Student Loan Forgiveness

[pgg]

The universities that took in billions upon billions of easy dollars and essentially used it for fancy landscaping and renovated lobbies should be required to give some of that money back.

This is another unintended consequence of unlimited money. Universities weren't doing those things as some kind of indulgent wastefulness. They found themselves needing to compete to attract students (and their loan $) and boring academics don't sway teenagers as much as beautiful dorms and other amenities.

The dorm I lived in back in the early 90s was an old squat building built decades earlier. We had air conditioning but one of the other dorms didn't. The dorms my kids have lived in the last 6 years or so are modern apartment masterpieces. I've toured college gyms nicer than the ones at 5 star resorts I've stayed in, with juice bars where you can get whatever supplement-boosted probiotic all-vegan soul-enhancing sustainably-farmed post-workout smoothie, personal trainers on staff, etc.

None of that stuff exists without a "customer" base that has unlimited funds.

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[GassYous]

I care about inflation. It is eating away at my purchasing power. Throwing around free money constantly just increases the cost of everything. That 20 dollar cheeseburger is now 30 dollars because people are just spending the free money they got from my tax dollars.

Why is tuition so high? Because the government gives away free money to everyone for higher education. Do we need all these people with underwater basket weaving degrees floating around? I just saw a thread on reddit about a guy who is doing a ui/ux degree costing 70k a year for a job that doesn't require that degree. He was upset because his parents didn't want to pay for it anymore. That's 280k for a worthless degree. Why should I pay for that? Do we really need more government intervention in higher education?

My own college keeps begging me for money. This is an institution that has one of the highest tuitions in the country. But they just spent hundreds of millions of dollars on one new building. One. Spend your money better and wait until I finished paying off my student loans first maybe?

 

[GassYous]

Why haven't you refinanced yet? We did that a few years ago, got the rate down to 2.75%.

No government protections and currently the interest rate is 0% until the end of August so...

 

[nimbus]

Leave things as is and in 5 years Med school will be 150k per year if not more, undergrad will be 75 per year and student loans will continue to balloon and more and more people will NOT participate in the economy (buying cars, houses, getting married etc) which will effect everyone. I say forgive the interest on all the loans in existence now and going forward the interest will be nominal, 1 percent or so. Principle would remain outstanding. Then, put schools on notice (they already are.. they know their brand is in trouble.. Im looking at you Ivys). Raise awareness about the actual value of getting an education at a state school vs an ivy league education. Is it that much different? And push the utilization of community colleges.

Due to their endowments, Ivy’s are essentially free for low income and lower middle income families. Their costs are inconsequential for rich families but are a burden for middle income and upper middle income families. The Ivy’s are not in trouble. The demand for their product is higher than it has ever been.

Subsequent tiers of private universities eg USC don’t provide as much aid even though they also have huge endowments.

 

[nimbus]

Medicare blew up health care spending. Not every grandma in america would be getting cataract surgery and total knees if it weren’t for Medicare.

Federally guaranteed student loans blew up higher education spending. Not every semi-literate 18yo in America would be attending university if it weren’t for guaranteed student loans.

Both programs drive demand. Doctors, hospitals, universities all made out like bandits.

 

[Shimmy8]

I’ve refinanced once every year for the last 4 years. Currently on a SOFI variable at 1.74%. Keep extending. the loan at lower rates.

Refinancing privately has zero impact on credit, fees associated, etc. It’s great. No PSLF or hold on payments, but it’s what I signed up for.

 

[chessknt]

Medicare blew up health care spending. Not every grandma in america would be getting cataract surgery and total knees if it weren’t for Medicare.

Federally guaranteed student loans blew up higher education spending. Not every semi-literate 18yo in America would be attending university if it weren’t for guaranteed student loans.

Both programs drive demand. Doctors, hospitals, universities all made out like bandits.

It blew up surgical subspecialty pay. Pcps and inpatient providers on the other hand...

Third 80+ year old death in 6 months in ICU with heart failure or aspiration or sepsis within a year of their 50k tavr. 4 more cases lined up for Tuesday, all over 75. Gotta buy more Teslas.

I wonder how many would be on there if it reimbursed $10 like an aline or $150 like an ebus?

