Paying off student loans

[salsasunrise123]

Thought I would share this Medscape report on physician debt (http://www.medscape.com/features/sl...rep_160420_mscpedit&uac=&impID=0&faf=1#page=8).

The stats around student debt are particularly interesting. See page 8. 24% of respondents are still paying off student loans between age of 45-49 and 41% are still paying it off between age 40-44. Question is what the average interest rate is for these people. They could be in prolonged payment plan and opting to invest elsewhere instead of paying debt off but I do not know how common a practice that is. Glad to see that I will not be alone in paying off my loans into my 40s. Coupled with projection that the country's student debt burden will be approx. 3.3 trillion in ten year (currently in ball park of 1.3 trillion), this truly is next bubble to burst. If doctors, who generally speaking are in top decile of wage earners are taking this long to pay off debt, then we are in serious trouble. Let's just hope that future changes to PSLF (which is necessary from fiscal perspective) grandfather us in. I think it will as not doing so would be contrary to common law and public policy, as well as being unprecedented in terms of federal student loan financing. Though the program should be capped for future borrowers as it created unmitigated incentive for schools to continue to increase tuition. Georgetown Law is probably the best example. Georgetown justifies increases in tuition by offering to pay loan payments for public interest grads for 10 years so students may qualify for 100% forgiveness. Essentially, these students are going to school for free on taxpayers dime. However, that said, PSLF should remain intact for current borrowers for the reasons that have been discussed ad nauseum on this website. The issue isn't whether PSLF will change. It will. The issue is how current borrowers will be affected.

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[deleted731525]

I have no doubt they will cap PSLF and do it retroactively. They made private student loans non dischargeable in bankruptcy and it was applied retroactively even if you already took out loans. The reason that became a big deal in the first place was because a few doctors and lawyers discharged their loans and the public caught on. There is no way history doesnt repeat itself.

 

[RangerBob]

I have no doubt they will cap PSLF and do it retroactively. They made private student loans non dischargeable in bankruptcy and it was applied retroactively even if you already took out loans. The reason that became a big deal in the first place was because a few doctors and lawyers discharged their loans and the public caught on. There is no way history doesnt repeat itself.

This is pretty much how I feel as well. The one thing going for us is lawyers need PSLF even more than we do (they have almost as much debt, but much worse job prospects/lower income) and lawyers have a lot more clout in Congress.

Of course, a lot of good that did them when the bankruptcy rules were changed... And as you point out--those rules were entirely changed because of public reaction to media coverage of a few well-off and unethical physicians/lawyers declaring bankruptcy to discharge their student loans.

We should know sometime in late 2017 or early 2018, as the first cohort of PSLF-eligible borrowers will reach their 10-year mark in fall of 2017.

 

[pd1112]

Thought I would share this Medscape report on physician debt (http://www.medscape.com/features/sl...rep_160420_mscpedit&uac=&impID=0&faf=1#page=8).

The stats around student debt are particularly interesting. See page 8. 24% of respondents are still paying off student loans between age of 45-49 and 41% are still paying it off between age 40-44. Question is what the average interest rate is for these people. They could be in prolonged payment plan and opting to invest elsewhere instead of paying debt off but I do not know how common a practice that is. Glad to see that I will not be alone in paying off my loans into my 40s. Coupled with projection that the country's student debt burden will be approx. 3.3 trillion in ten year (currently in ball park of 1.3 trillion), this truly is next bubble to burst. If doctors, who generally speaking are in top decile of wage earners are taking this long to pay off debt, then we are in serious trouble. Let's just hope that future changes to PSLF (which is necessary from fiscal perspective) grandfather us in. I think it will as not doing so would be contrary to common law and public policy, as well as being unprecedented in terms of federal student loan financing. Though the program should be capped for future borrowers as it created unmitigated incentive for schools to continue to increase tuition. Georgetown Law is probably the best example. Georgetown justifies increases in tuition by offering to pay loan payments for public interest grads for 10 years so students may qualify for 100% forgiveness. Essentially, these students are going to school for free on taxpayers dime. However, that said, PSLF should remain intact for current borrowers for the reasons that have been discussed ad nauseum on this website. The issue isn't whether PSLF will change. It will. The issue is how current borrowers will be affected.

