Public service loan forgiveness

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dyk343

Anyone pursing this option post residency graduation? I am technically joining a non-profit that should qualify. My residency is also at a non profit so I have almost 3 years of income based repayments from residency. That would mean 7ish years to be debt free making income based or pay as you earn repayments.

However, 100% of my advisors say the program is unreliable and should not be trusted. They all recommend living like a resident for the next 3-5 years and pay it off before pursing other financial debt (like a home). I'm leaning towards this advice.

What are other people doing? Anyone taking the gamble?

Direct from the student aid.gov website:
Can I be certain that the PSLF Program will exist by the time I have made my 120 qualifying payments?

We cannot make any guarantees about the future availability of PSLF. The PSLF Program was created by Congress, and Congress could change or end the PSLF Program
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Given the program (in it's short history) has been eyed for reduction in the amount forgiven (at least once) to ~$56k, that was enough to scare me away. Congress will bring it to the chopping block at some point to some degree. If you can pay off your loans before the 10 year mark, I say just pay them off. If you can't pay off in 10 years, it doesn't hurt to participate in the program making what payments you can.

I would hate to get to 120 payments or close to it and have the rug pulled out from under me with only a larger loan bill to pay. My family is going the route of live like a resident for a few more years and knock it out.
 
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pacpod said:
Given the program (in it's short history) has been eyed for reduction in the amount forgiven (at least once) to ~$56k, that was enough to scare me away. Congress will bring it to the chopping block at some point to some degree. If you can pay off your loans before the 10 year mark, I say just pay them off. If you can't pay off in 10 years, it doesn't hurt to participate in the program making what payments you can.

I would hate to get to 120 payments or close to it and have the rug pulled out from under me with only a larger loan bill to pay. My family is going the route of live like a resident for a few more years and knock it out.
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I called the federal student loan office today after posting this post. They said that they have not been informed that the program will dissolve at all or in the future. The lady on the phone went on to say "if it did you would likely be grandfathered in". I wish I was recording!

I also asked her about reporting my new income once I graduate. She said that they only restructure annually and therefore if seeking PSLF I was advised to make the minimum payment based on my resident salary until it is time to restructure again. At that time I would have to pay income based payments on my much higher salary.

To date there is no loan cap.

It just feels like too big of a gamble. Make the most minimum payment possible and watch that balance skyrocket only to have the rug torn out from under you at the end.
 
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There's been some recent drama about this in the news. Essentially, a number of people working for non-profit variations of the American Bar Association had applied to FedLoans and were initially informed that they were making qualifying payments. They were then contacted later and told that none of their payments were qualified and that it was retroactive. They are suing.

"In a legal filing submitted last week, the Education Department suggested that borrowers could not rely on the program’s administrator to say accurately whether they qualify for debt forgiveness. The thousands of approval letters that have been sent by the administrator, FedLoan Servicing, are not binding and can be rescinded at any time, the agency said."
https://www.nytimes.com/2017/03/30/business/student-loan-forgiveness-program-lawsuit.html?

Pacpod's $56K value was in 2015 proposed budget proposal to congress by Obama. Supposively the 2016 Republic Budget proposal proposed eliminating PSL for new borrowers. I don't think that anyone has actually received PSLF yet though we are closing in on it (and then we'll learn how expensive the program will be).

I intend to live affordably and pay my debt off. My home state is affordable and has no state income taxes. I'm very fortunate to have less debt (albeit still greater than $100K) than most people. REPAYE is doing a great job keeping my payments both affordable and preventing my debt from ballooning with interest. I'm a newspaper junkie and I've never read an article about student loan debt that sounded promising - there are sadly a lot of people in debt who are not in default, but are essentially doing the equivalent of paying the minimum on a credit card.
 
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My classmates and I have been discussing this topic in detail since graduation is right around the corner. As of right now, my wife's and my plan is to live like a resident following the completion of my training. Might be personal philosophy setting in, but I have trouble trusting the government to keep their word in 10 years. But it's still early for me, my thinking/plan might change once I get that first job offer.
 
