Is student loan debt relevant anymore?

[petomed]

Most of us have heard of PSLF and the associated full forgiveness after 120 qualifying payments. But loan policy is also currently written such that nearly all repayment plans will forgive your loan balance after 25 years worth of payments. That's all federal loan types, not just if you're working full-time at a qualifying non-profit.

I'm not arguing the case that a 10 year or 25 year forgiveness pathway is the most financially optimized. My point is that you can consolidate your loans and pay 10% or at worst, 15%, of your discretionary income and be free after 25 years. Viewing this as a tax of at worst 15% for 25 years, is that even an issue for anyone?

If you make 400k/yr, then you'll probably pay off your whole loan balance within at worst 25 years. Yes, you'll potentially pay a ton of interest, but are you really going to be hurting with this 15% income burden? Likewise if you only make 150k/yr. If an indefinite 15% income burden at 150k/yr still enables you to live your life happily, what's the issue?

This of course hinges on policy remaining as is and your personal goals not aligned with being debt free as soon as possible.

With these considerations in mind, should students really be concerning themselves with TCA or their future debt burden?

https://studentaid.gov/manage-loans/repayment/plans

---

Members don't see this ad.

 

[NITRAS]

Short answer: yes.

If you haven’t noticed, student loans are a very polarizing and political area. Congress can change over 25 years. You still have the liability of the loans. I really don’ think that congress would throw out the 25 year forgiveness unless it got super expensive (Which it might) or the congress just decided to hose the rich doctors.

Also I think it is important to realize that people get wealthy on 10-15% of your income. Even paying that much is a huge cost to you.

 

[petomed]

Short answer: yes.

If you haven’t noticed, student loans are a very polarizing and political area. Congress can change over 25 years. You still have the liability of the loans. I really don’ think that congress would throw out the 25 year forgiveness unless it got super expensive (Which it might) or the congress just decided to hose the rich doctors.

Also I think it is important to realize that people get wealthy on 10-15% of your income. Even paying that much is a huge cost to you.

I don't disagree. A policy change could occur and then you'd be way up the compound creek with everything you paid having been tossed out the window, more or less. That is the biggest risk.

As for the wealth comment, that's definitely true. Even 5% year over year can be the difference between millions and a few hundred thousand. But many of us aren't in this to get wealthy. We just don't want to become homeless.

 

[deleted1100659]

Most of us have heard of PSLF and the associated full forgiveness after 120 qualifying payments. But loan policy is also currently written such that nearly all repayment plans will forgive your loan balance after 25 years worth of payments. That's all federal loan types, not just if you're working full-time at a qualifying non-profit.

I'm not arguing the case that a 10 year or 25 year forgiveness pathway is the most financially optimized. My point is that you can consolidate your loans and pay 10% or at worst, 15%, of your discretionary income and be free after 25 years. Viewing this as a tax of at worst 15% for 25 years, is that even an issue for anyone?

If you make 400k/yr, then you'll probably pay off your whole loan balance within at worst 25 years. Yes, you'll potentially pay a ton of interest, but are you really going to be hurting with this 15% income burden? Likewise if you only make 150k/yr. If an indefinite 15% income burden at 150k/yr still enables you to live your life happily, what's the issue?

This of course hinges on policy remaining as is and your personal goals not aligned with being debt free as soon as possible.

With these considerations in mind, should students really be concerning themselves with TCA or their future debt burden?

https://studentaid.gov/manage-loans/repayment/plans

1. Probably most doctors don't make 400k a year.

2. 10-15% is a lot when your tax burden is 30-40% for federal/state taxes, not to mention all the other taxes you pay and an economy with ridiculous inflation.

3. Waiting 25 years would result in paying an insane amount of money on your loan that could have been put towards retirement

4. They should absolutely be concerned with debt burden. Nothing in life is guaranteed. Physician salaries aren't guaranteed. Loan forgiveness programs arent necessarily guaranteed. The economy isnt guaranteed. Your career isnt even guaranteed.

 

[petomed]

1. Probably most doctors don't make 400k a year.

If you make 400k/yr, then you'll probably pay off your whole loan balance within at worst 25 years. Yes, you'll potentially pay a ton of interest, but are you really going to be hurting with this 15% income burden? Likewise if you only make 150k/yr. If an indefinite 15% income burden at 150k/yr still enables you to live your life happily, what's the issue?

2. 10-15% is a lot when your tax burden is 30-40% for federal/state taxes, not to mention all the other taxes you pay and an economy with ridiculous inflation.

I'm not arguing the case that a 10 year or 25 year forgiveness pathway is the most financially optimized. My point is that you can consolidate your loans and pay 10% or at worst, 15%, of your discretionary income and be free after 25 years. Viewing this as a tax of at worst 15% for 25 years, is that even an issue for anyone?

3. Waiting 25 years would result in paying an insane amount of money on your loan that could have been put towards retirement

I'm not arguing the case that a 10 year or 25 year forgiveness pathway is the most financially optimized. My point is that you can consolidate your loans and pay 10% or at worst, 15%, of your discretionary income and be free after 25 years. Viewing this as a tax of at worst 15% for 25 years, is that even an issue for anyone?

If you make 400k/yr, then you'll probably pay off your whole loan balance within at worst 25 years. Yes, you'll potentially pay a ton of interest, but are you really going to be hurting with this 15% income burden? Likewise if you only make 150k/yr. If an indefinite 15% income burden at 150k/yr still enables you to live your life happily, what's the issue?

4. They should absolutely be concerned with debt burden. Nothing in life is guaranteed. Physician salaries aren't guaranteed. Loan forgiveness programs arent necessarily guaranteed. The economy isnt guaranteed. Your career isnt even guaranteed.

True, nothing is guaranteed. However following this line of doomsday, no one should pursue any career.

Again, if we assume (1) and (2) below are true, what is the issue?
1) Loans are forgiven after 25 years, (ideally 10 with PSLF)
2) The 15% loan tax burden is palatable for your lifestyle

 

[deleted1100659]

True, nothing is guaranteed. However following this line of doomsday, no one should pursue any career.

Again, if we assume (1) and (2) below are true, what is the issue?
1) Loans are forgiven after 25 years, (ideally 10 with PSLF)
2) The 15% loan tax burden is palatable for your lifestyle

its not doomsday thinking; its practicality. most careers dont have 300k debt associated with them.

again, tthats 25 years of money that could be put towards your retirement.

you dont know how much you're going to make or the lifestyle youll want as time progresses, and when you put in 8 years of hard work throughout medical school/residency, you will appreciate a reward for your effort and sacrifice.

I mean if you dont mind paying 15% discretionary income, then feel free to donate your money to my loans every year.

 

[petomed]

its not doomsday thinking; its practicality. most careers dont have 300k debt associated with them.

again, tthats 25 years of money that could be put towards your retirement.

you dont know how much you're going to make or the lifestyle youll want as time progresses, and when you put in 8 years of hard work throughout medical school/residency, you will appreciate a reward for your effort and sacrifice.

I mean if you dont mind paying 15% discretionary income, then feel free to donate your money to my loans every year.

It's hardly a donation if you'll be paying my 500k+ tab.