Aug 17, 2017
3
0
Status
Non-Student
Hi, I'm new to SDN and hoping to get some sage advice.

My husband just finished EM residency and is a new attending. I'm working in government and have an MPH degree. We need to pay down our student loan debt. Combined with our undergrad, grad and medical school loans, we have about $405K in debt. My loan interest rates are 6.25% and my husband's are 6.5%. We have already done consolidation with FedLoans and I signed up for PSLF. I already have 2/10 years of qualifying PSLF payments.

Now our combined income before taxes is approx. $360K. Now that our income has gone up significantly due to promotion for me and new attending salary, and with the uncertainty of PSLF, what are others in similar situations doing to pay off exorbitant student loan debt?
 
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InvestingDoc

2+ Year Member
Jul 5, 2016
131
173
Status
Attending Physician
Welcome to SDN and congrats on the new job.

No one knows what will happen with PSLF for doctors. If its going to be cut, one would imagine that doctors who earn a lot more than the average person would be the first to be considered for an exclusion clause. The first batch of people who would have ever qualified for PSLF will potentially have debt forgiven next month. We will see what happens.

A good website to see what the payment plans would be like for you is StudentLoans.gov

There you can plan with all the government plans and repayment options, including PSLF. I've typed in all your info and for REPAYE this is what you get.


First Monthly Payment
$2,797
Last Monthly Payment
$4,403
Total Amount Paid
$425,679
Public Service Loan Forgiveness
$183,484
Repayment Period
120 month


Compare that to the standard plan.

First Monthly Payment
$4,558
Last Monthly Payment
$4,558
Total Amount Paid
$546,910
Public Service Loan Forgiveness
-
Repayment Period
120 months


What you end up doing will be a very personal decision. As you know it can range from PSLF, to re-financing your loans, to living in a small apartment on beans and rice while throwing all your excess money at the loans. According to the government, in the second quarter of 2017 about 5 millions borrowers are currently using one of the income based repayment plans and/or PSLF plan. Another about 16.6 million people are in a standard or extended repayment plan. While you wont be in the majority with this type of repayment plan, you are certainly not alone.

Personally I've refinanced my loans, lived in a crappy apartment and have saved up enough money to pay off my loans very early. Then again, I don't have a family or kids so your situation may vary. Good luck!
 

SigmaFS

5+ Year Member
Apr 4, 2014
161
58
www.facebook.com
The estimate of $183,484 forgiven w/PSLF is incorrect as it assumes the spouse (EM) is pursuing PSLF. OP states she's pursuing PSLF, but no mention of the spouse. I'll assume (and please correct me) the EM attending is employed by a for profit doctors' group not eligible for PSLF. If you choose to pursue PSLF, I would select PAYE and file separately. But feel free to provide a few more details - each spouse's income and federal student loan debt.
 
OP
S
Aug 17, 2017
3
0
Status
Non-Student
The estimate of $183,484 forgiven w/PSLF is incorrect as it assumes the spouse (EM) is pursuing PSLF. OP states she's pursuing PSLF, but no mention of the spouse. I'll assume (and please correct me) the EM attending is employed by a for profit doctors' group not eligible for PSLF. If you choose to pursue PSLF, I would select PAYE and file separately. But feel free to provide a few more details - each spouse's income and federal student loan debt.
Hi yes you're correct. My husband's employer does not qualify for PSLF since he's with a for profit physician's group. I believe his time in residency would qualify though, since he trained at a university. Also my loans are older and I do not qualify for PAYE unfortunately. My husband was right on the cusp of the Oct 1, 2007 date for eligible loans with PAYE, but he does not qualify for that repayment plan either. We are currently both on IBR and would consider REPAYE, but I'm not clear on the tax implications for filing married and separate.
 
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OP
S
Aug 17, 2017
3
0
Status
Non-Student
Welcome to SDN and congrats on the new job.

No one knows what will happen with PSLF for doctors. If its going to be cut, one would imagine that doctors who earn a lot more than the average person would be the first to be considered for an exclusion clause. The first batch of people who would have ever qualified for PSLF will potentially have debt forgiven next month. We will see what happens.

A good website to see what the payment plans would be like for you is StudentLoans.gov

There you can plan with all the government plans and repayment options, including PSLF. I've typed in all your info and for REPAYE this is what you get.


First Monthly Payment
$2,797
Last Monthly Payment
$4,403
Total Amount Paid
$425,679
Public Service Loan Forgiveness
$183,484
Repayment Period
120 month


Compare that to the standard plan.

