Is this the end of PSLF?

[confettiflyer]

For the record, while I'm enjoying this discussion and am taking advantage of PSLF Donald Trump style (and grinding peoples' gears, apparently), I do support universal student loan forgiveness for all professions. I think it would look something like this:

1) 12.5% of discretionary income of the amount above 250% of the FPL - Currently, REPAYE is 10% @ 150% above FPL. What this functionally does is increases the monthly payment required, but exempts more income from the calculation. 250% of FPL is about $30,000 for a single person, that means if your AGI is $30k/yr, you pay nothing (seems fair).

2) Forgiveness at 15 years for undergraduate debt
3) Forgiveness at 20-25 years for graduate debt (20 for masters level, 25 for doctorate level)
4) Lifetime cap of $250,000 of principal balance, indexed to inflation.
5) Maximum interest accrual 50% of principal balance
6) $10,000/yr for a maximum 5 years for non-profit or government work in rural/underserved zip codes (replaces PSLF)

This about as middle of the road as it can get, to balance competing interests. Of course I'll gun for, and use, the maximum forgiveness for me.

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[BidingMyTime]

I don't like PSLF for all the reasons BMBiology put out. Then again, I also think it would be better to have a flat tax, instead of deductions like mortage. But I don't blame confettiflyer or anyone else for taking advantage of what the current set-up allows.

 

[confettiflyer]

I don't like PSLF for all the reasons BMBiology put out. Then again, I also think it would be better to have a flat tax, instead of deductions like mortage. But I don't blame confettiflyer or anyone else for taking advantage of what the current set-up allows.

I'd love a flat tax as that benefits high earners, but there's something abhorrent about taxing the first dollar someone makes just above the standard deduction the exact same rate as my very last dollar I make as a pharmacist.

But I guess I'm in a blue state for a reason.


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[BMBiology]

Nothing is guaranteed:

Student loan debt, PSLF, planning for future - Bogleheads.org


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[bananaface]

I guess I didn't realize how much the game has changed in 10 years. I figured that the people graduating with 150-250k were people doing 4 year BS and then going into one of those predatory new pharmacy schools. My 80k-ish was full tuition and room for 2 years pre-charm and then 4 years of pharmacy school

Interest rates changed the game.

I went to an established "non-predatory" state school that was not in my home state. I will leave "non-predatory" in quotes because they charged 3 semesters of tuition 4th year but never told anyone that would be happening ahead of time - even if you had bye rotations during summer. That was an unexpected hit of something like 24k. 48k Tuition and 8.7 percent federal loan interest were stupid high and I ended with like 330k in loans on my way out. 50k of that I had come in with. I worked 10-15 hours a week during school and 50-80 hours a week in the summers, so unlike many of my peers, I made enough to cover my non-academic expenses.

If my mom had not died and left me a boat load of cash (slightly more than my loan), I would have been living like a college student and just throwing money at the loan. With interest being so high, and it not being tax deductible, I would pretty much be losing 30k just to the interest initially. if I had stayed in the state I went to school in where salaries were about 100k and income after taxes was about 70k, that would leave 40k after taxes and interest to live on and with which to pay down the principal balance. Ugly. Oh, and you can't get a car loan or mortgage with that debt, much less a McMansion or Stepford Wife. And you can't get a lower rate through a place like SoFi until you pay it down quite a bit.

I moved to get a better salary and lower taxes. I could have lived cheap and gotten rid of my debt in 10-15 years. Maybe gotten a mortgage after 10. Unless people go to their own state school, the finances today for graduate education just suck.

 

[confettiflyer]

Nothing is guaranteed:

View attachment 220124

Student loan debt, PSLF, planning for future - Bogleheads.org


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The government doesn't deny the certification form, the servicer does. The DOE doesn't actually approve PSLF until 120 payments.

You can't have it both ways. You can't simultaneously argue that servicers are incompetent (with those false approval letters sent out for those 501c6 people), AND turnaround and argue they speak the truth (the above post).

EDIT: I clicked on the link and read the discussion and that NYT article about the false approval letters for 501c6. Confirms everything I said. That bogleheads post doesn't make any sense and/or the poster is misinformed/omitting pertinent info. #fakenews

Also, I've had an ECF denied before... the servicer will absolutely send you a letter and tell why it's denied (my employer checked off part-time by accident and I had to resubmit). Point #2 why that post makes zero sense.

 

[CUninja]

My thought is: yes I will go for pslf, as I make significantly less most of my peers. I will also have enough cash saved up at 10 yrs to fully pay off the student loans should it not happen for one reason or another. A hedging of bets, if you will.

If it does happen, that $ will be used to move on to my next career, which will not be in health care.

As in most things, YMMV.

 

[lord999]

Do people really factor in the mortgage deduction when planning on how much house to buy? It was always just a nice tax bonus for me to go into my pot

Yes, there's been quite a bit of work comparing our tax advantaged policies compared with the Loonies and Marks. Without FHA and VA LGY, very few mortgages would be written without 40/50% down, and without some tax advantage, the majority rent rather than own, which causes other problems.

I'm quite ok with the moral hazard even though I was not a beneficiary as it brings salaries down with the supply of talent up from the old days in civil service. From the human resources perspective, I like having debtlocked peons that I knew I didn't have to worry about catering to their spoiled whims cause the credit check told me how much and how many years they owed. If this wasn't around, civil service would have to pay market rates for inferior people as it sucks harder to work here.

I knew though that when we convened to board a pharmacist or physician with no debt, we HAD to offer at the higher end of or max the scale as they had the leverage otherwise. This is still true for supervisors, where a retention and housing allowance is guaranteed to debt free hires, but is not done when we know we have time leverage.