PSLF or private job?

[psychdoc00]

Hi everyone! Was hoping someone could please help me and offer some sound advice. I have around ~500k in student loan debt (all direct federal loans eligible for PSLF forgiveness). I’m in my last year of fellowship (six total years of residency and fellowship), plus one year where I worked at an eligible employer. So that will be about 7 years total come next July. I was on REPAYE which just got switched to SAVE.

As I look for general and/or child psychiatry jobs, I’m not sure what my best option is. If I work for a PSLF qualifying employer for the next 3 years, ideally all of the 500k loans should be forgiven. But I’m tempted to accept a job that pays more (but is private).

Any advice on how to proceed? With 500k in student loans I’m worried my interest will forever continue to grow, but I think the SAVE plan helps me out now while I’m on a fellow salary (and next year since they use the prior year’s tax info) and the interest is waived?

Thank you for any help everyone!
I know the PSLF program has recently been revised with last year’s limited waiver and the current IDR one-time adjustment, so I know positive changes have happened to this program, so I’m hoping to continue to qualify but, unsure if accepting a higher paying job at a private company is better.

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[ObsequiousAplomb]

So you're asking about 8 years of minimal payments plus 2 years of attending payments under the SAVE program, and comparing it to paying off $500k the hard way? Unless that job pays $250k more per year, it doesn't sound financially worth it. It could be worth it personally, but unless there's a really compelling reason ...

 

[psychdoc00]

So you're asking about 8 years of minimal payments plus 2 years of attending payments under the SAVE program, and comparing it to paying off $500k the hard way? Unless that job pays $250k more per year, it doesn't sound financially worth it. It could be worth it personally, but unless there's a really compelling reason ...

Thanks! You mean it’s worth it to do a PSLF job for 3 more years right? And then have the 500k forgiven after?

 

[ObsequiousAplomb]

Thanks! You mean it’s worth it to do a PSLF job for 3 more years right? And then have the 500k forgiven after?

Unless you think you can earn enough to pay off $500k in three years the hard way. As long as you're on SAVE, you'd only make two years of full payments.

 

[psychdoc00]

Unless you think you can earn enough to pay off $500k in three years the hard way. As long as you're on SAVE, you'd only make two years of full payments.

Very true. Thank you for the great advice !!

 

[clozareal]

PSLF is the best choice for you. Do that for 3 years then you can go private if you want. Or you can do 30 hours of the PSLF eligible job and then 1 day a week of private practice. However, if your main goal is to get as much forgiven as possible, you want to limit your AGI as much as possible so that you can have lower monthly payments. If you do private practice 1 day a week, make sure you start an LLC/PC and then pay yourself a very low salary, equivalent to 20% (because it's 20% of the week) of what a typical psychiatrist makes for your area, and keep there rest in the corporation.

 

[clozareal]

So you're asking about 8 years of minimal payments plus 2 years of attending payments under the SAVE program, and comparing it to paying off $500k the hard way? Unless that job pays $250k more per year, it doesn't sound financially worth it. It could be worth it personally, but unless there's a really compelling reason ...

even if it does pay $250k more per year, it wouldn't be worth it with that amount of loans. However, there's more to taking a PSLF eligible job vs private practice than just pay. If there are other benefits that align with your career/life goals then it may be worth considering but it would come at a high cost.

 

[psychdoc00]

PSLF is the best choice for you. Do that for 3 years then you can go private if you want. Or you can do 30 hours of the PSLF eligible job and then 1 day a week of private practice. However, if your main goal is to get as much forgiven as possible, you want to limit your AGI as much as possible. If you do private practice 1 day a week, make sure you start an LLC/PC and then pay yourself a very low salary, equivalent to 20% (because it's 20% of the week) of what a typical psychiatrist makes for your area.

Woah this is so super helpful, thank you @clozareal !

 

[TheRightMedication]

Aren't all LLC profits considered personal income? It passes through (no corporate tax prior to you then receiving taxable income) which is good but I don't think you can shelter the money that way.

What you can do is put 25 percent of your LLC income into an individual 401k, so long as employed 401 + employer contributions + individual 401k is under the total limit.

That aside getting a 30 hour gig (check the PSLF documentation to make sure that's still the requirement), and also starting a 1 day a week practice, is good advice.

That's exactly what I did, no regrets.

 

[annoyedpsychiatrist]

Hi everyone! Was hoping someone could please help me and offer some sound advice. I have around ~500k in student loan debt (all direct federal loans eligible for PSLF forgiveness). I’m in my last year of fellowship (six total years of residency and fellowship), plus one year where I worked at an eligible employer. So that will be about 7 years total come next July. I was on REPAYE which just got switched to SAVE.