 

[ambiturner]

Selfishly, I’m sick and tired of all this class warfare in government programs. Covid stimulus, tax reform, loan forgiveness, ACA tax, child tax credit, local tax rebates in my city - why do all of these programs phase out at this magical $300-400k mark, the point where most professional couples land, as if we don’t have kids or student loans or take pay cuts during Covid? And both parties do this: remember when the trump tax cuts specifically excluded doctors, lawyers, and accounting firms from their S-corp tax cuts? Meanwhile the truly rich continue to pay much lower taxes. At some point I’m just going to start working less, I could probably go 75% and barely lose any money after accounting for the tax implications.

 

[voxveritatisetlucis]

400k after taxes is like 18k per month take home (that’s in a high tax state too). Even with a 7k mortgage and 3k student loans (again both on the higher side, with a 7k mortgage being like a 1.5 million dollar house) that leaves one with 8k cash per.

True, on this salary one won’t be able to afford a ski house in Aspen or a Brunello Cucinelli wardrobe, but I think it’s a bit ridiculous to have firefighters, construction workers, waitresses etc. subsidizing people within this salary range.

I do however agree that both sides need to stop giving away fiscal stimulus to their constituencies or the country will be broke in no time.

Current debt to GDP is ~128%

 

[nimbus]

It blew up surgical subspecialty pay. Pcps and inpatient providers on the other hand...

Third 80+ year old death in 6 months in ICU with heart failure or aspiration or sepsis within a year of their 50k tavr. 4 more cases lined up for Tuesday, all over 75. Gotta buy more Teslas.

I wonder how many would be on there if it reimbursed $10 like an aline or $150 like an ebus?

Yeah most of our TAVRs are in their 80s and 90s.

 

[Drwine]

https://static.politico.com/d6/ce/3edf6a3946afa98eb13c210afd7d/ogcmemohealoans.pdf

Student Debt Cancellation Resources Page | Committee for a Responsible Federal Budget

2022-01-04-Overview

www.crfb.org

Bloomberg: Joe Biden Is Being Pressured to ‘Cancel’ Student Loans by Corrupt, Self-Dealing Aides | National Review

There’s a word for this sort of thing: Corruption.

www.nationalreview.com

 

[OptionOffense]

. At some point I’m just going to start working less, I could probably go 75% and barely lose any money after accounting for the tax implications.

im with you there. Everytime i get asked to work some extra call I say NO. Even though it is more money, 40 percent of it goes to the govt and I cannot stomach that.

 

[shotgunlagoon]

Selfishly, I’m sick and tired of all this class warfare in government programs. Covid stimulus, tax reform, loan forgiveness, ACA tax, child tax credit, local tax rebates in my city - why do all of these programs phase out at this magical $300-400k mark, the point where most professional couples land, as if we don’t have kids or student loans or take pay cuts during Covid? And both parties do this: remember when the trump tax cuts specifically excluded doctors, lawyers, and accounting firms from their S-corp tax cuts? Meanwhile the truly rich continue to pay much lower taxes. At some point I’m just going to start working less, I could probably go 75% and barely lose any money after accounting for the tax implications.

Most professional couples make $300-400k??? News to me, I could have sworn people made a lot less than that in this country. The purpose of these social programs isn’t to offset the cost of life for all of society, it’s to provide a safety net for the most vulnerable parts of society. If you are struggling to make ends meet at 300-400k, that’s a budgeting issue on your part. Perhaps victim of lifestyle creep?

I absolutely agree that the people making over 7+ figures should be paying much more in taxes, but unfortunately they’ve got their fingers deep in the lawmaking system and they’re able to protect their little tax loopholes that the rest of us can’t use.

 

[OptionOffense]

I absolutely agree that the people making over 7+ figures should be paying much more in taxes,

Why do you say that? WHy should they pay any more than most people? So the govt can waste more money and grow government. Government is the problem. People who make 7 figures if they are w2 have a higher tax bracket than you so they DO pay more than you. If they make 7 figures owning a business, sure they prob pay less because of the things they do that the govt wants such as employ people, etc etc

 

[voxveritatisetlucis]

Yes there is a ton of waste.

For example, Ken Langone (billionaire who made NYU tuition free), asked Elizabeth Warren on CNBC why he was still getting a social security check and she had no answer.

That is a prime example of waste that will never go away because everybody knows it is a huge political blunder to cut entitlements, regardless of how little utility they bring.

 

[Hoya11]

Why is tuition so high? Because the government gives away free money to everyone for higher education.

See I have ta different take on the reason for sky high tuition.