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I would not go out of my way to work for a non-profit hoping for this to qualify. You would be better served by doing a rural health type job that will give you 25-50k a year to pay off loans directly. And anybody who is going into for-profit work should be making sure your credit is top notch so that you can refinance your student loans and stop paying the federal goverment. Every single person here should be reading/listening to www.whitecoatinvestor.com They have recently added podcasts. Moral of the story - refinance ASAP if you are not going to be able to take risk of PSLF. Lots of good, legitimate companies out there - Sofi, Lend Key, Commonbond and others. You can get aggressive and get pretty fantastic rates vs. your 6.8 federal - I am doing a 5 year ARM and will cut my rate in half - that is a lot of money saved. Student Loan Refinancing
 
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dyk343 said:
Great advice here. I have read his book twice and frequent his website all the time.
Click to expand...
Ankle Breaker said:
I just bought the book today. Air bud has recommended this website to me before. Will definitely dive deeper into the website once I get through the book. Sounds really promising.
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I third white coat investor. It has been a good site for everything across the board financially. He has a big series on disability insurance that I found very helpful.
 
The only thing with refinancing to consider is that you have to show income before you can get a significantly better rate. Unlike mortgages, there really is no collateral for the bank/company buying your debt. Therefore, future earnings and the fact that you "should" do very well in the near future is not enough for a company like Sofi. There also is no special "doctor loan" underwriting like there is for mortgages. So if you are joining a podiatry group, for example, and only have $8500 (gross) per month guaranteed you aren't going to get a 4% or better rate from a lender. You'd have to crunch the numbers but you may be better off waiting for 5-6 months before refinancing if it means a whole point better on the rate.

Otherwise, I agree with refinancing and paying in full as quickly as you can. Though I can't say I blame someone with $300k+ in debt who is looking at saving several hundred thousand dollars banking on the government keeping the program in place (a bunch of gutless men and women that IMO won't touch "student loans" in order to save us money)...

I had a family member buy my debt, they weren't kind enough to make it interest free but 1% sure beats 6.55%. Needless to say, I will not be following my own advice and will not be paying it off as quickly as possible.
 
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No clue. I am actually enrolled the PSLF program because I work for a rural hospital. I don't know if it will work out or not. My employer technically qualify so I figure why not see what happens.



dyk343 said:
Anyone pursing this option post residency graduation? I am technically joining a non-profit that should qualify. My residency is also at a non profit so I have almost 3 years of income based repayments from residency. That would mean 7ish years to be debt free making income based or pay as you earn repayments.

However, 100% of my advisors say the program is unreliable and should not be trusted. They all recommend living like a resident for the next 3-5 years and pay it off before pursing other financial debt (like a home). I'm leaning towards this advice.

What are other people doing? Anyone taking the gamble?

Direct from the student aid.gov website:
Can I be certain that the PSLF Program will exist by the time I have made my 120 qualifying payments?

We cannot make any guarantees about the future availability of PSLF. The PSLF Program was created by Congress, and Congress could change or end the PSLF Program
Click to expand...
 
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newfeet said:
No clue. I am actually enrolled the PSLF program because it work for a rural hospital. I don't know if I will work out or not. My employment technically qualify so I figure why not see what happens.
Click to expand...

Same here.
 
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It blows me away how many people are banking on this public service loan forgiveness and not just paying outright.

Some of y'all are making low 200k. After taxes that's what, 150k? Y'all telling me that u can't live off of 50k/year? Even if u got 400k in student loans, you could be debt free in 5 years if you put away 100k/year.
 
GypsyHummus said:
It blows me away how many people are banking on this public service loan forgiveness and not just paying outright.

Some of y'all are making low 200k. After taxes that's what, 150k? Y'all telling me that u can't live off of 50k/year? Even if u got 400k in student loans, you could be debt free in 5 years if you put away 100k/year.
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Yes. That's what we are telling you.
 
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Did some reading on it. All speculation. Lots of talk of those in repayment being grandfathered in. Also has to pass congress.

Sucks for those down the line but for those of us in the process of repaying on PSLF it will be the ultimate test to see if it will last.
 
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dyk343 said:
Did some reading on it. All speculation. Lots of talk of those in repayment being grandfathered in. Also has to pass congress.

Sucks for those down the line but for those of us in the process of repaying on PSLF it will be the ultimate test to see if it will last.
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Hopefully the people in the process gets grandfathered in. I'm planning for its elimination.
 
Rop said:
Update:
IF Trump does get rid of PSLF it would not apply to those who took out loans before July 1, 2018. I take this to mean that class of 2019 and any borrowers before then would be completely grandfathered in (as they would have already originated their final loans before July 1, 2018 making PSLF legally binding on the government's part upon the signing of our promissory notes).

On track for Public Service Loan Forgiveness? Good news, you’re not in danger from Trump’s budget.
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Thanks I'm going to read this!
 
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