Federal loan repayment/finance (Resident)

[Boba Foot]

podiatry school should only be 3 years long, the residency should only be 2 years

Bingo. But then schools would lose an extra year of tuition and residency programs would lose an extra year of indentured servitude. And we’ve already seen who’s on CPME, so it will never happen.

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[billBOB213]

If your gonna rant, make it a good one, well done

 

[heybrother]

I have about 190K. I'm a first year resident, living at home with family through residency. At an average program. Residents done with numbers at the end of 2nd year. Average salary over the 3 years will be about 74k. I am also at a program where the 3 years would qualify towards PSFL.... With that said, I am aggressively paying off my loans. My goal is to have 80k left at the end of the 3 years and I will open up my own practice as soon as possible in a cheaper state. Probably after working as an associate for maximum 2 years to pay the rest off, and save for practice.

I went to podiatry school knowing exactly what I was getting myself into. I was a horrible college student, partied way too much, but had a good mind when it came to the sciences. I really had no other career options that I could see myself being happy in. I can't actually thank this forum enough because I used to read it all the time as a premed student trying to decide what I was going to do. It's because of this forum I knew exactly what I was getting into. I really enjoy what I do on the day to day in podiatry, but I would laugh at anyone debating this field if they had another option. Just too much sacrifice for the financial reward. I mean be reasonable. For me though, a person with no other option, it's been worth it. Likely because, I have never had a problem with being referred to as a podiatrist haha.

I want to be successful, and I know I can do it. I'm going to focus on becoming great in disciplines the common public expects a podiatrist to be excellent in. I'll build my referral network and so on and so forth, and I have other ideas for my practice also that I think are somewhat original. I don't care if the first year I make 50k, at least I'll give it a shot and 15-20 years down the line who knows maybe I won't have to work anymore or worst case I'll be with the rest of the 'Foot and ankle surgeons' in a regular associate job, with my debt paid off.

To me a hospital job is just too much headache for what you are paid, plain and simple. You are performing surgery on very sick people. MSG would probably be the most enjoyable out of all of em in my opinion, but I would never rely on it given the job market. Ortho group.... you have to know someone most likely to get it, and hopefully you like that someone, cause you'll be with them the rest of your career. I'm sure for every situation theres a right place right time, etc.

Don't get me wrong I really do enjoy surgery. I think its awesome, I mean to get to see the anatomy with your own eyes minimum 3-400 times in a residency program is a privilege. As stated above though, not worth the stress when considering the financials. It's also just risking more of your life...to pursue the fellowship and the additional training. You might even be prolonging your eventual retirement if all that training doesn't earn you more money... life is short... I already am getting gray hairs.

Also, podiatry school should only be 3 years long, the residency should only be 2 years for most programs considering where most graduates end up. My entire 4th year of podiatry school was spent not even at the school............................. Some of the residencies are just straight up criminal with their numbers. Like how about just be honest and say "hey come here, it's a chill program, and you'll save a year to become a practitioner and can do bunions and hammertoes." I'm sure some students are actually looking for that.

rant over

Your feelings about life and living and podiatry may evolve and change, but if you can truly graduate residency having paid your debt down to $80K you are likely going to be successful at whatever you choose to do.

 

[Feli]

....Also, podiatry school should only be 3 years long, the residency should only be 2 years for most programs considering where most graduates end up....

Yeah, podiatry re re leadership missed the boat badly by not going to basic 2yr residencies for most (non-op care, wounds, office procedures, workups, insoles/braces, etc) and then having a fraction of DPMs get 4yr surgical programs (bone/joint)... basically like dent model. The non-op grads would have much less debt, and the surgical DPM grads could be better trained (didn't have enough '3yr surgical' spots/cases for all grads... still don't) and more important, they'd be in demand and be busy in practice... again, like dent.

Instead, the wise heads of Powe Die a Tree start new schools without residency spots or quality applicants, and it was decreed that we all do 3yr 'surgical' residencies when we didn't back then - and don't now - have nearly enough good spots and cases for that. Also, as you said, some don't even want that surgical aspect, they don't pass boards for it, and there are definitely not enough surgery cases/demand/jobs out in practice for most DPMs to use those most/any of those skills to any great extent. Ergo, we all get the big debt, highly varied training, varied results, too many gunning for and even underbidding on too few surgical jobs. Most of us doing surgery 0-1 days/wk with bad ROI... fewer do few surgery 2days/wk but work like dogs. Overall, <5% have the situation of good income and good full-scope job quality. Not logical, but those be the breaks. Don't forget to donate extra to your national org, lol.

...good job paying your debt and staying frugal. I could never live with parents at age 28 or 30 or whatever, but more power to you. I would sleep in the resident room before that.

 

[LordofWaffles]

Yeah, podiatry re re leadership missed the boat badly by not going to basic 2yr residencies for most (non-op care, wounds, office procedures, workups, etc) and then having a fraction of DPMs get 4yr surgical programs... basically like dent model. The non-op grads would have much less debt, and surgical grads could be better trained (didn't have enough '3yr surgical' spots for all grads) and they'd be busy in practice... again, like dent.

