Public Service Loan Forgiveness Program?

[BVSc2016Hopeful]

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Anyone do some serious looking into this program? 10 years of working for a Public Service and 10 years of on-time monthly payments and all is forgiven? And you can do it on income-based loan repayment, so if you are making squat, you don't have to pay and it still counts as a "payment". Would make the idea of $200K of vet school debt a bit easier to swallow!!

 

[CurrySpice]

The probability that this program will still exist when you graduate from vet school in a few years? Slim to none.

... Cool idea though! I know a lot of vets work small animal for a few years to make a big dent in their debt and then go on to pursue a different specialty.

 

[Ricegrad]

The probability that this program will still exist when you graduate from vet school in a few years? Slim to none.

I don't think this statement is entirely accurate. The program isn't new; it's been in place for years. The income-based repayment option might not be available, however. I certainly wouldn't sign up the promissory note for student loans banking on it (loans, banking...see what I did there? ).

 

[BVSc2016Hopeful]

Thanks for the input! I'm actually not "banking" on anything other than repayment in full, but it makes me feel better that there MIGHT be a way to get my loans paid off sooner/easier. It's really just a coping mechanism to help me through the stress of $200K in loans at 35 years old. 😉

 

[Armymutt25A]

Take out a mortgage and that $200K doesn't look like much.

 

[kaydubs]

Reading this tidbit made me feel a bit more hopeful about paying off loans. I'll have to research this more (unless someone has some helpful links before I get the chance to while I'm away from home on a sorta reliable laptop......)

 

[Minnerbelle]

What worries me about this program is needing to be employed at nonprofits for 10 years. I can start with the intention of doing that, but what if I lose my job after 3 years (or get fed up with it, etc...)? At that point, if I can only find a job in the for-profit sector, or only part-time in another non-profit, what do I do? I know it doesn't have to be continuous employment... but it still really scares me. It feels like once I go into it and spend a few years in the program, I would lose a lot of flexibility. So even if I do go this route, I don't think I will be banking on it, and will pay as much as I can manage (same as if I weren't using this program). I can't imagine making only minimal payments on it... which can be less than interest alone on the IBR, resulting in having my loans mushroom and then being stuck with an even bigger debt if I decide not to work for non-profits anymore.

I know there are many options for non-profits, but it's not like if you're at a spay/neuter clinic you can switch over to academia or public health/government with the blink of an eye or anything. I would hate to start a family, be all settled, and have to relocate just to find full-time employment at another non-profit elsewhere (esp if there are other non-profit jobs I can take nearby) just for the sake of working at any non-profit. For something like shelter med, which is what I'd like to do, the politics get so sticky and it's such a small world, that depending on location, it's not always easy to find another place to go. Your choices can be very limited.

I dunno, maybe if I go this road and hit disaster, worst comes the worst, I could end up working at a non-vet related non-profit just to get full-time employment (go back to being a research tech, or defer my loans by getting a PhD and then working in academia for the remaining time), while hopefully taking on enough vet work as a "hobby" to keep my clinical skills from getting too rusty? It just doesn't sound very pleasant.

 

[drwildlife]

Reading this tidbit made me feel a bit more hopeful about paying off loans. I'll have to research this more (unless someone has some helpful links before I get the chance to while I'm away from home on a sorta reliable laptop......)

PDF Files for the win!

 

[CurrySpice]

I don't think this statement is entirely accurate. The program isn't new; it's been in place for years. The income-based repayment option might not be available, however. I certainly wouldn't sign up the promissory note for student loans banking on it (loans, banking...see what I did there? ).

You have more faith than I do that our government cares about education...

 

[gone2dogs]

PDF Files for the win!

Thanks so much for posting that! I've sort of had this idea in the back of my mind, but really didn't have much of a concept of how it would work and hadn't looked into it at all yet. I just benefited from a similar loan forgiveness program for teachers, so I know at least at present, in principle the government will actually send a check for thousands of dollars to your loan company and pay off your loan. Gives me hope that they will continue to see value in supporting people working in public service! That document also gave me the terrible idea that if I can't find a vet job after graduating that I could always go back to my old career for 10 years and at least clear my debt🙄. I didn't realize this program wasn't a vet specific thing!

