PSLF question

[heartworry101]

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I have approximately 350k in debt from med school and I'm about to graduate med school and start residency. Do you guys think that PSLF is a good option? I'm doing IM and hopefully cardiology after but would it be risky to bank it on PSLF and let my interest accumulate? I'm worried that if I do my residency and fellowship and I don't get a nonprofit job, then that will make me pay more because of the interest accumulation. Does someone have any advice?

 

[koan]

I have approximately 350k in debt from med school and I'm about to graduate med school and start residency. Do you guys think that PSLF is a good option? I'm doing IM and hopefully cardiology after but would it be risky to bank it on PSLF and let my interest accumulate? I'm worried that if I do my residency and fellowship and I don't get a nonprofit job, then that will make me pay more because of the interest accumulation. Does someone have any advice?

Just consolidate and put your loans into RePAYE, assuming you’ll do PSLF. You’ll be making payments based on your resident income and if you do fellowship then you’re only a few years from PSLF forgiveness by the end. You can make a decision then based on job offers whether to refinance and pay off quickly or work 501c3 and potentially take a pay cut while pursuing PSLF. Who knows if the program will still be around in 10 years anyway.

 

[IntheClouds4ever]

You do realize they are trying to remove this program and that an absurdly low number of applicants actually get it?? It’s like winning the lottery.. you could put an application in, but I wouldn’t bank on anything ever coming from it. Look into state and local programs for rural medicine physicians that will pay a significant portion. If you aren’t rural, continue with repaye and live like a resident for a few years out of residency. Also, you can sing with a hospital during residency and get a monthly stipend (I’ve seen 1K-2K per month) and use that to pay student loans.

 

[docbsb2015]

I'm in about the exact same position as you. I am just going to bite the bullet and try to pay them off FAST. Goal is 3-4 years post residency (about same debt as you; going into anesthesia). I would just hate to have that amount of debt hanging over my head for 10 years without the guarantee of them being forgiven.

 

[Czech777]

Just consolidate and put your loans into RePAYE, assuming you’ll do PSLF. You’ll be making payments based on your resident income and if you do fellowship then you’re only a few years from PSLF forgiveness by the end. You can make a decision then based on job offers whether to refinance and pay off quickly or work 503c and potentially take a pay cut while pursuing PSLF. Who knows if the program will still be around in 10 years anyway.

Bad advice. In theory it’s correct, but in practice you have very low likelihood of forgiveness. The program is a joke.

 

[koan]

Bad advice. In theory it’s correct, but in practice you have very low likelihood of forgiveness. The program is a joke.

It’s not bad advice, repaye is the most advantageous income-driven plan for residents because of the interest subsidy. I’m not saying you should assume PSLF will be around, on the contrary I’m saying you should take a path forward during training (residency +/- fellowship) that doesn’t disqualify you from the program if it is still around and your attending job qualifies as nonprofit (eg academic position) as you’ll already have made 6+ years of qualifying payments during training. Note that under repaye the first year of payments will be zero (based on income during your MS4 and second year will be small as well (based on 1/2 year of income as PGY1. This comports with your lower income as a PGY1/2.

Show me a resident with >$250k of debt on a standard 10-year repayment plan. I’ve never met one. Maybe if you live with your parents during residency and put your entire paycheck after taxes and retirement contributions towards the bill. If you can do that more power to you.

Most residents and fellows are best off with an income-driven plan during training (and repaye is the best of these) followed by refinancing post-residency and paying off as quickly as possible.

 

[heartworry101]

Should I only contribute the repaye or should I also pay some of my savings that are leftover from paycheck as well? or is that overkill?

 

[koan]

Should I only contribute the repaye or should I also pay some of my savings that are leftover from paycheck as well? or is that overkill?

People have different priorities, but generally:

1. Contribute to residency retirement plan (403b or 457 etc) to get the employer match (eg 3%) which is free money you can never get back retroactively otherwise
2. Keep a tight budget so you don’t accumulate more debt (credit card or other loans) during training
3. Build up an emergency fund ($5-10k) to cover costs like fellowship interviews and moving expenses
4. If you have money left over throw it at your loans

People in my program sometimes make the argument that the retirement plan doesn’t amount to much. “The total amount I’ll save throughout residency is equal to one month of work as an attending”...Well, for one if you don’t participate you’ll miss out on free cash. Secondly over a 25-35 year career the $30-40k you saved will grow with compound interest to well over a quarter million dollars (making some basic assumptions: the global economy doesn’t collapse, you invest your retirement money in low-cost diversified funds, growth rate over long term equals historical averages over multiple decades). More importantly, if you don’t develop the habit of saving and budgeting during residency, you’ll be one of those docs who live paycheck-to-paycheck and are still working in their 70s, not because they love it.

 

[BorntobeDO?]

I have approximately 350k in debt from med school and I'm about to graduate med school and start residency. Do you guys think that PSLF is a good option? I'm doing IM and hopefully cardiology after but would it be risky to bank it on PSLF and let my interest accumulate? I'm worried that if I do my residency and fellowship and I don't get a nonprofit job, then that will make me pay more because of the interest accumulation. Does someone have any advice?

I am looking at this pretty hard myself. PSLF is super finicky in the way they seem to be interpreting the rules. You must work at a 501c3 or government only, which as a physician can be tricky, since most of our practices are for profit. And the payments have to be exact and on time. You have to be in the correct replayment plans (IBR, REPAYE and PAYE are the only ones that for sure work). You have to adjust your payments every year by refiling your income. Recertify every year with loan provider ( technically don't have to do this, but the people who don't are the ones who end up losing 6 years of payments etc).

The government is using the 'qualifying repayment' thing to get people right now. They are not real clear on what is and isn't. Thats why so few have been approved so far, and I haven't found one physician yet who will admit to having been approved. When I read on the White Coat investor that you should save up as much as you would owe anyway in case you have to pay it, I begin to think the program is an L.

If I was in anything that made more than 300k a year, or had the ability to make that much, I think the best option is just do it and pay those loans off as fast as possible. It seems like PSLF will actually take 12-15 years before most people actually get approved because of the nonsense around 'qualifying payments.'

It will probably be another couple years before we start seeing people who were cognizant of this from the start trying to get approved. The program is a mess, and the government is fine with that, because they don't want to forgive our loans.

 

[AlbinoHawk DO]

I have approximately 350k in debt from med school and I'm about to graduate med school and start residency. Do you guys think that PSLF is a good option? I'm doing IM and hopefully cardiology after but would it be risky to bank it on PSLF and let my interest accumulate? I'm worried that if I do my residency and fellowship and I don't get a nonprofit job, then that will make me pay more because of the interest accumulation. Does someone have any advice?

I can't imagine it being hard to get a non-profit job as a cardiologist. Personally, I wouldn't bank on PSLF. There are already people who qualify and the government is giving them a hard time getting the forgiveness