Instead, the wise heads of Powe Die a Tree start new schools without residency spots or quality applicants, and we all do 3yr 'surgical' residencies when we didn't back then and don't have enough good spots and cases for that, some don't even want that, and there are definitely not enough cases/demand/jobs out in practice for most DPMs to use those most/any of those skills to any great extent. Ergo, we all get the big debt, highly varied training, varied results, too many gunning for and even underbidding on too few surgical jobs, most of us doing surgery 0-2 days/wk. Not logical, but those be the breaks. Don't forget to donate extra to your national org, lol.

...good job paying debt. I could never live with parents at age 28 or 30 or whatever, but more power to you.

Yeah I mean its not the greatest situation living at home at 30, but have a good relationship with 'the roommates' LOL, not really home much anyway, and friends come over all the time and drink beers and what not. They are cool parents. I actually talked to an IMED doctor the other day and he did the same thing, lived at home during residency. You would be surprised how common it is.

I used to read here to only do pod school if you could get out with under 200k and thats what I did. A lot of other students were taking out maximum loans while I was getting a 12 pack a week, living off ramen, and wearing t-shirts and gym shorts haha. A lot of the schools are getting really unreasonable with their tuition, and they wonder why admissions are down. Students are just doing the math....... I did the math 5 years ago and I was barely convinced to apply. I shadowed a couple of successful pods who practice like podiatrists and thats what made me go for it.

 

[Emed MD]

Prior to last year I was wanting to pay of my government loans aggressively to get the burden off my back. Now with the new SAVE Plan (which essentially converts unsubsidized loans into subsidized loans) and with savings rates exceeding 5% (treasuries, CD’s, money market funds) I find it really makes no sense to pay off the government loans rapidly.

For anyone approaching graduation or in residency I’d recommend the following:

• DO NOT enter forbearance. Forbearance only increases the amount of debt.
• Collect your income information (Adjusted Gross Income, AGI) for the past two years.
• Enroll in the REPAY/SAVE plan. You may certify your income using your present income or your last filed tax return. This means, for example, if you certify your income in March of 2024 you can use your 2022 tax year income and recertify for 2025 using your 2023 income. If you recently graduated, your income while in Med school was most likely well below 225% of the poverty level making your required monthly payments for 2024 and 2025 to be $0. Under REPAY Uncle Sam will pay 50% of the months interest and starting in July SAVE will pay 100% of the remaining monthly interest so the loan balance won’t grow.
• In residency you will likely be earning around $60k, +-$5k. Make 401k/403b and IRA contributions (max $22500 & $6500 respectively in 2023) to bring your AGI below 225% of the poverty level. You do not need to include your spouse’s income but you will need to file taxes separately. This will give you another 4 years of payment-free interest-free loans.
• Put your savings or money that you would have been using to pay off your loans into safe investments like treasuries, CD’s and money market funds which are currently paying more than 5% interest.

Household size	1​	2​	3​
Poverty Level	14580​	19720​	24860​
150% of Poverty Level	21870​	29580​	37290​
225% of Poverty Level	32805​	44370​	55935​

So after six years of no payments and no interest, two of which you’d be making “Doctor Money”, you can assess your financial situation and continue under SAVE or pay off or refinance the loan. In addition you’d have earned 6 years of PSLF credit if that applies to you.

 

[icebreaker32]

Yeah, podiatry re re leadership missed the boat badly by not going to basic 2yr residencies for most (non-op care, wounds, office procedures, workups, insoles/braces, etc) and then having a fraction of DPMs get 4yr surgical programs (bone/joint)... basically like dent model. The non-op grads would have much less debt, and the surgical DPM grads could be better trained (didn't have enough '3yr surgical' spots/cases for all grads... still don't) and more important, they'd be in demand and be busy in practice... again, like dent.

Instead, the wise heads of Powe Die a Tree start new schools without residency spots or quality applicants, and it was decreed that we all do 3yr 'surgical' residencies when we didn't back then - and don't now - have nearly enough good spots and cases for that. Also, as you said, some don't even want that surgical aspect, they don't pass boards for it, and there are definitely not enough surgery cases/demand/jobs out in practice for most DPMs to use those most/any of those skills to any great extent. Ergo, we all get the big debt, highly varied training, varied results, too many gunning for and even underbidding on too few surgical jobs. Most of us doing surgery 0-1 days/wk with bad ROI... fewer do few surgery 2days/wk but work like dogs. Overall, <5% have the situation of good income and good full-scope job quality. Not logical, but those be the breaks. Don't forget to donate extra to your national org, lol.

...good job paying your debt and staying frugal. I could never live with parents at age 28 or 30 or whatever, but more power to you. I would sleep in the resident room before that.

I did not think that the dental profession required 2 year residencies for all….but I get your point.

We all know the profession is not voluntarily going to walk back our training or reduce enrollment.

I would argue we could easily permanently cut out enrollment in half and have 90 percent do a quality 2 year residency with another 10 percent doing a quality 3rd year fellowship….but oh well there is saturation and thus all toenails must be trimmed by a 400K 11-12 year trained (including college) doctor.

 

[dial1010usa]

To directly answer the original question. Sign up for SAVE plan, this is the best financial approach.