Access to seemingly unlimited loan money might not help the situation.

But the primary problem in my view is the cost set by the universities themselves.

Similar to pharmaceutical companies - huge bonuses for those at the top, huge waste within the organization/spending, no regulation of pricing for really an essential service to the youth of your country.

I would think MORE government intervention is what you need to keep prices DOWN.

Lower overall tuition costs, less loan money needed, makes the interest rate more irrelevant.

They could pass a law tomorrow that says tuition can not exceed 40k per year - take it or leave it.

No bonuses over X amount for anyone.

Insulin should only costs X - take it or leave it.

Some industries like pharm and education can use a little government regulation keeping it honest for the people..

 

[OptionOffense]

Yes there is a ton of waste.

For example, Ken Langone (billionaire who made NYU tuition free), asked Elizabeth Warren on CNBC why he was still getting a social security check and she had no answer.

That is a prime example of waste that will never go away because everybody knows it is a huge political blunder to cut entitlements, regardless of how little utility they bring.

There is bigger waste than that. Look at the waste in all the agencies. It is criminal. and nobody talks about it.

 

[nimbus]

Yes there is a ton of waste.

For example, Ken Langone (billionaire who made NYU tuition free), asked Elizabeth Warren on CNBC why he was still getting a social security check and she had no answer.

That is a prime example of waste that will never go away because everybody knows it is a huge political blunder to cut entitlements, regardless of how little utility they bring.

The answer to that question is that social security would never have passed if it was means tested.

Same for Medicare. Early in my career I worked at a hospital that served a wealthy resort/retirement community. The patients would arrive in Bentleys and Astons and of course their insurance was Medicare.

 

[ambiturner]

Most professional couples make $300-400k??? News to me, I could have sworn people made a lot less than that in this country. The purpose of these social programs isn’t to offset the cost of life for all of society, it’s to provide a safety net for the most vulnerable parts of society. If you are struggling to make ends meet at 300-400k, that’s a budgeting issue on your part. Perhaps victim of lifestyle creep?

I absolutely agree that the people making over 7+ figures should be paying much more in taxes, but unfortunately they’ve got their fingers deep in the lawmaking system and they’re able to protect their little tax loopholes that the rest of us can’t use.

Those numbers are for families, so yes it is pretty common to have a couple making 150-200 each, or one making 300 and one 100, etc in many areas. Another issue is that these limits are not tied to metro so 400k in SF is treated the same as 400k in Little Rock.

My point is that the politicians have clearly done their homework and, as you’ve demonstrated with your response, determined that the public will never feel sorry for someone at that income level, and that that’s the ideal spot to phase things out to keep programs financially solvent while simultaneously pissing off the fewest number of people. Otherwise why not phase out at 200k or 600k or 800k?

 

[OptionOffense]

Those numbers are for families, so yes it is pretty common to have a couple making 150-200 each, or one making 300 and one 100, etc in many areas. Another issue is that these limits are not tied to metro so 400k in SF is treated the same as 400k in Little Rock.

My point is that the politicians have clearly done their homework and, as you’ve demonstrated with your response, determined that the public will never feel sorry for someone at that income level, and that that’s the ideal spot to phase things out to keep programs financially solvent while simultaneously pissing off the fewest number of people. Otherwise why not phase out at 200k or 600k or 800k?

I still think the simplest solution is to cancel the interest. If you have student loans outstanding, the interest accrued heretofore is now cancelled and going forward is zero. Collection regulations still apply so if you miss a payment it will affect your credit score. Perhaps make incentives to pay off balances early. A bonus towards the loan amount if it is paid off within 1 year, 3 years, 5 years, 10 years, 15 years. Then you tackle current regulations. Who is going to object to that solution?

 

[voxveritatisetlucis]

In 2021, 400k was in the 98th percentile for household income, so even for families in the Bay Area I wouldn’t say it’s “common”

Obviously it’s more common in these areas, but I would say that a lot of people in the bay make less but just bough their houses earlier.

Availability heuristic

 

[Chrish]

On one hand I am against the idea of canceling the debt because you knew what you were getting into. But at the same time as a partner in small business during pandemic, we received over 100k in last two years. So, that would make me a hypocrite if I am upset about canceling 10k for each student.

People also forget during last recession of 2007, if it weren’t for the government bailing out the banks out of billions of dollars of debt, economy would have been crushed. So, why is it okay to bail out the corporations, but not the individual?

