Loan forgiveness: changes ahead?

[Cheese Whiz]

http://www.wsj.com/briefly/BL-263B-6485

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[deleted245139]

The program is bound to get dropped with waning support from either side, but I suppose the bigger question is if/how people will be grandfathered in. If you go from residency and making 3y of qualifying payments, then on to a for-profit group, the swing back to academia at a NFP, will the clock reset, will you be booted out entirely, or will it be done away with top-to-bottom for particular income levels (ie, no longer eligible if you make >200k).
I would imagine it WILL go away, and that those in it will stay eligible, but I think the government is going to cut losses on the program for those going forward.

 

[Mbekweni]

October 2017 will be the first cohort that qualifies. I anticipate some backlash after that and some paring back of the program, hopefully with existing participants grandfathered in. Then likely a backlash to the backlash from groups who would be squeezed hard by this like physicians, and a bit of stability on the public service front in around 2018-2019.

 

[gutonc]

October 2017 will be the first cohort that qualifies. I anticipate some backlash after that and some paring back of the program, hopefully with existing participants grandfathered in. Then likely a backlash to the backlash from groups who would be squeezed hard by this like physicians, and a bit of stability on the public service front in around 2018-2019.

You are high as hell if you think that a group of participants in this program who have 6 figure salaries is going to elicit any sort of sympathy from congress or the public in this setting. While it's true that we, as physicians, technically qualify for the program, it was very clearly intended for teachers and social workers. I wouldn't be surprised (or frankly, that upset), if the program was capped at some sort of median debt or other metric that left a chunk of my debt up to me. Sure...it's nice to make other people responsible for it, but I know that I can pay it off.

My kid's teacher, who needs a Master's degree just to get hired for a $35K/y job OTOH...he really needs it.

 

[mdmacros]

I hear things terms like "grandfathered" thrown around all the time by colleagues but is there any government precedent for something like that? What's to stop the government from outright dropping the program? Certainly there would be a whole host of legal challenges if that happens but your interest will keep accruing while that is fought in court.

 

[SoCuteMD]

There is language in some promissory notes about PSLF.

 

[DocEspana]

I hear things terms like "grandfathered" thrown around all the time by colleagues but is there any government precedent for something like that? What's to stop the government from outright dropping the program? Certainly there would be a whole host of legal challenges if that happens but your interest will keep accruing while that is fought in court.

Yes there is. The department of education put out a memo on exactly this 1.5-2 years ago where they said that they view the master promissory note as a binding contract. And then references some SCOTUS case (can't remember it off the top of my head) where it basicslly says the US government can't defund a program to avoid paying people in a program and they have to honor and grandfather partial contracts.

The big caveat here is if you read the master promissory note it does describe the PSLF program in a way where a "similar" forgiveness could be acceptable as well. There could be some legalese involved in arguing if a capped amount would be similar or not.

 

[usrael]

I couldn't deal with the uncertainty of this plan going forward. Residents and young attendings may end up getting hurt from this at the end. If you pay the minimum your debt adds up with interest. Should PSLF be thrown out or limited for MDs then there would be a big problem. I personally decided to refinance and pay off aggressively even though I technically qualify for now. Just not worth the stress. But that's my opinion.

 

[deleted547339]

Why don't people just pay what they owe? If you borrowed money, you should pay it back. Good Lord, people.

Go to state school, save your money, work every odd-job you can, live cheap and moonlight a lot. It's not that hard. I don't understand how people end up with the absurd debts, nor do I feel horribly sorry for them. If you decided to borrow more money to go to a private school, get a new car in med school or live in a fancy loft during residency, you knew what you were doing.

 

[shoal]

Umm because our interest rate is 7 percent. Even with pslf i will pay 20k over my initial loan amount. I went to a state school with no undergrad loans and came out with 220k. I lived in a efficency apartment, i drive a 1994 car as an attending. Youre statements are so out of touch with reality. If i can save 60k by doing pslf vs refinancing im going to do it.

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[maxxor]

You are high as hell if you think that a group of participants in this program who have 6 figure salaries is going to elicit any sort of sympathy from congress or the public in this setting. While it's true that we, as physicians, technically qualify for the program, it was very clearly intended for teachers and social workers. I wouldn't be surprised (or frankly, that upset), if the program was capped at some sort of median debt or other metric that left a chunk of my debt up to me. Sure...it's nice to make other people responsible for it, but I know that I can pay it off.

My kid's teacher, who needs a Master's degree just to get hired for a $35K/y job OTOH...he really needs it.

You forget the lawyers in public service. The law school implosion is drifting by, hoping the fed will pay off their loans.

