Reality check on loan repayment at % of salary

[Igor4sugry]

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Today made some calculations to see how much our "attending salary" will get us.
We graduated with average loan balance of 210k each; this is ballooning fast due to 6.8% rate and will likely reach $500k by end of 4yr residency. The 10yr repayment is $5.7k/mo.
Which is about 38% of our take home pay (assume 150k each). Used paycheckcity to estimate take-home pay (http://www.paycheckcity.com/calculator/salary/).

High student loan burden is hitting home. Still too uncertain to go into PSLF (and not sure if I can easily find an employer like this in area where I want to stay).
Anyone else in this situation?

 

[235009]

Today made some calculations to see how much our "attending salary" will get us.
We graduated with average loan balance of 210k each; this is ballooning fast due to 6.8% rate and will likely reach $500k by end of 4yr residency. The 10yr repayment is $5.7k/mo.
Which is about 38% of our take home pay (assume 150k each). Used paycheckcity to estimate take-home pay (http://www.paycheckcity.com/calculator/salary/).

High student loan burden is hitting home. Still too uncertain to go into PSLF (and not sure if I can easily find an employer like this in area where I want to stay).
Anyone else in this situation?

you think at 6.8% your loan balance is going to balloon by 150% in 8 years? (not to mention that you're not even taking out that full amount at the beginning of the eight years but your borrowing is spread out over the first four). basically you should do a little more research/calculating.

 

[DrBowtie]

you think at 6.8% your loan balance is going to balloon by 150% in 8 years? (not to mention that you're not even taking out that full amount at the beginning of the eight years but your borrowing is spread out over the first four). basically you should do a little more research/calculating.

His calculations for the 500k was for combined 420k at graduation.

 

[235009]

His calculations for the 500k was for combined 420k at graduation.

oh i missed the "each" part

 

[TeddyA]

My advisor was pretty great in setting up my IBR payments. I'm paying $400 one time for my remaining two years in residency.

To have an idea how much I owe, it's about half what you owe now.

 

[wolfvgang22]

My advisor was pretty great in setting up my IBR payments. I'm paying $400 one time for my remaining two years in residency.

To have an idea how much I owe, it's about half what you owe now.

Do you mean you are paying one $400 bill and that's it in the last two years of residency? Or do you mean you are paying $400 per month for two years?

 

[TeddyA]

Do you mean you are paying one $400 bill and that's it in the last two years of residency? Or do you mean you are paying $400 per month for two years?

I apologize if my last post wasn't too clear. I did not mean my monthly IBR payment but the fee for the advice and help I am getting for two years.

 

[LionMD]

I apologize if my last post wasn't too clear. I did not mean my monthly IBR payment but the fee for the advice and help I am getting for two years.

Please tell me your advisor does more than just "set up" you IBR payments. Otherwise you literally paid him $400 for filling out a two page form.

 

[Igor4sugry]

Please tell me your advisor does more than just "set up" you IBR payments. Otherwise you literally paid him $400 for filling out a two page form.

It sounds like they went with GLAdvisor, they charge that $400.00 fee. You basically pay them for something anyone can do for free and with just as much ease.

 

[badasshairday]

I'm ~9 months into IBR and I have accrued >6,000$ in interest. I graduated with 201K of debt. This is ridiculous. I'm thinking about pouring money into this debt (combined income with spouse), but there is that darn pie in the sky loan foregiveness I don't want to lose. I don't know what I will be doing after residency in terms of being able to qualify. I hate the government. I hate loans. 6.8% interest rate is robbery.

 

[LionMD]

I'm ~9 months into IBR and I have accrued >6,000$ in interest. I graduated with 201K of debt. This is ridiculous. I'm thinking about pouring money into this debt (combined income with spouse), but there is that darn pie in the sky loan foregiveness I don't want to lose. I don't know what I will be doing after residency in terms of being able to qualify. I hate the government. I hate loans. 6.8% interest rate is robbery.

Pay them off ASAP or at least pay enough so the interest doesn't balloon. If you're looking at buying a house in the next decade realize the new 2014 mortgage rules cap your debt/income ratio to 0.43 (student loans included) essentially shutting you out unless you have a sizeable down payment and/or high income. (I theorize these regulations will go away after the housing market takes another hit). You also have to pay tax on the "income" from when your loans get written off so you're not really getting away with much IMO.

 

[235009]

I'm ~9 months into IBR and I have accrued >6,000$ in interest. I graduated with 201K of debt. This is ridiculous. I'm thinking about pouring money into this debt (combined income with spouse), but there is that darn pie in the sky loan foregiveness I don't want to lose. I don't know what I will be doing after residency in terms of being able to qualify. I hate the government. I hate loans. 6.8% interest rate is robbery.

To add to the above you won't get penalized for sending them more money. Also once you qualify for IBR you are qualified forever until you change your payment plan. The amount you are required to pay may change depending on your income but you will still be on track for loan forgiveness regardless of your income or voluntary extra payments.

 

[TeddyA]

Please tell me your advisor does more than just "set up" you IBR payments. Otherwise you literally paid him $400 for filling out a two page form.

I came to them mainly for my student loan problems. The advice given also took into account the taxes I have to pay and the amount I am willing to part with monthly-in case I wanted to pay more because I could. I'm anxious about how the interest on my loans are accruing. I wanted to see how low I can go on the monthly payments without increasing my total debt considerably.