As I look for general and/or child psychiatry jobs, I’m not sure what my best option is. If I work for a PSLF qualifying employer for the next 3 years, ideally all of the 500k loans should be forgiven. But I’m tempted to accept a job that pays more (but is private).

Any advice on how to proceed? With 500k in student loans I’m worried my interest will forever continue to grow, but I think the SAVE plan helps me out now while I’m on a fellow salary (and next year since they use the prior year’s tax info) and the interest is waived?

Thank you for any help everyone!
I know the PSLF program has recently been revised with last year’s limited waiver and the current IDR one-time adjustment, so I know positive changes have happened to this program, so I’m hoping to continue to qualify but, unsure if accepting a higher paying job at a private company is better.

if you have three years left and 500k in loans you should 100% try to do PSLF. The value for you there is immense. In your situation i would pay the minimum, because with SAVE the interest wont make the principle go higher as long as you do this, and use the rest of the money to invest in things like index funds that have a higher rate of return than your loan, as a nice plan B.

I have 310k left in loans, and a little less than 4 years left on PSLF. Im investing the money i would have paid towards my loan. Im roughly saving about 150k a year and i definitely live a good lifestyle (drive a nice car, vacation frequently, nice apartment, etc). Though this will go down slightly with loan payments restarting, but will make up for it on interest from investments.

 

[Merovinge]

Holy PSLF batman. Don't consider a non-PSLF job for a second unless they are actually abusing you at work. Make sure you have all your PSLF certifications and ducks in a row and then get a nice bottle of something to celebrate when 1/2 million gets wiped out TAX FREE. That's the same as earning 750k+.

This is like asking if someone offered you an all expensed paid vacation if you should go to Bora Bora or the gulf cost of Alabama.

 

[psychdoc00]

if you have three years left and 500k in loans you should 100% try to do PSLF. The value for you there is immense. In your situation i would pay the minimum, because with SAVE the interest wont make the principle go higher as long as you do this, and use the rest of the money to invest in things like index funds that have a higher rate of return than your loan, as a nice plan B.

I have 310k left in loans, and a little less than 4 years left on PSLF. Im investing the money i would have paid towards my loan. Im roughly saving about 150k a year and i definitely live a good lifestyle (drive a nice car, vacation frequently, nice apartment, etc). Though this will go down slightly with loan payments restarting, but will make up for it on interest from investments.

Thank you!!

 

[psychdoc00]

Holy PSLF batman. Don't consider a non-PSLF job for a second unless they are actually abusing you at work. Make sure you have all your PSLF certifications and ducks in a row and then get a nice bottle of something to celebrate when 1/2 million gets wiped out TAX FREE. That's the same as earning 750k+.

This is like asking if someone offered you an all expensed paid vacation if you should go to Bora Bora or the gulf cost of Alabama.

And awesome advice thank you much

 

[Mad Jack]

The equation I usually run to determine whether PSLF is worth it is IF(salary+[forgiveness amount÷years for forgiveness×1.38]>private practice salary)THEN(PSLF)ELSE(PP)

The 1.38 factors in taxes, give or take, as PSLF is tax free and PP salary to pay it off would be in post-tax dollars. If the numbers are close, pick the better job

 

[whopper]

Lots of jobs that pay for loans could be detrimental in several ways. I see several doctors trapped into a job they hate, but continue going to work cause of the old, "if I work here another 5 years I get ___" despite that they hate their jobs, and because the job is most of their life, they hate their lives.

If the job that pays off the debt is a great job and pays well of course go for it. The likelihood, however, is you will not know if you will like it until you're actually in it.

 

[Merovinge]

Lots of jobs that pay for loans could be detrimental in several ways. I see several doctors trapped into a job they hate, but continue going to work cause of the old, "if I work here another 5 years I get ___" despite that they hate their jobs, and because the job is most of their life, they hate their lives.

If the job that pays off the debt is a great job and pays well of course go for it. The likelihood, however, is you will not know if you will like it until you're actually in it.

Many places have payment every 12 months of service for X years. I recommend this type of structure where it is basically just a retention bonus paid to your loans directly. Highly agree with above to not golden handcuff yourself early on in career, most docs are changing jobs within a few years.

 

[FlaringRaynauds]

PSLF is the best choice for you. Do that for 3 years then you can go private if you want. Or you can do 30 hours of the PSLF eligible job and then 1 day a week of private practice. However, if your main goal is to get as much forgiven as possible, you want to limit your AGI as much as possible so that you can have lower monthly payments. If you do private practice 1 day a week, make sure you start an LLC/PC and then pay yourself a very low salary, equivalent to 20% (because it's 20% of the week) of what a typical psychiatrist makes for your area, and keep there rest in the corporation.

Does anyone have an update to the student loan forgiveness chart that clozreal posted? That chart is actually a few years old and based on the repaye plan instead of the new SAVE plan.