Think of having your loans forgiven through PSLF? Think again!

[allantois]

Just wait for the media to catch up with the fact that the biggest beneficiaries of the program are not people who the program was intended for:

http://www.wsj.com/articles/u-s-student-loan-program-proves-costly-1448042862

I cannot imagine an average American, making 30k, sympathizing over half a million dollar loan his physician has taken to guarantee himself an income of 200k+. Not to mention, the government would go bankrupt over forgiving these loans.

My suggestions: go to the cheapest medical school you get into, don't plan on having your debt magically disappear.

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[cliquesh]

My residency's financial department told us not to count on any of the federal forgiveness plans. Good advice? I don't know. That's what I've been told, though.

 

[Tommyguns89]

lol, I just posted this in the thread about DO tuition:

I would not rely on PSLF for the following reasons.

1) Nobody has actually had their debt forgiven. This program wasnt meant for doctors. The second a doctor applies(you have to apply to have your debt forgiven after making the payments) there will be public outrage and they will do everything legal to RETROACTIVELY change it so it doesnt apply to high earners. I dont know if it is legally possible but if it is they will do it. History has shown this. Some student loans used to be dischargeable in bankruptcy. There was outrage over a very small percentage of Doctors and lawyers discharging their loans and going on to enjoy high paying careers. This was retroactively revoked. So even if you took the loan when it was possible to discharge in bankruptcy, met all the requirements and were set to start the process for discharging it the next day, too bad **** you pay up.

2) There have already been attempts to cap the forgiveness amount at like 50,000

3) If you make IBR type payments, the interest will cause the principle to sky rocket, so when they retroactively close this door for you 8 years into your loan, you will be left with a million+ in debt.

 

[SLC]

Don't count on it, but jump in on it if you can.

My hope is that when the program goes away, those already making pslf payments will be grandfathered.

 

[Azete]

I expect these programs to fade away but the PAYE/IBR plans have bipartisan support and generate more for the economy any way you view it. It would be reasonable to assume these will be viable options for many years to come.

 

[DrMikeP]

While one shouldn't count on anything in life, one shouldn't also sit around worrying over whether or not something will be available 10-20 yrs from now. Don't pay attention to those who profess some magic crystal ball on IBR/PAYE/etc etc. because right now no one knows either way and right now they both exist. Don't stress over those that scream it'll bankrupt the government. The government will make money off them because it's collecting a HUGE amount of interest and in reality most people will have long paid enough to cover principle in 10yrs so interest is all that is really being forgiven. Even more importantly each physician creates almost $2 Million in economic value (9-14 jobs) and generates the gov $90K/yr in various revenues. So the more drs the better for the government and economy.

Realistically, is there ANYONE who would decide to not go to med school because PSLF might or might not be available? Doubtful, so why add another thing to worry about to the already nightmare of a list.

So if you have a cheaper option then of course consider it, but ultimately you must decide:

Do you want the cheapest option because something might or might not be around to help financially in 10 yrs or the one you like the most?

I'm going for the one I like the most and worse case I'll probably die before my loans are paid off so there is always an out... LOL LOL LOL

 

[allantois]

While one shouldn't count on anything in life, one shouldn't also sit around worrying over whether or not something will be available 10-20 yrs from now. Don't pay attention to those who profess some magic crystal ball on IBR/PAYE/etc etc. because right now no one knows either way and right now they both exist. Don't stress over those that scream it'll bankrupt the government. The government will make money off them because it's collecting a HUGE amount of interest and in reality most people will have long paid enough to cover principle in 10yrs so interest is all that is really being forgiven. Even more importantly each physician creates almost $2 Million in economic value (9-14 jobs) and generates the gov $90K/yr in various revenues. So the more drs the better for the government and economy.

Realistically, is there ANYONE who would decide to not go to med school because PSLF might or might not be available? Doubtful, so why add another thing to worry about to the already nightmare of a list.