 

[deleted875186]

On one hand I am against the idea of canceling the debt because you knew what you were getting into. But at the same time as a partner in small business during pandemic, we received over 100k in last two years. So, that would make me a hypocrite if I am upset about canceling 10k for each student.

People also forget during last recession of 2007, if it weren’t for the government bailing out the banks out of billions of dollars of debt, economy would have been crushed. So, why is it okay to bail out the corporations, but not the individual?

It’s only because student debt cancellation has been politicized. It’s talked about in the same way as critical race theory or abortion simply to fire people up.

 

[voxveritatisetlucis]

I get the sentiment but those banks paid the loans back with interest. I don’t think that this money will ever be recouped. So one was a shrewd investment and the other will just cause more inflation, house prices to keep going up etc.

 

[deleted875186]

I still think the simplest solution is to cancel the interest. If you have student loans outstanding, the interest accrued heretofore is now cancelled and going forward is zero. Collection regulations still apply so if you miss a payment it will affect your credit score. Perhaps make incentives to pay off balances early. A bonus towards the loan amount if it is paid off within 1 year, 3 years, 5 years, 10 years, 15 years. Then you tackle current regulations. Who is going to object to that solution?

I think everyone but the government would get on board with this one. Talk about loosing a lot of money for the government.

Also, let’s just check ourselves and ask, why does half the nation think a one time 10k student loan cancellation is unfair, but if we greatly reduced the student loan interest rate, probably saving people much more money in the long run, it would probably raise less objections??

 

[OptionOffense]

I think everyone but the government would get on board with this one. Talk about loosing a lot of money for the government.

Also, let’s just check ourselves and ask, why does half the nation think a one time 10k student loan cancellation is unfair, but if we greatly reduced the student loan interest rate, probably saving people much more money in the long run, it would probably raise less objections??

Because people are not bright.

 

[abolt18]

It's funny to me that people would worry about this 10K cancellation of debt. If someone is enrolled in RePAYE, the government subsidized half of their monthly interest accumulation. By being enrolled in that program, the government subsidized ~$30K of my interest! Now with the pause since COVID and 0% interest, it's saved me $50K since the pause. That's basically $80K in interest that the government has "forgiven." Haven't heard people being too up in arms about it.

I've taken a job that qualifies for PSLF. You bet I'm going to try for it! The contract that I signed (master promissory note) when I took on these loans included several provisions for forgiveness: death, severe disability, PSLF, and IDR forgiveness. Would anyone be upset if they forgave them upon my death? Or do you think they need to pay the balance from my life insurance or hold my wife accountable for them? What about if I had a major TBI that prevented me from working? Should they make me pay my loans from my disability insurance? Or should they honor the provisions of the contract that they provided and I signed?

I always had planned to go to private practice and just demolish my loans as fast as possible! However, life changes and the fact is I have no qualms with pursuing PSLF. Nor do I take issue with anyone else doing it. Never have.

Forgiving 10K for everyone seems kind of funny though. I think they should at least create a phaseout. 10K forgiven may make a substantial difference in the lives of many impoverished people, but it should barely dent the life of people making hundreds of thousands of dollars per year.

 

[wholeheartedly]

I care about inflation. It is eating away at my purchasing power. Throwing around free money constantly just increases the cost of everything. That 20 dollar cheeseburger is now 30 dollars because people are just spending the free money they got from my tax dollars.

Why is tuition so high? Because the government gives away free money to everyone for higher education. Do we need all these people with underwater basket weaving degrees floating around? I just saw a thread on reddit about a guy who is doing a ui/ux degree costing 70k a year for a job that doesn't require that degree. He was upset because his parents didn't want to pay for it anymore. That's 280k for a worthless degree. Why should I pay for that? Do we really need more government intervention in higher education?

My own college keeps begging me for money. This is an institution that has one of the highest tuitions in the country. But they just spent hundreds of millions of dollars on one new building. One. Spend your money better and wait until I finished paying off my student loans first maybe?

Energy companies, food companies, and others are raking in record profits right now and giving their shareholders huge payouts. So a good chunk of that “inflation” is actually just price gauging while blaming inflation. let’s maybe deal with that.

 

[GassYous]

I think everyone but the government would get on board with this one. Talk about loosing a lot of money for the government.

Also, let’s just check ourselves and ask, why does half the nation think a one time 10k student loan cancellation is unfair, but if we greatly reduced the student loan interest rate, probably saving people much more money in the long run, it would probably raise less objections??