You won’t owe more than 150$/month and they erase your interest so your loan will never go up. It is essentially equivalent to covid pause except you have to make a small payment.

This is true for every single resident assuming no spouse, additional income and filing separately. Post residency…. Good luck.

Don’t refinance to private loans in residency. That is stupid.

Thank you! I got my letter yesterday and I was like what. Can you please explain in more details. I have no clue what I should do in this case. I'm a CA FM resident going into 2nd year. Income is around $65k which is hardly I can save anything due to rent and other expenses. What plan is SAVE plan? Where can I find more information about this? I think I will able to manage $150/month to pay. Thank you so much!

 

[dial1010usa]

Yeah, my loans are 100% grad, so my payments are still at 10%, but with SAVE, your discretionary income is waaay less....that's what I'm saying, and that's why my monthly payments are going down by a lot. I'm on PSLF too, so the 20-25 year thing doesn't matter to me.

I just checked my loan servicer website, and my payments starting in October are hundreds less than they were.

Thank you! I don't have any undergrad loans either. I have 100% grad loans. So what have you decided to do? Can you please give more details?

 

[Scrantonicity]

Thank you! I don't have any undergrad loans either. I have 100% grad loans. So what have you decided to do? Can you please give more details?

Yeah I was already on REPAYE, so I was automatically switched to SAVE--payment is going down so yeah it's the best thing to do.

 

[Feli]

I did not think that the dental profession required 2 year residencies for all….but I get your point.

We all know the profession is not voluntarily going to walk back our training or reduce enrollment.

I would argue we could easily permanently cut out enrollment in half and have 90 percent do a quality 2 year residency with another 10 percent doing a quality 3rd year fellowship….but oh well there is saturation and thus all toenails must be trimmed by a 400K 11-12 year trained (including college) doctor.

Yeah, general dentists do 0 or 1yr residency.
Their dent surgeons and procedure docs (orthodont, OMFS, oral surg, peridont, peds, etc) do 2yrs or more of residency.
I was just using the example for two-tier training... gen vs surg/specialist.

...for podiatry, it'd likely be 2yr gen podiatry residency or 4yr surgical podiatry since nearly all MD surgeon/proced are 4+ years (maybe pod could be 3yrs as those are your smarter grads and the non-op stuff will be picked up faster?). Podiatry is a specialty, and fellowships not needed (but would surely try, to get free labor).

Either way, a two tier system is best. We missed the boat. We don't need every DPM to be a surgeon - nor do we have enough cases and good programs for that. There is not enough public demand for that... hence most DPMs doing just avg of just a case or a few per week. Two-tier would give the surgical ones higher volume and even more competence. Last of all, some pods don't even want to be doing surgery and will just fail and fail and fail at surgery, exams, etc. They'd get out sooner and with less debt with two tier training.

 

[newfeet]

I did not think that the dental profession required 2 year residencies for all….but I get your point.

We all know the profession is not voluntarily going to walk back our training or reduce enrollment.

I would argue we could easily permanently cut out enrollment in half and have 90 percent do a quality 2 year residency with another 10 percent doing a quality 3rd year fellowship….but oh well there is saturation and thus all toenails must be trimmed by a 400K 11-12 year trained (including college) doctor.

Depending on the state a dentist need a one year residency for a license but work experience can be substitute for residency.

 

[Boba Foot]

This is the latest weekly e-mail sent out by the folks over at Student Loan Planner. I think it has a lot of good info in it. Hopefully some of ya'll will find it helpful.

Student loan interest starts again tomorrow September 1 after being paused for more than 3.5 years.

What can you do to minimize the cost?

The answer is: quite a lot.

First, this might sound odd, but don't get hung up on the interest. It's the payments that matter to most borrowers. What I mean is, say you're going for PSLF or 20 / 25 year IDR forgiveness. The interest is probably irrelevant. On PSLF, there's no tax bomb. So literally the only thing that matters is the payments.

On 20 and 25 year forgiveness, there could be a tax bomb one day, so theoretically you want your forgiven balance to be as small as possible. But I've long explained that I think there's less than a 10% chance a tax bomb actually happens. So if you're going for forgiveness, you shouldn't really stress about things like interest capitalization, interest subsidies or lack thereof.

The payments should be the primary consideration.

And remember that if you were paying before COVID, your payment is probably good until 2024 or 2025.

That is, unless you apply for SAVE or consolidate right now.

There are sometimes very good reasons to take one of those two actions. But you shouldn't be in any rush to do anything. The only super serious deadline to be aware of is the end of the IDR Account Adjustment on December 31, 2023. There is no deadline to apply for SAVE. You can apply anytime. And SAVE is exactly the same thing as the New REPAYE plan Biden initially outlined in January 2023. They just wanted a catchier name, so they chose SAVE because they want everyone to sign up for it.

The only folks who need to be hyper aware of deadlines are those who need to consolidate. And we still have several months to do that.

Also keep in mind PAYE and new IBR can sometimes be much better than SAVE. So it's good not to rush into anything. Take your time deciding.


