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Loan Repayment Protip

Discussion in 'Anesthesiology' started by Psai, Sep 26, 2017.

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  1. Psai

    Psai Account on Hold Physician 2+ Year Member

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    So you're a fourth year medical student that's worried about the interview season and don't care about much past your email account. However, you can save some decent money for when you're in that awesome program you loved on the interview trail.

    If you submit a tax return for this year and you make no money as a medical student, you can have zero payments towards your loans for intern year. You submit in april this year since you matched like the baller you are and apply for repaye or one of the other programs. The government will pay half of your interest. Your half will be 10% of the 0 dollars you earned this year which means no payment until april of your pgy1 year. Then you apply in april of your pgy1 year with your pgy1 level pay for your pgy2 year. This will save you maybe $3,000 for that first year.

    When you submit a tax return for your pgy1 year, you can apply for the lifetime learning credit which will refund up to $2,000 on your tax return for that year.

    Now you have $5,000 to put in your Roth IRA and the magic of compound interest will be revealed.
     
    Last edited: Sep 27, 2017
    68PGunner, QueenJames, nimbus and 7 others like this.
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  3. WhiteCoatWonder

    WhiteCoatWonder doin' it for the culture 7+ Year Member

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    i think i saw this on reddit not too long ago. SUUUPER HELLLPFUL. thanks for putting it here and saving financial lives.

    who says theres not love on SDN???!:banana:
     
  4. abolt18

    abolt18 I regret nothing. The end. 5+ Year Member

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  5. abolt18

    abolt18 I regret nothing. The end. 5+ Year Member

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    Also, I did all of the above mentioned items, and I receive a subsidy on the thirtieth of each month on my loans, amounting to $950 every month. This means the government is paying >$11,000 a year towards my loans.
     
    68PGunner, WhiteCoatWonder and sethco like this.
  6. maxxor

    maxxor 7+ Year Member

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    How did you answer question 11 when you submitted your application?

    “Has your income significantly changed since you filed your last federal income tax return?”

    And this “Any false statement or misrepresentation on this form can be subject to penalties including fines, imprisonment, or both.”

    When I applied in 2014, you could not apply for IDR without being out of school, which makes it even trickier to apply while not having income.
     
  7. CommonMan

    CommonMan

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    This is unlimited meaning that if your employer allows for free university courses like Cornell does for their employees, you can obtain the credit again the year after.

    Not so. Credit may not be claimed for expenses covered by a tuition reimbursement that is excluded from income.
    Best not to get tax advice here.
     
  8. ERRES2288

    ERRES2288 2+ Year Member

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    Can I use the lifetime learning credit when I file taxes this year? Graduated in June and started intern year in July.
     
  9. Psai

    Psai Account on Hold Physician 2+ Year Member

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    How?


    I actually haven't done it myself but know someone who did. If you're worried you can apply after you graduate and before you start and your income will still be zero.

    Hm I looked for this but I didn't see it on the website. I took that part out for now.
     
    Last edited: Sep 27, 2017
  10. abolt18

    abolt18 I regret nothing. The end. 5+ Year Member

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    You apply after you graduate (like, the day after), because loans cannot be consolidated and you cannot enter RePAYE until you are graduated, but you also do it before you start residency. It is 100% true that my income was still $0 until July 31 when I got my first paycheck. My entire consolidation was completed in the middle of July and I entered RePAYE on July 23. Took a solid 6-7 weeks from the time I applied in May, to the time it was all done.
     
  11. abolt18

    abolt18 I regret nothing. The end. 5+ Year Member

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    $377,000 * 0.06 = $22,620 of interest per year.
    $22,620/12 = $1,885 in interest each month.
    $1,885 * 0.5 = $942.50 in subsidy each month thanks to RePAYE.

    Now, my subsidy is actually a little higher ($961) because a small portion of my loans are subsidized, and 100% of the interest on those loans is subsidized. But there's your "How."

    And one excellent thing is that next year, my payments will still be $0 for an additional 12 months because my 2017 income is only $26K, and I've got a wife who stays home with our 3 kids, so our "discretionary income" is still zero.
     
  12. CommonMan

    CommonMan

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    yes you can as long as you paid tuition in 2017.
     
  13. ERRES2288

    ERRES2288 2+ Year Member

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    Darn looks like loan was disbursed 12/28 of 2016. Missed out on 2k by 3 days!
     
  14. BLADEMDA

    BLADEMDA ASA Member 10+ Year Member

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    $377,000??
     
  15. nimbus

    nimbus Member 10+ Year Member

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    And with 3 kids and a stay at home wife it could grow larger during residency.
     
