Recertifying income as an attending for PSLF

[Alemo]

Hi all,

I was a resident during COVID and am about to start my first attending job. How much can I expect my repayment amount to increase? For the purposes of this estimation, I am going from a salary of 75,000 to 230,000. My partner is making 130,000. My loan amount is ~260,000.

I was paying around 875 monthly throughout residency and fellowship.

Also, I'm planning on recertifying soon with my fellowship salary, so as to get one more year of lower repayments.

Thanks!

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[TheRightMedication]

It's whatever the stated % of your income your repayment plan says it is.

That's a cut of your gross pay, though, so it feels like more.

I have some unsolicited advice to add - don't let the need to be employed for PSLF cause you to fail to run the numbers on a gig or enterprise that doesn't qualify for PSLF. Private practice for example.

PSLF is an all right deal but so is making a ton of money and paying the loans yourself in a few years.

 

[annoyedpsychiatrist]

It's whatever the stated % of your income your repayment plan says it is.

That's a cut of your gross pay, though, so it feels like more.

I have some unsolicited advice to add - don't let the need to be employed for PSLF cause you to fail to run the numbers on a gig or enterprise that doesn't qualify for PSLF. Private practice for example.

PSLF is an all right deal but so is making a ton of money and paying the loans yourself in a few years.

Adjusted gross income, not gross income. If you lower your AGI your payment amounts will also lower, such as maxing out retirement accounts.

PSLF is a great deal. With psych thats at least 4 years in residency that most people will qualify for where they're making minimal payments that essentially don't lower the balance. After that is 6 years left. For big loan balances, i would anticipate it would take a minimum of 4-5 years to pay off with attending salary, and being extremely diligent/no heavy spending. Taking that same money, investing it over 6 years, paying through REPAYE and still getting half the interest paid for by the government and then having it forgiven at year 6 would likely give you significantly more money, unless you had a smaller loan balance.

Just as an example, simply taking $45,000 a year you would have paid towards loans, investing it in index funds instead and assuming 9% annual interest on average, will give you an ending balance of $373,000, just off 6 years. And thats not your entire savings, thats simply just money you would have paid towards loans. Thats basically a house right there. Now you have no house payment/mortgage. Realistically to pay off loans in 5-6 years for high balances like >300k, im guessing it would be over double that (so around 90K) which you would end with around $746,000 after 6 years.

 

[Mad Jack]

It's whatever the stated % of your income your repayment plan says it is.

That's a cut of your gross pay, though, so it feels like more.

I have some unsolicited advice to add - don't let the need to be employed for PSLF cause you to fail to run the numbers on a gig or enterprise that doesn't qualify for PSLF. Private practice for example.

PSLF is an all right deal but so is making a ton of money and paying the loans yourself in a few years.

Also consider that loans are paid with after-tax dollars, while PSLF is tax free. Multiply your loan balance by your effective tax rate, divide by the number of years you have until forgiveness, and then subtract your annual payments. Add this number to any nonprofit salary to determine how much you would have to make in private practice for it to be worthwhile. Also make sure to factor in benefits, such as the ability to contribute to a 457b, SEP IRA, retirement matches, PTO, etc.

To determine your payments, calculators work best: Revised Pay As You Earn Repayment Calculator