Second, the SAVE plan sometimes offers interest subsidies, but not always. I see a ton of misinformation about the SAVE plan online. Some folks are under the impression that SAVE always offers zero interest when that's not true. SAVE covers only the interest that's above the level of your required payment.

1. So if your SAVE payment is $0, it covers 100% of your interest.
2. If your interest is $1,000 a month and your SAVE payment is $500 a month, it covers the difference ($500).
3. If your interest is $1,000 a month and your SAVE payment is $1,000 a month, SAVE covers nothing. You're paying your full interest.

So plenty of people still need to pay off their loans.

Third, you won't have to return benefits you get from SAVE, but it's by no means guaranteed the plan will stick around long term. A good student loan plan takes advantage of current policies, but it's also ready for Plan B and Plan C if something happens. We'll of course be watching the 2024 presidential election closely. If a Republican wins, I would not be surprised if SAVE was overturned and REPAYE was reinstated starting around 2026. The important thing to know is that any interest subsidies and forgiveness credit you get would stay.

So since we have to live with uncertainty, it's important that if you're pursuing forgiveness that you're also making progress towards other financial goals along the way.

 

[Hybrocure]

Having to change your current payment of choosing SAVE is big if so. Because I contacted my loan people and they said our payments for the next year are based off of what they were when the freeze began, not what our income is now. For many of us, we were making less then - which means lower payments til 24-25 for those on income based repayment

 

[Boba Foot]

Having to change your current payment of choosing SAVE is big if so. Because I contacted my loan people and they said our payments for the next year are based off of what they were when the freeze began, not what our income is now. For many of us, we were making less then - which means lower payments til 24-25 for those on income based repayment

Yes, if you were in residency during the covid freeze, absolutely do not recertify your income until they make you in early 2025. You will still be paying based off of your residency income though that period.

 

[FutureDPM323]

Having to change your current payment of choosing SAVE is big if so. Because I contacted my loan people and they said our payments for the next year are based off of what they were when the freeze began, not what our income is now. For many of us, we were making less then - which means lower payments til 24-25 for those on income based repayment

Yes, if you were in residency during the covid freeze, absolutely do not recertify your income until they make you in early 2025. You will still be paying based off of your residency income though that period.

That makes sense. I was wondering why my payment is currently $0 but the covid freeze hit when i was in school.

I got automatically enrolled in the SAVE program since I initially put myself under REPAYE. I’ll probably keep myself under SAVE for now since my payments are $0 and therefore interest won’t accumulate at least while I finish residency.

My one question though can I switch out of SAVE into another repayment plan option once I have to recertify my income? I can’t seem to find that info online anywhere.

SAVE is good for me right now but definitely won’t be in the future….

 

[Boba Foot]

You can switch, but I don’t think the forgiveness time transfers. For example, I don’t think you can ride SAVE for 20 years and then switch to PAYE for 20 year forgiveness since SAVE is a 25 year forgiveness plan.

 

[Podstar]

SAVE seems like the way to go, at least as a resident. No accumulation of interest as long as you make your payment each month. My monthly payment also went down $100 compared to the old REPAYE. I can also recertify right before finishing residency to keep low payment while making attending salary for a year.

 

[Hybrocure]

SAVE seems like the way to go, at least as a resident. No accumulation of interest as long as you make your payment each month. My monthly payment also went down $100 compared to the old REPAYE. I can also recertify right before finishing residency to keep low payment while making attending salary for a year.

Bold of you to assume your attending salary will be radically different than that of a resident lol

 

[JustAPedicurist]

What % of your income as an attending do you reccomend on paying on loans? Let’s say you have the standard podiatry scam of 250k-300k in loans

 

[DYK343]

What % of your income as an attending do you reccomend on paying on loans? Let’s say you have the standard podiatry scam of 250k-300k in loans

Its pretty simple.
If youre going for forgiveness as little as possible
If youre paying them off as much as possible.

 

[JustAPedicurist]

Its pretty simple.
If youre going for forgiveness as little as possible
If youre paying them off as much as possible.

Unfortunately I will not be working for a nonprofit. Under the save plan you can get forgiveness regardless after 20 years correct?

 

[Boba Foot]

Unfortunately I will not be working for a nonprofit. Under the save plan you can get forgiveness regardless after 20 years correct?

SAVE is 25 years. PAYE is 20 years.

 

[DYK343]

Unfortunately I will not be working for a nonprofit. Under the save plan you can get forgiveness regardless after 20 years correct?

Im not an expert on that forgiveness plan. Ill let others comment more. Im not sure if you get a tax bomb at the end or not (used to but may have been changed?).

Honestly 20 years is a long time to be in debt. You may make poor money to start as a new attending (or get lucky) but most move onto better jobs and get paid appropriately in time. As soon as one gets to the point where they are making decent money I would say its in their best interest to just plug away at those loans and get the burden out from under you.

The faster you can get those loans gone the faster you can explode your wealth/investment portfolio

Have you ever listened to the white coat investor podcasts or followed any of the other financial advisors? (dave ramsey, physician on fire, etc).

 

[Boba Foot]

Im not an expert on that forgiveness plan. Ill let others comment more. Im not sure if you get a tax bomb at the end or not (used to but may have been changed?).