 

[dvmsara]

Take out a mortgage and that $200K doesn't look like much.

Perhaps I am misunderstanding you, but this seems like a terrible way to look at things (besides, in many parts of the country, you can get a nice house for $150,000 or less). Veterinary student loan debt is literally reaching crisis levels, and the job market isn't exactly rosy (just ask me, a 2011 cum laude grad who still doesn't have a job). Yet vet schools continue to raise class sizes and new vet schools continue to be opened/accredited, producing more vet students as job opportunities lag. The result? Fewer positions, and those that are available can afford to pay less since they have so many applicants. My advice: take on as little debt as possible, even if that means skipping out on your "dream school" (I would even consider moving to get residency in a state with a cheaper school). You're going to learn pretty much the same thing no matter where you go.

As for repayment options, you might also consider this, if you are willing to live in a rural area for at least 3 years: http://www.csrees.usda.gov/nea/animals/in_focus/an_health_if_vmlrp.html They pay off $25,000 per year for three years.

 

[StartingoverVet]

Here we go again!

 

[dvmsara]

Here we go again!

I'm new here...sorry if I'm beating a dead horse and others have talked about this already (or are you talking about something else?). Only reason I'm being blunt is that I think vet school hopefuls need to hear it. If I had to do it all over again, I'd still choose vet school over anything else.

 

[Armymutt25A]

Here we go again!

Yup.

My point is that people who are unaccustomed to taking on large amounts of debt tend to freak out at the thought of a large sum. When you consider the grand scheme, $200K isn't that much of an investment in your career. Even if you only make $55K per year, you are making a profit of $1450000 over 30 years. A $150K house is unlikely to bring in that much profit after 30 years, yet no one thinks twice about buying one.

 

[GirlGeek]

If I had to do it all over again, I'd still choose vet school over anything else.

That part is something that we don't always hear 🙂

 

[Maddiegirl]

While the debt is a scary prospect, I agree that it is a minimal investment in your future. And, if this is what you really want to do with your life, it's an investment in your happiness.

All that said, as with anything worth having, there will be required sacrifices...

 

[SilverSpyderGT]

Yup.

My point is that people who are unaccustomed to taking on large amounts of debt tend to freak out at the thought of a large sum. When you consider the grand scheme, $200K isn't that much of an investment in your career. Even if you only make $55K per year, you are making a profit of $1450000 over 30 years. A $150K house is unlikely to bring in that much profit after 30 years, yet no one thinks twice about buying one.

If you lose your job and can't make your mortgage payments (probably at 3-5% interest), you can get out of your mortgage.

If you lose your job and can't make your student loan payments (probably at 6.8% interest or more), you can't get away from the payments unless you die.

The investment in education is a lot riskier than buying a house, so it follows naturally that the payoff should be higher.

 

[Armymutt25A]

If you lose your job and can't make your mortgage payments (probably at 3-5% interest), you can get out of your mortgage.

If you lose your job and can't make your student loan payments (probably at 6.8% interest or more), you can't get away from the payments unless you die.

The investment in education is a lot riskier than buying a house, so it follows naturally that the payoff should be higher.

You can get out of your mortgage, but now you are homeless and jobless, and the chances of someone loaning you money to buy a house is as good as gone. If you have good enough credit, you can get a personal loan at a lower interest rate and pay off your student loans. As a veterinarian, I would expect you to have the motivation and resourcefulness to be able to figure out how to make a living in most environments.

 

[jsp132]

what specialty were you dvsmara? you obviously had stellar marks.........but yet you can't even land a job yet?

can't you relocate or anything?

 

[WhtsThFrequency]

I'm new here...sorry if I'm beating a dead horse and others have talked about this already (or are you talking about something else?). Only reason I'm being blunt is that I think vet school hopefuls need to hear it. If I had to do it all over again, I'd still choose vet school over anything else.

There have been a lot of recent discussions on the topic, which have gotten sometimes heated. I agree with you on both counts.

 

[TXvet]

Yup.