 

[AlmostAnMD]

Why don't people just pay what they owe? If you borrowed money, you should pay it back. Good Lord, people.

Go to state school, save your money, work every odd-job you can, live cheap and moonlight a lot. It's not that hard. I don't understand how people end up with the absurd debts, nor do I feel horribly sorry for them. If you decided to borrow more money to go to a private school, get a new car in med school or live in a fancy loft during residency, you knew what you were doing.

Because if President Trump has taught me anything, it's hate the system that lets this happen but take every advantage of it possible while you still can

 

[SoCuteMD]

Why don't people just pay what they owe? If you borrowed money, you should pay it back. Good Lord, people.

Go to state school, save your money, work every odd-job you can, live cheap and moonlight a lot. It's not that hard. I don't understand how people end up with the absurd debts, nor do I feel horribly sorry for them. If you decided to borrow more money to go to a private school, get a new car in med school or live in a fancy loft during residency, you knew what you were doing.

1) Got waitlisted at my state school, happily would have attended.
2) Have made regular payments through residency, fellowship, and now as an attending.
3) Car paid off entirely throughout med school and residency.
4) Still owe a metric s--- ton.

Edited to add: 5) I truly work in public service. I'm in academics and I work in an inner city hospital. Our site and several other sites around town are short a few docs as it is hard to recruit here right now. I take a paycut to do this. I make about 35% less than people in a comparable community setting, work about 5 fewer hours clinically a week and put in an additional 15 hours a week of academic work. So while you are bashing those of us who hope to seize the opportunity presented to us while we were making our long term financial plans 5-7 years ago, don't forget that we are actually doing something and sacrificing something for what was promised.

 

[Old_Mil]

One thing you can be sure of...whatever changes happen to the program will occur so that the maximum amount of benefit accrues to the bureaucrats and their political masters.

 

[NinerNiner999]

LOL - this says that you must may a minimum of 10% of your income annually, for 10 years, and then the rest is written off. If your loans are less than your salary, there is no point to this program! If you can afford to put 10% of your salary towards loans each year, you don't need a lower paying job in a less desirable area to make and pay less.

 

[carbonizedeyesockets]

Why don't people just pay what they owe? If you borrowed money, you should pay it back. Good Lord, people.

Go to state school, save your money, work every odd-job you can, live cheap and moonlight a lot. It's not that hard. I don't understand how people end up with the absurd debts, nor do I feel horribly sorry for them. If you decided to borrow more money to go to a private school, get a new car in med school or live in a fancy loft during residency, you knew what you were doing.

You realize that even when doing this program, most docs will more than pay back what was borrowed. Some of us actually didn't get hand-outs from Mom and Dad. I had to borrow for tuition and cost of living. I actually worked part-time during med school. I've crunched the numbers and I will pay back a couple hundred thousand beyond what I borrowed due to interest. Even with PSLF, the government wins... a lot.

 

[deleted547339]

You realize that even when doing this program, most docs will more than pay back what was borrowed. Some of us actually didn't get hand-outs from Mom and Dad. I had to borrow for tuition and cost of living. I actually worked part-time during med school. I've crunched the numbers and I will pay back a couple hundred thousand beyond what I borrowed due to interest. Even with PSLF, the government wins... a lot.

My parents' contribution to my education was minimal, but thanks for your condescension. If you think my parents paying for my car insurance and gas is what kept my student loans from being 250k, good for you.

 

[SoCuteMD]

LOL - this says that you must may a minimum of 10% of your income annually, for 10 years, and then the rest is written off. If your loans are less than your salary, there is no point to this program! If you can afford to put 10% of your salary towards loans each year, you don't need a lower paying job in a less desirable area to make and pay less.

You aren't factoring in that residency can count towards the 10 years.

 

[NinerNiner999]

It's still pretty close

 

[SoCuteMD]

It's still pretty close

Not for me. I had an accountant run the numbers. My situation may be less common as I went to private medical school and work in academics. Your rough formula also doesn't take interest into account, and interest on federal educational loans these days is no joke - 6.8%.

FWIW, it's not "a minimum of 10% of your income," it's a percentage of your AGI (minus the poverty level for your family size). At times that has been less than 10% of my income. If you reduce your AGI as much as possible (maxing out 403b/457b for those of us in academics) you reduce your payments. Since I did 4 years of residency and a year of fellowship, that means I have only 5 years of payments based on my attending salary and I am using that time to fund my retirement as much as I possibly can. I've also paid off my car and am close to paying off 1 of my 2 private educational loans in the last 18 months - so I'm not exactly penniless even after loan payments

 

[goodoldalky]

In general given the uncertainty surrounding loan forgiveness, I think it's best to refinance loans in the 3-4% range and pay them off aggressively.