PSLF in ophthalmology

[ydalegrog]

Hi all,

I have been looking into repayment options for the med school loan, and one attractive option currently out there is Public Service Loan Forgiveness Program, or PSLF for short; for those you who never heard of this, it is basically if you work for any of the following:

Government organizations at any level (federal, state, local, or tribal)
Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code (most hospitals are 501(c)(3) so most residencies and fellowships qualify)
Other types of not-for-profit organizations that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, if their primary purpose is to provide certain types of qualifying public services

and get paid by that organization for 10 years, then your remaining loan balance after 10 years gets forgiven, tax-free.


The caveat however is that often times, a lot of attendings under the "same hospital system" is nonetheless on the payroll that may be from the for-profit organization that is part of that umbrella non-profit, which means they do not qualify for PSLF as the for-profit is the one that pays your salary.

So my question is: what percentage of ophtho jobs will you say is on the payroll by nonprofit?

I imagine it is probably less than internal medicine, but I could not really pin down a number, whether the non-profit positions are in the minorities, to a point that I actually have to worry about PSLF eligibility when hunting for the job.

I have not been able to find a good answer from the search, so wanted to start a new thread and see if you have any rough guesses?

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[ydalegrog]

I would be really hesitant of PSLF. No guarantee of what the government will do with it in 10-15 years. Also if you look at the minutia, the year you pay off your loans it becomes some sort of "taxable income." Essentially if you x amount ($200-400k) it will act as a lump sum of income you received, which you will have to pay taxes on and that is a lotttt of $$$.

Also ophtho is one of the few fields that pay disproportionate amounts in academics vs. private practice/employed salary. So I would even further dissuade a future ophthalmologist.

In the first paragraph, you are actually referring to IBR/REPAYE/PAYE loan forgiveness which are taxable income if they are done without PSLF. I was referring to doing those with PSLF, which is a tax-free forgiveness.

But, could you elaborate on the second paragraph? What percentage of employed (roughly) are on the payroll under non-profit?

 

[airplanes]

OP you are absolutely correct that any amount forgiven under PSLF is not taxed as opposed to loan forgiveness from IBR, etc. which occurs after 25 years of payments. The rules are very clear about this.

Academic positions are essentially the only PSLF qualifying jobs available for Ophthalmologists. Academics may or may not be a good fit for you. Hard to give an actual number but I would estimate 10% or less of jobs are in academics. Traditionally, academic positions are going to pay less and have a lower compensation ceiling than private practice so if you are pursuing an academic job primarily for PSLF eligibility, the overall math may not necessarily be in your favor. It's more important that you find the right fit.

OP what stage of training are you in? It is certainly not a bad idea to keep your options open and continue making IBR payments rather than refinance too early. I can tell you I had no interest in academics throughout training and was 99% sure I would be going private practice like the vast majority of Ophthalmologists. I was so sure that my wife and I even made an extra 25k payment towards my 6.8% federal loans while I was a resident. Instead, I ended up taking an academic job close to home that was a good fit with no research and great comp/very high ceiling.

I am now about 3 years away from 120 payments. As a hedge, if the program falls through, I have a side fund building up that will wipe the remaining loans away. By the way, most experts agree that any revision to the plan will grandfather in people currently enrolled as there is a good bit of legalese that makes PSLF binding. If it does actually go through then i'll have a nice bolus to put in to retirement and to splurge a little.

 

[sw99]

By the way, most experts agree that any revision to the plan will grandfather in people currently enrolled as there is a good bit of legalese that makes PSLF binding. If it does actually go through then i'll have a nice bolus to put in to retirement and to splurge a little.

This sounds awful.

 

[airplanes]

This sounds awful.

Why? If borrowers currently on track for PSLF are allowed to see it through, that would be a good thing in my book.

 

[sw99]

Why? If borrowers currently on track for PSLF are allowed to see it through, that would be a good thing in my book.

I guess I agree with you, but it sounds like you weren't happy with your PSLF experience. I might be wrong...to clarify, could you maybe expand more on this for those who may be considering PSLF?

 

[airplanes]

I guess I agree with you, but it sounds like you weren't happy with your PSLF experience. I might be wrong...to clarify, could you maybe expand more on this for those who may be considering PSLF?

I have three years of payments remaining until I apply for forgiveness so I don’t have a positive or negative experience to draw upon. My backup plan/hedge is the side fund I am building.

Physicians who actually qualify have been getting approved for some time now.

The White Cost Investor website would be my recommended source for further reading regarding the pros/cons and considerations.