to consolidate, so the whole IBR payment will end up going towards my consolidated loan amount... oh well

 

[medicinesux]

IBR is NOT making medical school more affordable. It is making it more expensive!

It sickens me to hear that colleges and universities nowadays are telling their students to "not worry" about debt anymore and just go on IBR!!! Colleges and medical schools are loving this because now they can REALLY ratchet up their tuitions like never before. How much is med school going to be a year in 2020? 100K??? If we are going to have IBR, we really need to pass a law to curb tuition increases by indexing them to inflation to stop such nonsense. The intention of IBR was not to fatten the wallets of those in Higher ED and steal from the taxpayers, but to assist students repaying their student loans.

When IBR was originally passed back in 2007 as part of the College Cost and Reduction Act, it was originally proposed to assist law school grads who were going into the nonprofit sector and not biglaw. I really don't think it was designed for doctors bringing down 150-200K to pay off their loans. There was an article in Forbes magazine today talking about this in more detail. IBR has great intentions but like the author of the article states, I feel this will only lead to even higher tuitions which will make things even worse in the long run.

http://www.forbes.com/2010/05/10/st...education-bennett.html?boxes=Homepagechannels

I wouldn't be too worried about IBR disappearing altogether. Rather, my greatest concern would be that the govt picks up on this loophole sometime in the next ten years and places an income cap on those who can qualify. Sort of like what we currently have for those who want to contribute to a Roth IRA (which you all should be contributing to as a resident since you can't when you are an attending). Especially when money is tight, the govt will always gets it's pound of flesh. If caps were ever to be introduced, it would really suck to have 400-500K in debt and not be able to take part in IBR anymore. Just something to keep in mind.

 

[BBW17]

Hey guys, first time posting. I totally agree that tution is getting out of control and this IBR just seems too good to be true. I should be attending medical school in the fall with an average attendance of 72K a year with a 90K burden from undergrad already (big mistake but what's done is done) and I am having a heart attack. I'm on a waiting list at my state school but honestly 50K COA isn't that much less either and I'm still looking at an absurd amount of debt.
I'll have to decide what's the best path foward (millitary, career change?) but what scares me is the cavalier attitude of my peers when I bring up this point. Apparently I shoulnd't worry about it because IBR will take care of it or there will alrways be a bounty of loan forgiveness jobs out in the middle of nowhere to take me back from the brink of ~500K despair. Am I nuts or is this just stupid now? I like hearing from you residents and attendings; pre-meds seem to have no understanding of sort of lifestyle one would have with that debt magnitude even being in a high paying speciality. This seems to be uncharted waters and I'm starting to question if it's even worth it.

 

[RN-to-MD]

BBW17--
I'm in about the same boat and I *totally* agree w/you. I'm about $70k in debt from pursuing a career change at age 30 and becomming an RN while doing all my post bacc/premed classes in a two year bit of craziness. Now, I'm looking at $50k/yr tuition to attend med school--did not get accepted to any state schools, which are still $30/yr anyhow, and I'm really starting to wonder if it's even worth it. I'll grad in 4 yrs w/$350-450k in debt *easily*, in fact a good friend just grad that same school and now owes $380k, even if I enter a high pay specialty, I'm still barely looking at earnings equal to total debt. I'm older and have experienced how hard it is to payback loan balances, even w/you continue to drive an old beater car (yes, me), lives w/roomates (yes), pay >1/2 your income to loans----and *especially* able to enjoy the feeling that comes from working your ass off, having patients sometimes be downright rude to your face, feeling a degree of exhaustion not known to most,--and then, after all that, not really being able to splurge on things you may want, and feeling guilty when you do.

So, now, I'm in the crucial last weeks, I'm set up to start as ms1 in August, and yet, here I sit, painfully fence-sitting, wondering, is it worth it?