It's not that common because so many of our peers are stupid.

 

[Pacna]

One of my classmates from college isn't paying his loans at all. He asked a lawyer (his wife dragged him to a lawyer), and he was told to continue not to pay. Something to do with statute of limitations every month he didn't pay before they took action... Idk. He's still not paying it.

So I guess that's an option? Not that I suggest it. (But so long as the old lady doesn't get wind of my plan...!)

 

[Pacna]

That makes no sense, and I went to law school. His wages can be garnished and it would def hurt his credit.

My better half also went to law school and worked in collections, and she says it's legit. *shrug* But she said we can't try it. (ONE HAND GIVETH)

 

[Mad Jack]

One of my classmates from college isn't paying his loans at all. He asked a lawyer (his wife dragged him to a lawyer), and he was told to continue not to pay. Something to do with statute of limitations every month he didn't pay before they took action... Idk. He's still not paying it.

So I guess that's an option? Not that I suggest it. (But so long as the old lady doesn't get wind of my plan...!)

Statute of limitations doesn't apply to federal student loans (they have no statute of limitations, and can pursue you literally to the ends of the earth until you die), but does apply to private. If they sue him at any point prior to his loans being discharged (and they'll usually wait until the last minute to maximize the penalties they can collect), the statute of limitations begins anew if they so much as make contact with you via a served notice.

 

[Mad Jack]

My better half also went to law school and worked in collections, and she says it's legit. *shrug* But she said we can't try it. (ONE HAND GIVETH)

The student loan creditor waited too long to sue you. Federal student loans have no statute of limitations. However, private student loans are subject to your state’s statute of limitations (time limits on how long to wait before suing) for legal action to collect on written contracts. To learn more about statutes of limitations and the time period that applies in your state, see Statutes of Limitations & Debt Collection.

 

[Pacna]

Statute of limitations doesn't apply to federal student loans (they have no statute of limitations, and can pursue you literally to the ends of the earth until you die), but does apply to private. If they sue him at any point prior to his loans being discharged (and they'll usually wait until the last minute to maximize the penalties they can collect), the statute of limitations begins anew if they so much as make contact with you via a served notice.

I should add that everything they own is in his wife's name, and he's really skinny, so if they try to serve him, he'll just turn sideways.

 

[Mad Jack]

I should add that everything they own is in his wife's name, and he's really skinny, so if they try to serve him, he'll just turn sideways.

If you're married, all property is on the table. Had a coworker with an embezzling lawyer husband that got caught. Got sued for everything- even the stuff that she'd paid for with her money that was in her name, and he went away for six years. The rules vary by state, but generally the only things that can't be taken are your home and your government-sanctioned retirement funds (401k, 403b, IRA, SEP, etc). Of course, it does vary by state.

I looked into doing some things like that to shield my assets in case a patient sued me- it's very hard to do. And it actually incentivizes buying a huge house as a physician- your house is protected, so if you've got a million dollar home, that's a million dollars someone can't sue you for and that you won't lose in bankruptcy.

 

[Mansamusa]

I've been trying to find out more about the legality of not grandfathering us into PSLF. I think it would be pretty unethical and unprecedented to change loan the conditions of loan repayment after we've already signed on for the loan.

The law students getting screwed with help us launch a lawsuit if we have grounds for it

 

[Silent Cool]

If you're married, all property is on the table. Had a coworker with an embezzling lawyer husband that got caught. Got sued for everything- even the stuff that she'd paid for with her money that was in her name, and he went away for six years. The rules vary by state, but generally the only things that can't be taken are your home and your government-sanctioned retirement funds (401k, 403b, IRA, SEP, etc). Of course, it does vary by state.

I looked into doing some things like that to shield my assets in case a patient sued me- it's very hard to do. And it actually incentivizes buying a huge house as a physician- your house is protected, so if you've got a million dollar home, that's a million dollars someone can't sue you for and that you won't lose in bankruptcy.