Same reason why people think that going into a higher tax bracket means making less posttax

I don't have a problem with pslf or decreasing the interest rate. The rates were usurious to begin with. But if you start forgiving principle where does it end? Where will tuition end up? It's already growing unsustainably. I'm thinking that I'll need half a mil to educate one child. That's probably an underestimate.

 

[nimbus]

Same reason why people think that going into a higher tax bracket means making less posttax

I don't have a problem with pslf or decreasing the interest rate. The rates were usurious to begin with. But if you start forgiving principle where does it end? Where will tuition end up? It's already growing unsustainably. I'm thinking that I'll need half a mil to educate one child. That's probably an underestimate.

Agree. The borrower doesn’t get to keep the money, the universities do. It is a government handout to the universities.

 

[NITRAS]

I think everyone but the government would get on board with this one. Talk about loosing a lot of money for the government.

Also, let’s just check ourselves and ask, why does half the nation think a one time 10k student loan cancellation is unfair, but if we greatly reduced the student loan interest rate, probably saving people much more money in the long run, it would probably raise less objections??

Zero interest would make the cost of education even higher, and people who would have no incentive to pay them off.
Interest isn't the problem. The high cost with the low "felt" cost to the consumer and the unrealistic expectation of payout of different degrees is the problem.

$10k in forgiveness is immoral if you still keep making more loans.

I would be in favor of a one time forgiveness of some amount if the federal government got out of the business. We can all agree that the current practice is unjust and immoral.

 

[BLADEMDA]

Very good discussion so far and I have learned some new facts.

 

[aneftp]

The issue is students these days can try to cut cost on their living and eating. They want their own apt. They don’t want to eat ramen 4x a week like I did.

A 3 bedroom apt runs $1600-2200 in most areas. 4 bedroom house rental runs $2000-2500 in most college towns

But kids these days don’t want max of one roommate.

So they can easily cut housing and food cost by $700-1000 a month easy. That’s $8000-12000 a year savings. That’s $30-40k savings over 4 years.

Most in state colleges run $6000-12000 a year


Yes. It’s quit expensive. But it’s doable. Owe 50k-60k undergrads these kids can work also. Part time jobs. 20 hours a week. They should be able to generate 8-10k of income each year. Not working a lot. Most places will pay $15-20 an hour.

 

[NITRAS]

It never made sense to me that my student debt hovered around 6-8% for some loans, but I could get a loan for a car that I couldn’t afford at 0% interest. There is no reason why student debt has to carry any interest at all.

The universities that took in billions upon billions of easy dollars and essentially used it for fancy landscaping and renovated lobbies should be required to give some of that money back.

The whole student loan system was a scheme devised by politicians, bankers, and universities to transfer wealth from the working and middle class into the pockets of the rich. It should have never existed in the first place. It was a disaster from the start and education costs have skyrocketed because of it. $10k does little to solve the problem and seems more like political pandering to grab headlines. I would rather see universities and banks held accountable for handing out easy money and doing little to reign in costs.

I agree with your general sentiment. Just a couple points.
-Your "0%" car loan isn't actually zero percent. The interest is built into the cost of the car.
-I read an article a while back, and the majority of people in default actually don't owe that much in student loans. <10 grand in a majority of cases. I'm sorry I don't remember the exact numbers.

 

[voxveritatisetlucis]

Can we talk about why doctors (medical students) are required to pay high interest rates when the default rate is so low?

Even federal rates are a joke considering doctors and med students will usually pay back their loans.

I’m surprised banks haven’t begun undercutting federal rates, offering super low rates specifically for med students



Rates should be adjusted based on risk like any other investment. When is the time you heard of a doctor defaulting on a loan?

 

[kidthor]

Can we talk about why doctors (medical students) are required to pay high interest rates when the default rate is so low?

Even federal rates are a joke considering doctors and med students will usually pay back their loans.

I’m surprised banks haven’t begun undercutting federal rates, offering super low rates specifically for med students



Rates should be adjusted based on risk like any other investment. When is the time you heard of a doctor defaulting on a loan?

That and the loans are inescapable and coordinated via the government for an educational need. Of any loan type, student loans shouldn’t have crazy interest rates.

That and as other mentioned all the student loan modifications and forgiveness won’t fix the root problem of run away tuition/spending. Oddly few politicians want to touch the real issue….