My point is that people who are unaccustomed to taking on large amounts of debt tend to freak out at the thought of a large sum. When you consider the grand scheme, $200K isn't that much of an investment in your career. Even if you only make $55K per year, you are making a profit of $1450000 over 30 years. A $150K house is unlikely to bring in that much profit after 30 years, yet no one thinks twice about buying one.

Not the same thing at all. You can sell your house but you can't get rid of your student loan-been there, done that. I was lucky to have sold my house before the market crash and make a lovely profit (generally can't do that with a student loan either unless you are a great day trader). I live in an apartment now-much cheaper and if I needed to, I could move at any time and find an even cheaper apartment.

 

[dvmsara]

what specialty were you dvsmara? you obviously had stellar marks.........but yet you can't even land a job yet? can't you relocate or anything?

I was mixed track, but looking to do small animal work. Hoping to be at or near a large-ish city in the midwest area (mainly looking at Des Moines, where I am currently, Kansas City, St. Louis, OKC, and Dallas). To be fair, I didn't start seriously looking until the summer. I had other stuff in life to take care of--selling our mobile home, moving, attempting to sell a house I still own in my undergrad town, fixing up said house to re-rent it when I found out that I'd be losing about $20,000 on it if I sold it, etc. I didn't know when I would be done with all that, so I didn't want to tell someone that I'd be able to start on such-and-such date and then not be able to. Also, it's not as much of an emergency for me, because my husband has a job (poorly paid as it is), and I don't have nearly as massive student loans as many people do. Still, applying has been frustrating so far. Sent out a bunch of apps for jobs that had been posted (I used AVMA, VIN, and state VMA websites). Many did not even respond back, even after a followup e-mail. Most of those who DID respond, the position had already been filled. I do have an interview in OK this week with Banfield. Still waiting to hear from a few others that were collecting apps before they start interviewing, or that were planning on making an offer to another applicant but would let me know if it didn't work out. I am currently shadowing at a referral/emergency clinic and am on their list of relief vets, but haven't gotten any shifts yet. If the Banfield thing or one of these other things doesn't work out, I will probably resort to cold-resume-sending to clinics in the areas I want to be.

So overall, I'm not in panic-mode yet and have not been as aggressive as many of my classmates. I have heard of plenty of folks sending out 50 apps and getting like 2 interviews (and these were not poor students or people with no people skills). A large number of us (I would estimate a third or more) still didn't have jobs at graduation, though it seems several have since found employment.

 

[dvmsara]

Even if you only make $55K per year, you are making a profit of $1450000 over 30 years.

We must be honest here--it's not really a profit of $1,450,000. The true profit would be your salary minus vet school cost (which you've already done) minus what you would have made if you HADN'T gone to vet school (say, $35,000 a year). If you really wanted to get technical, you should also calculate the wages you missed out on during the 4 years of vet school, and also figure in the higher tax rate (i.e. when going from a salary of $35,000 to $55,000, you aren't really making $20,000 more, once you figure in taxes). You also have to consider that the $200,000 in student loan debt is at around 6.8% interest (standard federal rate in the U.S.). If you are lucky enough to pay it off in 10 years (with a payment of $2300 a month, that's going to be difficult for most people) you will actually end up paying around $275,000. Pay it off via the extended plan (30 years at about $1000/month), and you will pay over $390,000. When considering all this, you may or may not still come out ahead mathematically. In any case, with those debt payments, you're going to have to sacrifice retirement savings and college savings for your kids if you have them, put off buying a house (or do a lower down payment or a longer term), and generally not be able to enjoy life as you would if you were not saddled with this debt. If it is worth it to someone, just to be able to follow their dreams and be a vet, I'd tell them to go for it! But one should not blindly take on this kind of burden without fully considering the consequences.

 

[Armymutt25A]

There is no difference in the tax rate when going from $35K to $55K, so you are making $20K more. Add in the deduction of your mortgage interest, which is what you are mostly paying for the first 10 years, and your tax burden is even lower. Since a BS is basically worthless, you are missing out on what, $30K a year while in vet school? Everyone seems to disregard the availability of a lower rate personal loan to pay off student loans. If you look, there are ways of converting that student debt into other debt with a lower rate. Personally, I could care less. I'm only taking out loans to cover residual debt and living expenses.