The tax bomb has been suspended through I think 2025. There is hope that will be extended or made permanent, but that will depend on who’s in the White House & congress.

Honestly 20 years is a long time to be in debt.

You don’t have a mortgage?

The faster you can get those loans gone the faster you can explode your wealth/investment portfolio

I would argue that paying less toward loans now frees up cash to invest now to compound over time. Time in market is huge.

 

[JustAPedicurist]

The tax bomb has been suspended through I think 2025. There is hope that will be extended or made permanent, but that will depend on who’s in the White House & congress.

You don’t have a mortgage?

I would argue that paying less toward loans now frees up cash to invest now to compound over time. Time in market is huge.

What’s the best way of lowering your interest on the loans as a new attending? Interest just came back and my average is like 6.7% unfortunately

 

[JustAPedicurist]

Im not an expert on that forgiveness plan. Ill let others comment more. Im not sure if you get a tax bomb at the end or not (used to but may have been changed?).

Honestly 20 years is a long time to be in debt. You may make poor money to start as a new attending (or get lucky) but most move onto better jobs and get paid appropriately in time. As soon as one gets to the point where they are making decent money I would say its in their best interest to just plug away at those loans and get the burden out from under you.

The faster you can get those loans gone the faster you can explode your wealth/investment portfolio

Have you ever listened to the white coat investor podcasts or followed any of the other financial advisors? (dave ramsey, physician on fire, etc).

Yeah I’ve listened to them all, and in general I agree it’s best to be aggressive towards the loans but I do see the other side of things

 

[wakaflocka88]

I’m lucky that my MSG is non profit and therefore I qualify for PSLF. With the new rules, I can retro my residency years and my time already spent working here. Many docs in our group are happy with the new rules and HR is already on board with signing off forms to verify our employment etc. of course anything can change again in the future but I only have to make payments for 5 more years under an IBR plan before my loans are forgiven.

A few of our recent ortho hires are stoked because residency plus fellowship knocked off 6 years. They only have to make payments for 4 years and that’s it.

 

[Boba Foot]

What’s the best way of lowering your interest on the loans as a new attending? Interest just came back and my average is like 6.7% unfortunately

You don't. Interest rates were set by Congress the year you took the loans, which is why they vary. You can sign up for autopay through your student loan servicer and save 0.25%. Yippee.

You could refinance but interest rates right now are crap and it makes the loan private so burns the bridge of any federal forgiveness plan.

I’m lucky that my MSG is non profit and therefore I qualify for PSLF. With the new rules, I can retro my residency years and my time already spent working here

PSLF is the golden ticket but many of us aren't that lucky and/or don't want to work for a hospital. It's huge though. Complete forgiveness after 10 years, no tax bomb. You can max out your 401k and do an HSA if you have an eligible health insurance plan to make those monthly payments even lower and forgiveness even higher. If I ever worked for a hospital, PSLF would be the main selling point for me.

 

[DYK343]

You don’t have a mortgage?

About 150k.
Will be gone fairly soon. I pay 4k extra a month towards it.
Interest is about 6% as I bought about a year ago.
So its a guaranteed 6% return.

I’m lucky that my MSG is non profit and therefore I qualify for PSLF. With the new rules, I can retro my residency years and my time already spent working here. Many docs in our group are happy with the new rules and HR is already on board with signing off forms to verify our employment etc. of course anything can change again in the future but I only have to make payments for 5 more years under an IBR plan before my loans are forgiven.

A few of our recent ortho hires are stoked because residency plus fellowship knocked off 6 years. They only have to make payments for 4 years and that’s it.

Typically any government program one gets grandfathered in even if the rules change for new borrowers.

 

[DYK343]

I would argue that paying less toward loans now frees up cash to invest now to compound over time. Time in market is huge.

Gotta break down the interest rates and associated risk.

Like I said with my mortgage. 6% guarantee risk free return on my money paying that down. Thats a safe bet and better than bonds.

Loans may be similar if not better return with interest rates today.

We've had a fortunate decade stock market run. I made bank on my vanguard admiral account and 401k/IRA accounts

If you look at it historically the stock market always goes up. But young investors like myself have blinders on with the crazy interest rates we've been getting.

Just checked Vanguard. Even with the recent market fall Im still making 9.7% returns. That cant last forever but it sure is nice. Less nice with inflation.

 

[JustAPedicurist]

SAVE is 25 years. PAYE is 20 years.

how does SAVE determine your monthly payments? how do you keep interest from accumulating?

 

[DYK343]

how does SAVE determine your monthly payments? how do you keep interest from accumulating?

Not to be an as$ but I think you should go to the student loans website and do some self research.
Its all public information.
There have been a lot of changes so someone may have outdated info (which Is why I didnt comment above) and could advise you incorrectly.
Finance is different for everyone. You'll need to make the best plan for yourself.

 

[JustAPedicurist]

Not to be an as$ but I think you should go to the student loans website and do some self research.
Its all public information.
There have been a lot of changes so someone may have outdated info (which Is why I didnt comment above) and could advise you incorrectly.
Finance is different for everyone. You'll need to make the best plan for yourself.

