Loan forgiveness after 10 years question

[skybliss]

So I am reading about the new federal student loan policy implemented in 2009 that is encouraging people to go into public services (such as healthcare).

Here is the 2 page pdf:
http://studentaid.ed.gov/students/attachments/siteresources/LoanForgivenessv4.pdf

Here's the source:
http://studentaid.ed.gov/PORTALSWebApp/students/english/PSF.jsp

Main points:
* You are only allowed to use up to 10% of your salary to pay a loan.
* If, after 10 years, you are still in debt, then your loan is forgiven.
* This is only valid for federally provided student loans. However, if your loans are not federally provided, you will be able to consolidate your loans under a federal plan.

This sounds, uhm, basically really good. It sounds almost too good to be true. Can I get the opinion of some of the people here about this?

I'm asking because well, the school I'm starting at in August originally had tuition at 29k, but just increased it to 40k which really sucks cause tuition was a main consideration for me, and I don't want to have loans looming over my head when I'm trying to decide between primary care, or some specialty.

Thanks =)

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[skybliss]

An increase from 29k to 40k? Which school did that?

lol, not going to badmouth my school, but it was a result of the recession, and us receiving less donations from private donors.

@!#$ you Bush!

 

[Shinken]

This sounds, uhm, basically really good. It sounds almost too good to be true. Can I get the opinion of some of the people here about this?

The 10 year loan forgiveness, as it applies to med school, is only valid if your loans are serviced through the Federal Direct Consolidation Loan. Also, and this is a biggie, the forgiveness is only if you work for places such as CHCs or FQHCs, *or* if you work for a non-profit institution.

Now, before you moan and groan, realize that most hospitals are non-profit institutions. If you're a physician employed by a non-profit hospital, this 10-year forgiveness might apply to you. As an example, the Cleveland Clinic is a non-profit. So you don't necessarily have to work for a small, rural hospital for this to apply to you.

 

[skybliss]

The 10 year loan forgiveness, as it applies to med school, is only valid if your loans are serviced through the Federal Direct Consolidation Loan. Also, and this is a biggie, the forgiveness is only if you work for places such as CHCs or FQHCs, *or* if you work for a non-profit institution.

Now, before you moan and groan, realize that most hospitals are non-profit institutions. If you're a physician employed by a non-profit hospital, this 10-year forgiveness might apply to you. As an example, the Cleveland Clinic is a non-profit. So you don't necessarily have to work for a small, rural hospital for this to apply to you.

interesting.

 

[CWALKERRUN]

So I am reading about the new federal student loan policy implemented in 2009 that is encouraging people to go into public services (such as healthcare).

Here is the 2 page pdf:
http://studentaid.ed.gov/students/attachments/siteresources/LoanForgivenessv4.pdf

Here's the source:
http://studentaid.ed.gov/PORTALSWebApp/students/english/PSF.jsp

Main points:
* You are only allowed to use up to 10% of your salary to pay a loan.
* If, after 10 years, you are still in debt, then your loan is forgiven.
* This is only valid for federally provided student loans. However, if your loans are not federally provided, you will be able to consolidate your loans under a federal plan.

This sounds, uhm, basically really good. It sounds almost too good to be true. Can I get the opinion of some of the people here about this?

I'm asking because well, the school I'm starting at in August originally had tuition at 29k, but just increased it to 40k which really sucks cause tuition was a main consideration for me, and I don't want to have loans looming over my head when I'm trying to decide between primary care, or some specialty.

Thanks =)

I found a really cool website about stafford loan forgiveness.

http://www.staffordloan.com/repayment/forgiveness.php

The Peace Corp forgives 15% per year if you go do work for them (lets see, 15% x 250K=$37,500 per year). That's not too bad.

 

[randomusername]

I found a really cool website about stafford loan forgiveness.

http://www.staffordloan.com/repayment/forgiveness.php

The Peace Corp forgives 15% per year if you go do work for them (lets see, 15% x 250K=$37,500 per year). That's not too bad.

That 15% forgiveness only applies to Perkins loans though. :0/

 

[Tarenthyl]

I wouldn't count on that money being there. It would suck big time to pay that small of an amount of 10 years, just to have them cancel that program or tell you they don't have the money. Best to pay it off as fast as possible even if that means living like a resident a few years or working extra.

Loan forgiveness for "underserved areas" are already out of money in Washington State and many people are counting on that type of program to repay their loans.

Edited to add if you only pay 10% of your salary a year, you may only be paying the interest for 10 years. So, if the program is not there, you basically have the ENTIRE loan to pay off still after a decade of making payments. That would be one hell of a rude awakening.