First Monthly Payment
$4,558
Last Monthly Payment
$4,558
Total Amount Paid
$546,910
Public Service Loan Forgiveness
-
Repayment Period
120 months


What you end up doing will be a very personal decision. As you know it can range from PSLF, to re-financing your loans, to living in a small apartment on beans and rice while throwing all your excess money at the loans. According to the government, in the second quarter of 2017 about 5 millions borrowers are currently using one of the income based repayment plans and/or PSLF plan. Another about 16.6 million people are in a standard or extended repayment plan. While you wont be in the majority with this type of repayment plan, you are certainly not alone.

Personally I've refinanced my loans, lived in a crappy apartment and have saved up enough money to pay off my loans very early. Then again, I don't have a family or kids so your situation may vary. Good luck!
Thank you for the calculation based on my situation. I wasn't aware there was a repayment calculator so I will definitely take a look at this. I need to investigate how filing taxes married but separately will affect us in the future if we chose REPAYE. I have absolutely no clue and we are going to meet with our CPA today to discuss this. Also my husband is not banking on PSLF even helping out and forgiving our loans. He was skeptical of the programs longevity from the beginning, so he never certified his employment. He wants to just pay off the loans the old fashioned way now.

We would like to buy a house next year, but I'm skeptical with our amount of student loan debt if we would even be able to do so. We're living in a housing boom in our area, so ideally I would love to buy and rent out a room to make some extra income to help pay the mortgage (and possibly our loans). Currently we are living with rent free with family, which is working out so far. Not really ideal but it's really helping financially.
 

SigmaFS

5+ Year Member
Apr 4, 2014
161
58
www.facebook.com
REPAYE takes into consideration spouse's income regardless of tax filing status. The likely path is IBR filing separately if you, Sugaboogie, pursue PSLF. Then it becomes a question as to any tax liability increase by filing separately. It's been my experience, at your income level, it will be negligible.
 

cpants

Member
10+ Year Member
Sep 28, 2007
2,658
291
Status
Attending Physician
It's a big hole, but you've got a big shovel. I'm assuming your income jumped this year by at least 250k. Thats about an additional $175k/year in post-tax dollars. Delay gratification for a few years and you can pay those things off real fast with that cash. PSLF probably isn't worth it. With your income you will pay off 80% of your loans in the next 8 years unless your are filing taxes separately. The tax savings for filing jointly are probably more than your loan repayment will cost over that time period. Plus, who knows if it will even be around.
 
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goodoldalky

Member
10+ Year Member
Jul 6, 2006
555
368
Status
Attending Physician
It sounds like your loans would theoretically qualify for PSLF if the program is still around in 8 years (this is very unlikely). Your spouse's loans will not qualify regardless.

I would see what your refinancing options are right now. See what type of rate you can get on a plan that is no more than 10 years. You'd probably be looking at around 4K/monthly. I imagine the offers you get right now, because of the burden of loan debt relative to principal, are relatively high rate, 5-6%+.

In order to refi for a lower rate you will probably need to pay these down significantly, which is the right answer regardless. I'd buckle down and throw $10-15K+ per month at them for a year or so. Go back with the loan sitting around $200-250K and then try to refinance.

If you buy a house with $400K plus in loans your mortgage interest rate will also be relatively high. The combination of buying a house and not paying these loans down significantly will be costly and may prevent you from getting a low student loan interest rate when you try to refinance them afterwards.

I would highly suggest paying a #[email protected]%-ton toward your loans for as long as possible, excuse my french. $405K is no joke.
 
Apr 8, 2013
38
27
Status
Pharmacist
My advice regarding your situation is simple. Doesn't require understanding all the government student loan repayment options and doesn't require a CPA. At $360K pre-tax, I would estimate you'll bring home $220K after taxes. My suggestion to you guys would be to live off of $40K annually, which really is not that horribly restrictive. That would leave you with $180K to throw at the loans, and those monsters will be gone in about 2.5 years. Not sure if you want to go that route? Just think about the interest... You're looking at around $70/day in interest on a $405K loan. That is like renting an room at Quality Inn every single night year-round and never staying in it. What a shame to waste all that money.

Regarding the 10-year PSLR plan... It is too long. Much too long to be under the thumb of your employer. Smarter and more responsible to buy your freedom ASAP, especially since you guys have the income to pull it off without having to sacrifice too much.

Oh yeah. Might I also suggest that you don't buy a house or upgrade cars until the loans are gone. Keep expenses as low as possible and focus on paying off the loans.
 
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