Even going to the official websites it doesn’t provide much info.. (us government lol)

But appreciate the help

 

[Boba Foot]

how does SAVE determine your monthly payments? how do you keep interest from accumulating?

SAVE determines your payment by taking 10% of discretionary income over 225% of the federal poverty line. PAYE is the same, but uses 150% of the federal poverty line.

You don't stop interest from accumulating. If you have a low paying job, SAVE will pay the interest for you. If you make what an attending podiatrist should make, SAVE doesn't do much, if anything, for your interest. Refer back to the newsletter I quoted up above a few days ago. Furthermore, interest doesn't matter as much when you're pursuing forgiveness as the interest is forgiven along with the principal. Only thing that matters is the tax bomb if that exists a couple decades from now.

 

[DYK343]

Even going to the official websites it doesn’t provide much info.. (us government lol)

But appreciate the help

I agree the website for student loans is super glitchy. Just checked where I am at in paying these things off. Was about 1hr just to see my balance. Super slow and glitches everywhere.

 

[Logs]

I have been trying to figure something out that I hope you guys have an answer to. The biggest issue is the interest in paying the student loans out as fast as possible. I am currently on the PAYE but am thinking of switching to the Save program because it says that if I just pay the minimum the unpayed interest is canceled.
My hopes is that I pay the minimum payment for each individual loan and then focus my money on paying 1 loan at a time. I just want to make sure that idea actually works, because as of now I have to pay the minimum plus all the interest that grew for the month for each loan so that none of the student loans go up and keep growing as I am focusing on paying off one at a time. Does that make sense?

 

[Boba Foot]

I am currently on the PAYE but am thinking of switching to the Save program because it says that if I just pay the minimum the unpayed interest is canceled.

You need to do your research. No interest is cancelled. At lower incomes, there is a subsidy that covers your interest payments but interest never stops accumulating. If you read something that said "interest is cancelled", you read bad information.

My hopes is that I pay the minimum payment for each individual loan and then focus my money on paying 1 loan at a time.

That's like playing whack-a-mole. If you're only paying down one loan, you have 8 others gathering interest. Doesn't really work like that. You have to either:
A) commit to "living like a resident" for 3-5 years and pay off loans as aggressively as possible before interest balloons, or
B) commit to paying the bare minimum for 20-25 years, depending on the IDR plan you're on, and then getting the balance forgiven

If you do anything other than those two options, you're going to be burning money

 

[Treaty of Dorsi]

You need to do your research. No interest is cancelled. At lower incomes, there is a subsidy that covers your interest payments but interest never stops accumulating. If you read something that said "interest is cancelled", you read bad information.

If the interest is being subsidized, doesn’t it technically mean the interest doesn’t accumulate as long as you pay your monthly minimum? so we can just assume that interest for that month as “cancelled” since someone else is paying for it and not you? Sounds to me like SAVE is the best move as long as your income isn’t in that “doctor” status

 

[Boba Foot]

If the interest is being subsidized, doesn’t it technically mean the interest doesn’t accumulate as long as you pay your monthly minimum? so we can just assume that interest for that month as “cancelled” since someone else is paying for it and not you? Sounds to me like SAVE is the best move as long as your income isn’t in that “doctor” status

It’s being paid for, yes, but as your income grows you begin shouldering more of the interest. And then you have an extra 5 years of payment compared to PAYE.

If you’re a teacher or have a similar income with a relatively low ceiling, then SAVE makes sense. Most people on here probably have limited benefit from SAVE other than lower monthly payments. But then you’re making those lower monthly payments for an extra 5 years. If SAVE was a 20 year plan, it would be more of a no-brainer.

 

[Logs]

Well here is my thought process. The way I am tackling the student loans is using the snowball method.
These numbers are just examples to make the math easier.
Student Loan 1 = $20,000 at 6% -> $100/month of interest
Student Loan 2 = $30,000 at 6% -> $150/month
Student Loan 3 = $40,000 at 6% -> $200/month
Student Loan 4 = $50,000 at 6% -> $250/month

These makes it $700/month of interest that is accruing. So if I budget, for example, $2,000/month for student loans. I pay the interest for each one of these loans and that will insure that none of the loans are building up interest. I have stopped the bleeding. Honestly, the minimum payment doesn't matter because I need to make sure the balance of the loans do not get larger because at that point I will be wasting money. That leaves $1,300 left for the principle, which I then place it all on student loan 1. I do that every month till the first one is finished and move on to the second and third, etc.
The question than goes to the SAVE program. If the "minimum" payment for each of the loans is smaller than the monthly interest than the remaining interest is then subsidized. So for example:

Student Loan 1 = $20,000 at 6% -> $100/month (minimum payment due is $50)
Student Loan 2 = $30,000 at 6% -> $150/month (minimum payment due is $100)
Student Loan 3 = $40,000 at 6% -> $200/month (minimum payment due is $150)
Student Loan 4 = $50,000 at 6% -> $250/month (minimum payment due is $200)

Total monthly interest is $700 but I paid the minimum of $500. All the remaining unpaid interest of $200 is subsidized. I now have $1,500 left to throw into student loan 1. What I am trying to find out is if this will work because that will save money on interest which will than allow to pay off the debt faster. Not only will this give more money to use for the debt but it will prevent the loans from getting larger. No matter how you look at it, interest payments are a waste of money because it does not go to the principle.