I was quite well-aware that their advisors do more than just set up clients on IBR. You have to understand that I'm nearly financially illiterate having come from a liberal arts degree before I went pre-med and then into medical school, so perhaps I didn't have the financial know-how to tackle the debt on my own. And as they are financial advisors that specialize in student loans and student loans being my biggest financial issue, I thought it would be a good idea.

 

[Igor4sugry]

You have to understand that I'm nearly financially illiterate having come from a liberal arts degree before I went pre-med and then into medical school, so perhaps I didn't have the financial know-how to tackle the debt on my own. And as they are financial advisors that specialize in student loans and student loans being my biggest financial issue, I thought it would be a good idea.

Financial advisers are good at one thing, taking your hard earned money and charging high fees for something any physician can educate self on. GLAdvisers is like that too. Of course they will never say "Call your loan servicer and they will guide you on applying for IBR for free". They will instead charge $400.00.

Many residents have low personal finance knowledge, but there are great resources to educate oneself. The only way to be successful with personal finance is to educate oneself and take control into your own hands. Keep track of your monthly expenses, know what loan amounts you have and have a strategy for paying them off as well as invest into retirement accounts that are low cost index funds. Lastly avoid financial advisers.

Residents are also unfortunately exposed to financial salesmen of disability insurance that their programs bring in. Be very careful with them, they are often very one-sided, sell products that are often not appropriate, and do not provide enough options. If you want to buy insurance again read whitecoatinvestor.com (http://whitecoatinvestor.com/personal-finance/insurance-more-than-just-malpractice-protection/)

[1] Whitecoatinvestor.com:
http://whitecoatinvestor.com/financial-survival-guide-for-new-interns/

[2] Bogleheads
Bogleheads guide to investing:
http://www.amazon.com/Bogleheads-Gu...id=1378810021&sr=1-1-spell&keywords=bgleheads

Bogleheads guide to retirement planning:
http://www.amazon.com/The-Boglehead...id=1378810021&sr=1-2-spell&keywords=bgleheads

Forum:
http://www.bogleheads.org/forum/index.php

Bogleheads wiki:
http://www.bogleheads.org/wiki/Main_Page

 

[TeddyA]

Igor4Surgery, thanks for taking the time. I really appreciate it. Maybe in 6 months or so I can come back here with a review on them. So far so good.

Financial advisers are good at one thing, taking your hard earned money and charging high fees for something any physician can educate self on. GLAdvisers is like that too. Of course they will never say "Call your loan servicer and they will guide you on applying for IBR for free". They will instead charge $400.00.

Many residents have low personal finance knowledge, but there are great resources to educate oneself. The only way to be successful with personal finance is to educate oneself and take control into your own hands.

 

[badasshairday]

Pay them off ASAP or at least pay enough so the interest doesn't balloon. If you're looking at buying a house in the next decade realize the new 2014 mortgage rules cap your debt/income ratio to 0.43 (student loans included) essentially shutting you out unless you have a sizeable down payment and/or high income. (I theorize these regulations will go away after the housing market takes another hit). You also have to pay tax on the "income" from when your loans get written off so you're not really getting away with much IMO.

How stupid will I feel if I pay off my loan when I could have had forgiveness down the road? How about if I pay off 100K in interest while in residency only to find myself working for a nonprofit for 4 more years and having the remaining balance paid off? I would feel pretty sheepish for having put in 100K into my loan while a resident on a lower income.

 

[DrBowtie]

How stupid will I feel if I pay off my loan when I could have had forgiveness down the road? How about if I pay off 100K in interest while in residency only to find myself working for a nonprofit for 4 more years and having the remaining balance paid off? I would feel pretty sheepish for having put in 100K into my loan while a resident on a lower income.

It's called being responsible and fulfilling your debt you signed on the dotted line for. I wouldn't feel sheepish, I'd feel proud.

 

[badasshairday]

It's called being responsible and fulfilling your debt you signed on the dotted line for. I wouldn't feel sheepish, I'd feel proud.

Believe me I don't mind paying off aggressively. But if there is about to be a big Obama-style handout, I will gladly take mine for once, and keep the 200K in my pocket.

For now I will stick to IBR payments which will make a huge increase with my wife's combined income in the coming year. I may end up paying even more by doing IBR if I don't get PSLF. Because of that, I feel like I should pay off aggressively. Unfortunately I don't know where life will take me when I'm done with training and would only need 4 more years of non-profit employment to get PSLF. This is the reason why I hate PSLF and IBR, there is no garentee, so you are screwed either way by paying off aggressively now or just doing IBR.

 

[Dr. USMLE]

Believe me I don't mind paying off aggressively. But if there is about to be a big Obama-style handout, I will gladly take mine for once, and keep the 200K in my pocket.

For now I will stick to IBR payments which will make a huge increase with my wife's combined income in the coming year. I may end up paying even more by doing IBR if I don't get PSLF. Because of that, I feel like I should pay off aggressively. Unfortunately I don't know where life will take me when I'm done with training and would only need 4 more years of non-profit employment to get PSLF. This is the reason why I hate PSLF and IBR, there is no garentee, so you are screwed either way by paying off aggressively now or just doing IBR.

Better to just pay it off, but not to be self-righteous or morally responsible. The simple fact is that most radiology groups are private for-profit (even if in a not-for-profit or academic hospital). That is, most rads jobs will not qualify for PSLF.

 

[wunnac]

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