@Mad Jack , are investment properties also protected? Or is it just the primary house? What about assets located outside of this country? Like let's say I have property and a home in New Zealand? Could the lawyers touch something like bitcoin?

thanx

 

[deleted731525]

I've been trying to find out more about the legality of not grandfathering us into PSLF. I think it would be pretty unethical and unprecedented to change loan the conditions of loan repayment after we've already signed on for the loan.

The law students getting screwed with help us launch a lawsuit if we have grounds for it

They did it before with bankruptcy on private student loans. I believe it was the Obama administration that proposed capping PSLF at 50k. The democrats take the position that these programs arent meant for high earners. Some Republicans feel the same way. The rest believe that these programs shouldnt exist at all. There will be nobody going to bat for us.

 

[Mad Jack]

@Mad Jack , are investment properties also protected? Or is it just the primary house? What about assets located outside of this country? Like let's say I have property and a home in New Zealand? Could the lawyers touch something like bitcoin?

thanx

Not sure honestly- still working on strategies myself

 

[Mansamusa]

They did it before with bankruptcy on private student loans. I believe it was the Obama administration that proposed capping PSLF at 50k. The democrats take the position that these programs arent meant for high earners. Some Republicans feel the same way. The rest believe that these programs shouldnt exist at all. There will be nobody going to bat for us.

But the bankruptcy thing was to combat unethical and illegal actions. This is a program that people are using to gauge their ability to attend school. My friends in law school talk all the time about how the loan is nbd since it will be forgiven if they get a public service job. This is a completely different scenario.

Getting rid of PSLF is akin to getting rid of IBR and requiring everyone to do a 10yr standard payment. We made our decision to take out the loans based on the contract and repayment options offered to us, you can't change those conditions after we already sign.

 

[Silent Cool]

But the bankruptcy thing was to combat unethical and illegal actions. This is a program that people are using to gauge their ability to attend school. My friends in law school talk all the time about how the loan is nbd since it will be forgiven if they get a public service job. This is a completely different scenario.

Getting rid of PSLF is akin to getting rid of IBR and requiring everyone to do a 10yr standard payment. We made our decision to take out the loans based on the contract and repayment options offered to us, you can't change those conditions after we already sign.

A 10-year standard repayment would leave a lot of people with ~30K per year if they had 500K+ of loans. That's ridiculous.

 

[Mansamusa]

A 10-year standard repayment would leave a lot of people with ~30K per year if they had 500K+ of loans. That's ridiculous.

I know, that's just a hypothetical comparison. It's the same idea that they are changing the options we have available to pay off our loans after we already take them out without giving us the option to continues with the payment plans that existed when we signed our loan contract. Bamkruptcy wasn't a repayment plan that would be considered a protected option wheb you sign your loan contract, so I understand why they claimed they could retroactively change that. Not grnadfathering in PSLF would be a different situation alltogether

Edit: Businesses realize they made bad agreements all the time, but they can renege on those agreements. You cut your losses and learn for the future. The gov't shouldn't be above those agreements either

Edit: So they explicitly state that any changes made to the Act is applied to our loans. So we do just have to rely on the strength of the law lobby to keep PSLF going

 

[Redtwogreen]

That makes no sense, and I went to law school. His wages can be garnished and it would def hurt his credit.

Seriously. That is for sure, insane.

 

[username456789]

It's not that common because so many of our peers are stupid.

If you can direct me towards a low risk investment where I can earn 8% returns (or more) reliably, I would consider investing some of my money. Otherwise, it would be stupid to do that versus paying off my loans.

 

[jw3600]

If you can direct me towards a low risk investment where I can earn 8% returns (or more) reliably, I would consider investing some of my money. Otherwise, it would be stupid to do that versus paying off my loans.

You would be lucky to get guaranteed 4% right now. I really don't see many instances where paying off your loans aggressively isn't the best plan. At least for the next 2-5 years.

 

[username456789]

You would be lucky to get guaranteed 4% right now. I really don't see many instances where paying off your loans aggressively isn't the best plan. At least for the next 2-5 years.

Exactly.