 

[Boba Foot]

Well here is my thought process. The way I am tackling the student loans is using the snowball method.
These numbers are just examples to make the math easier.
Student Loan 1 = $20,000 at 6% -> $100/month of interest
Student Loan 2 = $30,000 at 6% -> $150/month
Student Loan 3 = $40,000 at 6% -> $200/month
Student Loan 4 = $50,000 at 6% -> $250/month

These makes it $700/month of interest that is accruing. So if I budget, for example, $2,000/month for student loans. I pay the interest for each one of these loans and that will insure that none of the loans are building up interest. I have stopped the bleeding. Honestly, the minimum payment doesn't matter because I need to make sure the balance of the loans do not get larger because at that point I will be wasting money. That leaves $1,300 left for the principle, which I then place it all on student loan 1. I do that every month till the first one is finished and move on to the second and third, etc.
The question than goes to the SAVE program. If the "minimum" payment for each of the loans is smaller than the monthly interest than the remaining interest is then subsidized. So for example:

Student Loan 1 = $20,000 at 6% -> $100/month (minimum payment due is $50)
Student Loan 2 = $30,000 at 6% -> $150/month (minimum payment due is $100)
Student Loan 3 = $40,000 at 6% -> $200/month (minimum payment due is $150)
Student Loan 4 = $50,000 at 6% -> $250/month (minimum payment due is $200)

Total monthly interest is $700 but I paid the minimum of $500. All the remaining unpaid interest of $200 is subsidized. I now have $1,500 left to throw into student loan 1. What I am trying to find out is if this will work because that will save money on interest which will than allow to pay off the debt faster. Not only will this give more money to use for the debt but it will prevent the loans from getting larger. No matter how you look at it, interest payments are a waste of money because it does not go to the principle.

This is too much math. Good luck.

Doesn't need to be this complicated. Either pay it off in full quickly, or pay the minimum until it's forgiven.

Interest doesn't really matter when you're on an IDR plan, so I'm not sure why you're so hung up on it. Yes, there may be a tax bomb after forgiveness, but at most you're only paying 37% of the forgiven amount including interest.

 

[FutureDPM323]

Yea I’ve always been told either pay off the student loan asap or pay the bare minimum you can for 20 years (now 25), get it forgiven but save up for a tax bomb just in case

 

[MoostashPod]

All of these REPAYE (now SAVE) plans are all gibberish from the government trying to make it seem like they are trying to help you. They aren't. No government, whoever is in office, are looking after you or lending a helping hands. America has been duped in this system for ages. Don't fall for this crap as they just want you to stay in debt... like FOREVER! As stated above, pay it all off as fast as possible or pay the bare minimum for 20+ years and hope, just hope, for the 1-2% chance of getting it forgiven. You will be disappointed. Work hard as possible and pay it off!

 

[Hybrocure]

You need to do your research. No interest is cancelled. At lower incomes, there is a subsidy that covers your interest payments but interest never stops accumulating. If you read something that said "interest is cancelled", you read bad information.

That's like playing whack-a-mole. If you're only paying down one loan, you have 8 others gathering interest. Doesn't really work like that. You have to either:
A) commit to "living like a resident" for 3-5 years and pay off loans as aggressively as possible before interest balloons, or
B) commit to paying the bare minimum for 20-25 years, depending on the IDR plan you're on, and then getting the balance forgiven

If you do anything other than those two options, you're going to be burning money

Let’s be honest here living like a resident tip is no longer 3-5 years in the current job climate for a majority of new grads. If you want to pay them down (say 3k a month minimum just to cover the interest that accumulates) you will be living like a resident for closer to 10-15 years.

If you’re making sub 200k better to go the 25 year route and just enjoy your life. You’ve worked too hard to be a doctor living in a 1 bedroom apartment for the entirety of your 30s.

Unfortunately MD student loan tips don’t really work for us podiatrists. They can pay off half their student loan with a signing bonus alone.

 

[h0td0g]

Update: Since I was in podiatry school during COVID, I wasn't working that time so my payment right now came out to be Zero under SAVE plan!! I think it would be dumb to start paying right now when it's 0 under that plan, plus interest won't increase! I decided to not start paying right now, and to invest somewhere.. maybe a CD account or something.. trying to figure this out as I'm new to all this. Any recommendations??
I'll be saving most of my residency salary (don't have to worry about bills and stuff). tia!

 

[iridocyclitiss]

I think the SAVE plan is great.

I've been saving and have a spouse who has been working. about 80k left on my loan. Planning on using my residency monies to pay it off. Housing is currently free due to spouse's work.

 

[Emed MD]

Update: Since I was in podiatry school during COVID, I wasn't working that time so my payment right now came out to be Zero under SAVE plan!! I think it would be dumb to start paying right now when it's 0 under that plan, plus interest won't increase! I decided to not start paying right now, and to invest somewhere.. maybe a CD account or something.. trying to figure this out as I'm new to all this. Any recommendations??
I'll be saving most of my residency salary (don't have to worry about bills and stuff). tia!