  16. GA8314

    GA8314 Regaining my sanity 2+ Year Member

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    And once you get out and begin working as a full time attending (in any capacity), make it your mission to max out your 401k and whatever other tax advantaged means you have, while picking up shifts, buying calls, doing anything extra you can to make a major dent in your loans. Debt is a form of enslavement, and the sooner you get yourself out of that trap the better. It can be done, while saving (including back door Roths), in 3-5 years depending on the level of obligations you have.

    Whitecoatinvestor.com
     
  17. abolt18

    abolt18 I regret nothing. The end. 5+ Year Member

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    Indeed. And that's pretty normal for anyone coming out of a private med school who has no family financial assistance. Which is why I spend a significant amount of time educating myself on personal finance and planning my financial future, especially debt payoff and funding retirement accounts. Whitecoat Investor blog and book has been instrumental in my financial education (including guiding me to other resources).
     
  18. La_Croix

    La_Croix

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    I'm wondering if anybody could provide some input for my situation. I currently have ~$40K in loans from med school. I'm in a position where I can aggressively pay this off during residency. If I pay off during residency, I'll save about $5K in interest. On the other hand, I can just pay the interest and keep the loan where it is. I'm hesitant to pay it all off because I've heard there are jobs where hospitals will offer some sort of loan repayment, and I don't want to miss out on that if I had already paid off everything. In addition, "aggressive" payment in my case would be ~$1K/month, which is significant on a resident salary and not paying this much would give me more leeway to enjoy some more things/put money into retirement.
     
  19. teeva

    teeva 2+ Year Member

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    My opinion won’t be the most popular or wisest....

    In a few years as an attending you can make an extra $5k taking an extra weekend call. In exchange for a weekend of sacrifice in the future, you can use the extra money you’ll have every month to enjoy life when possible as a resident, go out with your friends after work, and remind yourself you’re human rather than a slave to modern medicine.

    The few thousand dollars I blew on food, booze, and cheap vacations as a resident were priceless.

    Moreover, $40k in total loans is pocket change compared to your peers.
     
    Shimmy8, abolt18 and pjl like this.
  20. CommonMan

    CommonMan

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    Yes, schools love to do that. They want their money before the new year. I think if medical schools were educated on this issue they would wait 3 days.
     
  21. danthemahan

    danthemahan

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    Hello all,

    Could one of you please advise me as to where you learned this information regarding structuring your taxes and loan repayment, etc? I'm a bit in the dark on this, and I'm hoping to read a resource that will walk me through it. Thank you!
     
  22. Shimmy8

    Shimmy8 ASA Member 5+ Year Member

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    Agree with above. Enjoy your life. Pay the minimum during residency. Thank us later.
     
  23. MirrorTodd

    MirrorTodd It's a gas. Physician 10+ Year Member

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    Just join the military and earn six figures during intern year and beyond.


    *six figures is purely an estimate, not applicable to everyone who serves, some restrictions do apply.*
     
  24. BobBarker

    BobBarker Member 10+ Year Member

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    REFINANCE! Cut your rate in half and just pay the damn things off.

    I used Sofi and they sent me pies, t-shirts, invited me to free dinners, etc. process was super easy. I did it with my iPhone while holding a sleeping baby at 6:00AM on a weekend morning.

    SoFi.com/share/76909
     
  25. Psai

    Psai Account on Hold Physician 2+ Year Member

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    They offered me a rate that was higher than the over 6% I have now. Get that referral link out of here.
     
    abolt18 likes this.
  26. GA8314

    GA8314 Regaining my sanity 2+ Year Member

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    Look into Earnest.
     
  27. BobBarker

    BobBarker Member 10+ Year Member

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    My rate was like 3% 5 year ARM
     
  28. anbuitachi

    anbuitachi ASA Member 7+ Year Member

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    This is not uncommon today
     
  29. Shimmy8

    Shimmy8 ASA Member 5+ Year Member

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    $300k total. Got 3.625% on a 7 year through Sofi.

    Got 3.25 on 5 year but monthly payments were too steep.
     
  30. GA8314

    GA8314 Regaining my sanity 2+ Year Member

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    You absolutely MUST get pissed off at that debt. Kill it. I think if you don't allow yourself that fire in the belly, then that much $$ can take a long time. Free yourself, but it will require dedication.

    These debt levels are problematic. Don't fuc.king buy a house. Upgrade a thing or two (important to also allow that of yourself a bit), but nothing major. Vacation to Caribbean? Nope. Not for you. Max out pretax savings AND max out debt repayment. That must be the focus. Otherwise that 5 year plan will turn to 7 or 8.....
     

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