 

[Dr Skeptismo]

I wouldn't count on that money being there. It would suck big time to pay that small of an amount of 10 years, just to have them cancel that program or tell you they don't have the money. Best to pay it off as fast as possible even if that means living like a resident a few years or working extra.

Loan forgiveness for "underserved areas" are already out of money in Washington State and many people are counting on that type of program to repay their loans.

Edited to add if you only pay 10% of your salary a year, you may only be paying the interest for 10 years. So, if the program is not there, you basically have the ENTIRE loan to pay off still after a decade of making payments. That would be one hell of a rude awakening.

I have no idea how a program like this would be adequately funded, but what government program ever really is? I'd only need it to last for a few years anyway

Aside from that small hurdle, it really doesn't seem too bad of a deal if you could spend 6-7 yrs of the 10 in residency and fellowships, during which time you don't pay much more than interest anyway. Although, I'm also a little skeptical. It just seems a little too freaking sweet for me (not so much for tax payers) for it to still be around in the no-strings-attached, hypothetical version that we're currently discussing. A lot can change when legislation becomes policy, and 14 yrs is a long time to wait when it only takes one line of bureaucratic clarification to really make this a stinker. But until then, I'm interested to see what happens.

 

[WNT Signaling]

A few things

Loans originating June 1, 2014 will only require you to pay 10% of your income towards repayment, however any loans before this date require you to pay 15% of your income towards your loans

Although a hospital might be not-for-profit, many departments within a hospital (anesthesiology, surgery, radiology, pathology, etc) are actually run by for-profit groups, which would disqualify you from 10 year foregivness

Although you have to pay 15% of your income towards your loans, your payment will never be in excess of how much it would have cost you to pay your loans off in 10 years when you started repayment. For example, when you start repayment (residency), you have $270,000 in loans, to pay that off in 10 years might mean you pay a total of $360,000 (due to interest that accrues) over ten years. That means you pay $36,000 a year, or $3,000 a month, which means you will never have to pay more than $3,000 a month in IBR. So let's say you do derm, and you make a flat $52,000 a year in residency for four years. You subtract the poverty level adjust from you income, say $15,000, leaving you with a number of $37,000. 15% of 37k is $5050 in payment towards your loans. Now, after residency you land an attending derm position that pays, say 275k, after you subtract the poverty level adjustment, you have a number of 260k, 15% of this is 39k, however, since your inital repayment cap was 36k, you only pay 36k in IBR and not the 39k

I hope this makes sense, but this was difficult to type on an iPhone!

 

[tkyle56]

This is FAFSA's loan calculator that will tell you how much you will be re-paying based on which plan you do. http://www2.ed.gov/offices/OSFAP/DirectLoan/calc.html

 

[Jamers]

A few things

Loans originating June 1, 2014 will only require you to pay 10% of your income towards repayment, however any loans before this date require you to pay 15% of your income towards your loans

Although a hospital might be not-for-profit, many departments within a hospital (anesthesiology, surgery, radiology, pathology, etc) are actually run by for-profit groups, which would disqualify you from 10 year foregivness

Although you have to pay 15% of your income towards your loans, your payment will never be in excess of how much it would have cost you to pay your loans off in 10 years when you started repayment. For example, when you start repayment (residency), you have $270,000 in loans, to pay that off in 10 years might mean you pay a total of $360,000 (due to interest that accrues) over ten years. That means you pay $36,000 a year, or $3,000 a month, which means you will never have to pay more than $3,000 a month in IBR. So let's say you do derm, and you make a flat $52,000 a year in residency for four years. You subtract the poverty level adjust from you income, say $15,000, leaving you with a number of $37,000. 15% of 37k is $5050 in payment towards your loans. Now, after residency you land an attending derm position that pays, say 275k, after you subtract the poverty level adjustment, you have a number of 260k, 15% of this is 39k, however, since your inital repayment cap was 36k, you only pay 36k in IBR and not the 39k

I hope this makes sense, but this was difficult to type on an iPhone!

Everything said in this post is true and corrects some of the errors mentioned in previous posts. I would like to add, however, that the main issue with this forgiveness is the lack of an application. If they invent an application process and one is accepted into this program and follows it accordingly, the government is charged with fulfilling the terms. Until then, you are taking a risk in assuming the program will still be there once republicans get back into office.

 

[skybliss]

Everything said in this post is true and corrects some of the errors mentioned in previous posts. I would like to add, however, that the main issue with this forgiveness is the lack of an application. If they invent an application process and one is accepted into this program and follows it accordingly, the government is charged with fulfilling the terms. Until then, you are taking a risk in assuming the program will still be there once republicans get back into office.

How about I just live fast and furious and die with as much debt as possible?

 

[IamaBanana]

How about I just live fast and furious and die with as much debt as possible?

This is the only viable answer to the problem.