It may or may not be dumb to make payments. It depends on the interest rates on the loans and how much you can make on your investments. You may be better off paying down the principal. Since you are able to save most of your resident salary consider paying yourself first to keep your required SAVE payments at or near zero by minimizing your AGI. Max out your pre-tax accounts (IRA, 401k/403b..., HSA) and any other "Adjustments to Income" on Schedule 1 Form 1040 that apply to your situation. Schedule 1

If you decide to pay down the principal you need to instruct your loan service provider to apply any extra payments to the principal. The day after the monthly payment date, after the government has paid your monthly interest, make the extra payment towards the principal.

 

[Feli]

It's still beneficial though--my payment is going down substantially. SAVE also lowers what is considered "discretionary income" by a lot (from 150% over poverty line to 225%), even for grad loans. Biggest difference between the undergrad loans is they only have to pay 5% of their discretionary income, while we still pay 10%.

What am I missing?

Any of the lower-your-payment attempt plans are only useful if you are going to try for the bail out options: pslf forgiveness, forgiveness after 20yrs or 25yrs on-time pays, IHS job grants, etc.

If you are actually trying to pay off the loans (or you make too much to minimize payments), it's best to just get used to the standard payments... and overpay them as much and as often as possible. That is going to be the vast majority of DPMs. For example, I could hide my income in private practice owner (let biz appear more profitable, pay myself little, and apply for lower IBR), but it's pointless.. the interest will still crush me, or at best, I'd go nowhere on the loans.

With current student loan interest rates of 7% or more, there is just no way that paying as much as one can is not the correct choice (assuming no loan cancel/assist option via job type). Back in moustache pod days when student loans were 2 or 3 or 4% interest, it was debatable to do 50/50 or some mix on paying loans and adding retirement savings, but at current rates, the loans are killers. They need to get squashed asap.

SAVE determines your payment by taking 10% of discretionary income over 225% of the federal poverty line. PAYE is the same, but uses 150% of the federal poverty line.

You don't stop interest from accumulating. If you have a low paying job, SAVE will pay the interest for you. If you make what an attending podiatrist should make, SAVE doesn't do much, if anything, for your interest....

This is exactly right. ^^^

SAVE might be useful for residents, fellowship year, or a very low paid associate to stay afloat, but 90% of DPMs out of residency training will make too much for it to be "helpful" (and helpful = just kicks the can down the road). The loans will still just be sitting waiting to go to interest again when the DPM gets a fair/good paying job.

....Put your savings or money that you would have been using to pay off your loans into safe investments like treasuries, CD’s and money market funds which are currently paying more than 5% interest....

Yes, this would work great... if anyone actually truly did that. So, there's that flaw.

For 99% of people, if they lower their monthly loan payment, they will just raise their spending on consumer goods, nicer vehicle, hobbies, speculative investments, etc.

Due to today's interest rates, it is typically better to just make a budget, put on the big boy pants, and make the highest loan payments possible. (sole exception to basic emergency fund cash savings and Roth IRA $6.5k/yr and, if available, 401/403 to employer matched level).

 

[Hybrocure]

Any of the lower-your-payment attempt plans are only useful if you are going to try for the bail out options: pslf forgiveness, forgiveness after 20yrs or 25yrs on-time pays, IHS job grants, etc.

If you are actually trying to pay off the loans (or you make too much to minimize payments), it's best to just get used to the standard payments... and overpay them as much and as often as possible. That is going to be the vast majority of DPMs. For example, I could hide my income in private practice owner (let biz appear more profitable, pay myself little, and apply for lower IBR), but it's pointless.. the interest will still crush me, or at best, I'd go nowhere on the loans.

With current student loan interest rates of 7% or more, there is just no way that paying as much as one can is not the correct choice (assuming no loan cancel/assist option via job type). Back in moustache pod days when student loans were 2 or 3 or 4% interest, it was debatable to do 50/50 or some mix on paying loans and adding retirement savings, but at current rates, the loans are killers. They need to get squashed asap.


This is exactly right. ^^^

SAVE might be useful for residents, fellowship year, or a very low paid associate to stay afloat, but 90% of DPMs out of residency training will make too much for it to be "helpful" (and helpful = just kicks the can down the road). The loans will still just be sitting waiting to go to interest again when the DPM gets a fair/good paying job.


Yes, this would work great... if anyone actually truly did that. So, there's that flaw.

For 99% of people, if they lower their monthly loan payment, they will just raise their spending on consumer goods, nicer vehicle, hobbies, speculative investments, etc.

Due to today's interest rates, it is typically better to just make a budget, put on the big boy pants, and make the highest loan payments possible. (sole exception to basic emergency fund cash savings and Roth IRA $6.5k/yr and, if available, 401/403 to employer matched level).

Disagree with the vast majority of DPMs will be paying down the debt with standard payments as much as possible.

The average monthly payment on a standard payment is about 3k a month with current school loans. This only outweighs a PAYE/SAVE plan if you’re bringing in over 300k a year.

The majority of new grad DPMs are not making a salary to pay that off and live comfortably. The majority of new grad DPMs are making half that.