 

[sunnyshine]

I very much agree with your assessment of the situation Armymutt. I was pretty nervous about getting my loans for the fall, but I expect the long term profits throughout my career to heavily outweigh my short term losses throughout the next four years of school. The debt/work issue kind of stinks, but I figure that it is just part of life and that if you really want to be a vet you just have to accept it. Besides, I think most people, though interested in making money, are more motivated by the ability to practice medicine and help others then they are at making a ton of $$$, though it would be nice to have both 😀.

 

[Armymutt25A]

Just another method for dealing with student loans - home equity line of credit. This is more for non-trads that already own a house. Just a quick check with my bank - USAA - I can get a 4.49% rate on $75K and greater. You can borrow up to 70% of the value of the house. With the grad plus loans having 8.6% rate, this looks pretty good. Oh yeah, for those of you fixated on it, this can be discharged in bankruptcy court.

 

[cowgirla]

Just another method for dealing with student loans - home equity line of credit. This is more for non-trads that already own a house. Just a quick check with my bank - USAA - I can get a 4.49% rate on $75K and greater. You can borrow up to 70% of the value of the house. With the grad plus loans having 8.6% rate, this looks pretty good. Oh yeah, for those of you fixated on it, this can be discharged in bankruptcy court.

Out of pure curiousity, since I dont own a house, can you delay making payments on that while you are in school? Or is it something you take out after you graduate to pay off your existing high-interest debt?

 

[david594]

Just another method for dealing with student loans - home equity line of credit. This is more for non-trads that already own a house. Just a quick check with my bank - USAA - I can get a 4.49% rate on $75K and greater. You can borrow up to 70% of the value of the house. With the grad plus loans having 8.6% rate, this looks pretty good. Oh yeah, for those of you fixated on it, this can be discharged in bankruptcy court.

This is a great option for those individuals that have $250,000 in assets(their house) to cover their $150,000 in student loan debt.

 

[Armymutt25A]

Out of pure curiousity, since I dont own a house, can you delay making payments on that while you are in school? Or is it something you take out after you graduate to pay off your existing high-interest debt?

You can't borrow against an asset you don't have, so unless you you own the house, then you'll have to wait until you buy one and have paid on it for a few years. Still, 10 years of 4.5% is better than 10 years of 8.6%.

This is a great option for those individuals that have $250,000 in assets(their house) to cover their $150,000 in student loan debt.

It's one plan we're going to look at. We'll end up with about $160K between my wife and I. Other options are living off my salary and using hers to pay the loans off for a couple years. Won't have to make any negative changes in our life style and we'll be able to improve our position 5 years after I graduate.

 

[cowgirla]

You can't borrow against an asset you don't have, so unless you you own the house, then you'll have to wait until you buy one and have paid on it for a few years. Still, 10 years of 4.5% is better than 10 years of 8.6%.



It's one plan we're going to look at. We'll end up with about $160K between my wife and I. Other options are living off my salary and using hers to pay the loans off for a couple years. Won't have to make any negative changes in our life style and we'll be able to improve our position 5 years after I graduate.

I meant for someone who owns their house going into vet school. If you take out the 4.5% loan before your first year, can you defer payments until after you graduate, like you can with federal student loans? Or is it like you said, you take out the new loan after school and use it to pay off the old loan?

 

[GellaBella]

I meant for someone who owns their house going into vet school. If you take out the 4.5% loan before your first year, can you defer payments until after you graduate, like you can with federal student loans? Or is it like you said, you take out the new loan after school and use it to pay off the old loan?

I'm pretty sure you can only defer student loans while you're in school. I don't think they would allow you to take a loan out on your house and then defer it until you graduate.

 

[Armymutt25A]

Yeah, that'd have to be something you work out with the lender. It's not a federal program.

 

[StartingoverVet]

For what it is worth (not much), credit unions are generally more flexible than regular banks. You may be able to work with one to structure a 2nd mortgage under those terms. A lot would depend on the equity in the home, your credit, and how the institution is doing. Expect a slightly higher interest rate for the added risk.