So if you have a cheaper option then of course consider it, but ultimately you must decide:

Do you want the cheapest option because something might or might not be around to help financially in 10 yrs or the one you like the most?

I'm going for the one I like the most and worse case I'll probably die before my loans are paid off so there is always an out... LOL LOL LOL

One may indeed not have to worry about this until they are accepted to a few schools that they can choose which one to attend.
Physicians with tons of debt who are making IBR payments will not, by any shot, pay anywhere close to their principal.
And I'm sorry, but healthcare (and everyone who is involved in it) is a big sucker for any government; it does not contribute anything to the economic growth. But that's besides the point.

 

[DrMikeP]

Economics is important so one should learn about it before being in the business of medicine and not drink the cool aid sold by various groups seeking political/financial advantage. While the healthcare system as a whole is absolutely a loss for the government, individual providers and practices often are not! My practice this past year paid MUCH more in taxes than it was paid by any governmental insurance program/benefit and the same can be said for many docs I know. Specifically it's helpful to study spill-over economic benefits in a finance class.

Kaiser Foundation reports ~46-50% of healthcare is paid from public dollars, that means ~50% is still paid for by individuals/businesses and much of that governmental cost burden goes to hospitals, insurance companies, etc. and NOT physicians.

At IBR payment of 15% at an average of $150K/yr (being conservative), means at 10 yrs one will pay $225K, which falls well in line with paying for most med school debt "principle" averaged across physicians. "average newly minted physician with $166,750 in medical school debt"

From real researchers, not opinions:

"Total economic output: The combined economic output of patient care physicians in the United States is $1.6 trillion. Per capita economic output: Each physician supports a per capita economic output of $2.2 million. Jobs: On average, each physician supports about 14 jobs. Wages and benefits: On average, each physician supports a total of $1.1 million in wages and benefits. Tax revenues: On average, each physician supports $90,449 in local and state tax revenues."

http://www.merritthawkins.com/uploa...Physician_Economic_Impact_Merritt_Hawkins.pdf

Fortunately for me, I'll be studying medicine this coming year vs. teaching my annual course in the business of practice, but unfortunately too many docs are limited in business knowledge and fall prey to whatever some bureaucrat, ins company, lawyer sells them and the training likely won't be offered at my university after I leave.

 

[Azete]

One may indeed not have to worry about this until they are accepted to a few schools that they can choose which one to attend.
Physicians with tons of debt who are making IBR payments will not, by any shot, pay anywhere close to their principal.
And I'm sorry, but healthcare (and everyone who is involved in it) is a big sucker for any government; it does not contribute anything to the economic growth. But that's besides the point.

You know the IBR balance that is forgiven is classified as taxable income? Meaning, if someone is forgiven a $400k balance, they would have a ~$130k tax liability. Add that number to the IBR payments and yes, the vast majority of physicians will easily cover their principal.

 

[allantois]

You know the IBR balance that is forgiven is classified as taxable income? Meaning, if someone is forgiven a $400k balance, they would have a ~$130k tax liability. Add that number to the IBR payments and yes, the vast majority of physicians will easily cover their principal.

I was more talking about doing PSLF after making 10 years of IBR payments (3 or more of them on residency salary). I agree that IBR itself won't go away.

All I'm saying in this thread is don't take 350k in loans if you have cheaper options in the hopes that the debt would be forgiven.

 

[Azete]

I was more talking about doing PSLF after making 10 years of IBR payments (3 or more of them on residency salary). I agree that IBR itself won't go away.

I would agree PSLF does not contribute positively to the economy but it was supposed to be an attempt to alleviate the physician shortage in some areas (mostly ineffective, in my opinion). I'd also agree that these programs are going to be short lived, but a lot of that will depend on the 2016 election.

IBR/PAYE will always be around in some form because they contribute positively to the economy and allow professionals (healthcare and otherwise) to establish themselves financially. Proposed changes to PAYE will eliminate the payment cap as well, so if somebody begins making millions they'll still be responsible for the same percentage and the entire principal will be paid in a couple years anyway.