 

[GravelRider]

I agree with your general sentiment. Just a couple points.
-Your "0%" car loan isn't actually zero percent. The interest is built into the cost of the car.
-I read an article a while back, and the majority of people in default actually don't owe that much in student loans. <10 grand in a majority of cases. I'm sorry I don't remember the exact numbers.

Of course, the dealer is playing with margins and trying to upsell you on options. However, even before I looked at cars, my bank would offer me sub 2% auto loans, which was still a lot less than the 8% on my student loans.

Universities play with margins and up-selling too…meal plans, bookstores, the nicer dorms, etc… All paid for by easily obtained, high interest loans.

 

[NITRAS]

Of course, the dealer is playing with margins and trying to upsell you on options. However, even before I looked at cars, my bank would offer me sub 2% auto loans, which was still a lot less than the 8% on my student loans.

Universities play with margins and up-selling too…meal plans, bookstores, the nicer dorms, etc… All paid for by easily obtained, high interest loans.

Comparing a collateralized loan to a person with a job and unsecured loan to a student with no job isn't exactly an apples to apples discussion.

I think interest rates aren't the problem. Just like interest rates aren't the issue with affordable housing.

Example, a SW who makes $40k/year has $100k loan. Whether they have a 3% or a 7% interest isn't the real problem. The shorter time you have the loan, the less the interest rate matters. The issues is that a SW who makes $40k/year can't reasonably pay off $100k in loans in any reasonable period of time.

Interest rates certainly add to the problem, sure. But I think that should not be the focus of "fixing" higher education.

 

[BLADEMDA]

I agree with your general sentiment. Just a couple points.
-Your "0%" car loan isn't actually zero percent. The interest is built into the cost of the car.
-I read an article a while back, and the majority of people in default actually don't owe that much in student loans. <10 grand in a majority of cases. I'm sorry I don't remember the exact numbers.

Canceling $10,000 per borrower would cost around $321 billion and completely forgive the loans of about one-third of student loan borrowers.

 

[BLADEMDA]

• Borrowers who owe less than $10,000 account for 66% of defaults that occur in the first three years of repayment
• Borrowers with more than $40,000 in student loan debt account for just 4% of defaults

Share of student loan defaults, by loan balance - Infogram

 

[Shimmy8]

Can we talk about why doctors (medical students) are required to pay high interest rates when the default rate is so low?

Even federal rates are a joke considering doctors and med students will usually pay back their loans.

I’m surprised banks haven’t begun undercutting federal rates, offering super low rates specifically for med students



Rates should be adjusted based on risk like any other investment. When is the time you heard of a doctor defaulting on a loan?

When you go through the student loan process for medical school, you are not offered the opportunity to even go private. It’s govt 6.8% or bust. It would take a bank with a very coordinated effort to get a foot in the door for that for schools. The ACGME and GME process are linked to the federal govt now, it’s a monopoly and they know it and guaranteed 6.8% income for them. They’re not letting that go.

 

[Beeftenderloin]

I think interest rates aren't the problem. Just like interest rates aren't the issue with affordable housing.

Interest rates are a MASSIVE part of the problem. I’m just now finishing training and between undergrad and med school I took out 280k in loans. Was making income based repayment payments all through residency up until covid forbearance. I’m currently sitting at nearly 410k in loans. 7% is INSANE, especially for something that directly benefits the government. I get a better education, make more money that the government can then take a larger share of in my taxes. Everyone wins. Not to mention who’s lower risk than physicians? It’s not like undergrad where 30% of freshman drop out. Sure every once in a while someone has to drop out of med school for family reasons, but virtually every US med school student is going to be able to pay this back. You’d be hard pressed to find a lower risk population of borrowers.

Edit: Even the banks know this vis-a-vis physician mortgage loans. They’ve done the math, figured how low risk of borrowers we are and even as an intern, they’ll give you 750K, nothing down, no PMI, with a rate MUCH lower than 7%. I think I got quoted 3.25% which was on par with market rates at the time.

 

[voxveritatisetlucis]

The only thing is if the interest rate is lowered to 0, then what is the incentive to ever pay it back?.

 

[Beeftenderloin]

The only thing is if the interest rate is lowered to 0, then what is the incentive to ever pay it back?.

Have it set up like a 30 year fixed with required monthly payments. Create incentives for early repayment. And if you aren’t making payments it starts hitting you like any other bill you don’t pay, tanking your credit score, collections, wage garnishment, etc.

I’m sure there are a handful of sheisty individuals on here, but I suspect most people aren’t looking to game the system. Just don’t want to get taken for a ride.

 

[BLADEMDA]

How does income based repayment work during residency then as an attending? I assume its 25 years of payments. Will your loan be paid off after 25 years? Did you get credit for payments during this Covid emergency or just no interest charges and deferment?

Income-Driven Repayment Plans

An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size. We offer four income-driven repayment plans: Revised Pay As You Earn Repayment Plan (REPAYE Plan) Pay As You Earn Repayment Plan (PAYE Plan)...

studentaid.gov

I used the loan simulator to figure out monthly payments on $180,000 worth of loans with an attending salary of $400,000. What am I missing here because the loan gets paid off before 10 years. Are you legally required to report your attending income if you initially reported a resident's salary? I would assume so. Did you wait a year to report the new salary?

With $400,000 worth of loans and an attending salary of $475,000 do any of the loans get forgiven after 25 years? I know some of you have 2% interest rates or lower on these loans so you are not paying them off early. FYI, I would think if the loan interest rate exceeds 4% you would want to pay them off over perhaps 15 years?

 

[deleted875186]

How does income based repayment work during residency then as an attending? I assume its 25 years of payments. Will your loan be paid off after 25 years? Did you get credit for payments during this Covid emergency or just no interest charges and deferment?

Income-Driven Repayment Plans

An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size. We offer four income-driven repayment plans: Revised Pay As You Earn Repayment Plan (REPAYE Plan) Pay As You Earn Repayment Plan (PAYE Plan)...

studentaid.gov

I used the loan simulator to figure out monthly payments on $180,000 worth of loans with an attending salary of $400,000. What am I missing here because the loan gets paid off before 10 years. Are you legally required to report your attending income if you initially reported a resident's salary? I would assume so. Did you wait a year to report the new salary?

With $400,000 worth of loans and an attending salary of $475,000 do any of the loans get forgiven after 25 years? I know some of you have 2% interest rates or lower on these loans so you are not paying them off early. FYI, I would think if the loan interest rate exceeds 4% you would want to pay them off over perhaps 15 years?

IBR goes up with your salary, it either 10% or 15% of “discretionary income”, but will max out at the 10 year standard repayment.

During residency, you calculated payment is less than monthly interest only payments on a large student loan balance, so the government pays half the interest accumulating under REPAYE, and that monthly payment counts towards IBR or PSLF.

The only way to get loans forgiven is PSLF, since residency payments will count towards 10 years, but as soon as your an attending your payment goes up, so you’ll never make it to 25 years to get any loans forgiven.

IBR uses previous years tax return to verify income.

 

[maxxor]

IBR goes up with your salary, it either 10% or 15% of “discretionary income”, but will max out at the 10 year standard repayment.

During residency, you calculated payment is less than monthly interest only payments on a large student loan balance, so the government pays half the interest accumulating under REPAYE, and that monthly payment counts towards IBR or PSLF.

The only way to get loans forgiven is PSLF, since residency payments will count towards 10 years, but as soon as your an attending your payment goes up, so you’ll never make it to 25 years to get any loans forgiven.

IBR uses previous years tax return to verify income.

Some nuance:
REPAYE caps at 10% discretionary income. It can exceed standard repayment upon graduation.
REPAYE also only pays 1/2 of interest for 3 years. After that, there is no further interest subsidy.

Agree on the rest.

 

[maxxor]

This isn’t true. 3 year period is just how long the 100% interest subsidy lasts for subsidized loans. Most docs have all unsubsidized and the 50% subsidy to unpaid interest is always in effect.

Hmmm, then I will need to see what the heck myfedloan was doing cuz they stopped giving it at the 3 year mark, and I did a 6 year residency...-_-

 

[deleted875186]

Some nuance:
REPAYE caps at 10% discretionary income. It can exceed standard repayment upon graduation.
REPAYE also only pays 1/2 of interest for 3 years. After that, there is no further interest subsidy.

Agree on the rest.

I didn’t know that …. In any case, if your planning on PSLF, I beleive you can simply switch to standard 10 year repayment when your an attending.

 

[BLADEMDA]

REPAYE during residency for let's say 5 years. Then you switch to PSFL for the last 5 years or you have to start over with PSFL and make payments for 10 years?