Hello!
I am doing some research on different types of loans/ loan repayments and I just wanted to make sure I was getting accurate information.
I used an online loan repayment calculator for a hypothetical loan of $118,000 and a set interest rate of 6.8%. Here is the information I got for a 10 year payment plan:
Monthly payments: $1,360
Total Interest paid: $45,000
In order to avoid "financial difficulty" the website says that the person receiving the loan would need to make an annual salary of about $163,000.
For a 25 year loan repayment plan:
Monthly payments: $819
Total interest paid:$127,700 !!!!
Annual salary: $98,300
Does anyone on loans feel like this is accurate? I am hoping I am overlooking something... but I think that is a naive/wishful thinking-attitude. Don't get me wrong... I am so excited to become a PA and I know this in the end this will all be worth it; however, I can't help but feel a little concerned about the 127k interest ! I mean I may be a few years from retiring once I'm done paying the loan off.
Can anyone share their plans on paying off student loans?
I will only be taking about 80,000 so mine will be a bit less. I want to work in a pediatric hospital, so I am going to try and seek out job offers that include tuition reimbursement. Even at 5,000 (which seems to be the avg for OH) it helps make a difference! When I was looking at attending USC I was pretty much planning on doing the national health service corps and going wherever i could in the US to work for 2-3yrs.
Loan repayment and tuition reimbursement are two different things. Make sure you read the fine print.Originally Posted by wisemakl
I have a hard time coming up with those numbers. 25 years to pay off 112,000??? That is with a 98,000 salary? Dunno about that. I think the interest is on par, but I highly doubt it would take 25 years to pay that off with a salary that high. It's pretty simple really. Your loan is 112,000, your salary is 98,000 -- net income is obviously different, but even so. Your first years out your not going to live like a king. Lets say for brevity sake.. your salary is 90,000, your net income for the year is 55-60,000. That's ~5,000/month. You have rent/mortgage, car payments living etc. Depending on how frugal you are for the first five years, you can make a substantial payment on your loan and principal that will drastically reduce that interest amount. Lets that your loan is 100,000 for example. You are dishing out 6,000 per year to interest. If you can get by with making payments totalling to 25k/year (~2k/month) that would reduce your principle by 19-20k each year (interest included). With 100,000 that would take ~6-7 years, and even less once your principal is reduced to where your interest itsn't adding up so much.
So take that 2k out of the 5k take home monthly. You have 3k left to make your mortgage/rent payments (probably not going to be over 1k if again you don't live in a mansion.. hopefully) and then 1k for everything else (car, utilities or whatever else). That's 1k left for living for the month. Again, these are pretty rough numbers. I know I can live off 1k/month. This example is from paying off 2k/month to polish off that loan in 6-7 years! Turn that into 10 years and your in better shape living wise. Now I don't claim to be a financial advisor, but I definitely think it is very possible.
Someone tell me if I am living in a dream world.
Oh and regarding the "financial difficulty". If your salary is ~1.4x higher than your loan... I would say your in really good shape. Then you may be able to live in that 500,000 house with a corvette. I would suggest finding an advisor to talk with instead of looking to a calculator for financial advisement.
Agreed
I'm right there with you which is why I posted here!
Here is a link to the website that I used (where I got my numbers and language- "financial hardship"- from).
http://www.finaid.org/calculators/sc...anpayments.cgi
Am I missing something? This is just some preliminary research and obviously it would be irresponsible to make any big decisions based only on the information from this online financial aid loan repayment calculator. But since this is an open forum with people paying off student loans, I thought I should post here for someone who is going through this to give me some perspective! Are you speaking from experience or from opinion? (either way any input is appreciated, though the latter would be taken with a grain of salt)
I'm all about living frugally... I definitely don't need a fancy corvette or anything like that- but I'm thinking ahead (IE family/kids/college tuition/ etc). So will my loan live to haunt me if I have another option of attending a different program with lower tuition ?
Im speaking from opinion mostly. But my theory (and it is just a theory) is calculated. I have worked this out with financial advisor pals. I have proposed it and they agree that it is definitely possible. The little I know about finances, there is one thing to take out of it. Anything is possible if you work hard at it (ie budget, work extra etc) and have a plan of action. I know of quite a few instances where people do not have a plan, and run themselves into the ground with debt. If you are motivated to make it happen, it will.. in the same breathe it has to be a reachable goal. In your example, it is reachable when looking at the salary and amount to pay back.
Of course you have to plan for things like marriage, kids etc. This is case by case. I will not have kids so that helps... and I'm fairly young. If you bring a spouse into the equation, you have to remember that you have two income sources. If you can cover the bases for living and added expenses along with loan payments, then your spouse can contribute by either putting money into savings or applying it to the loan. Take it with a grain of salt, like you said, but it's reality. I am sort of passionate about this because I have come from a place where living expenses are incredibly high. The average house in my city is roughly 350,000. Think about the people who take out that kind of mortgage just starting out.. with a salary far less than what you propose. That is significant in my eyes. If I can come out of PA school with 120,000 in loans.. get a mortgage for a house in the area I will be living for 250,000 (which is a pretty damn nice house in the demographics I will be living in.. and better than what I could find for 350,000 in my city). That totals 370,000... after consolidation. Close to the same as what that person would be paying in my home city.. add in the fact that I will have a higher salary. It seems a bit irrelevant to your question, but it's something to ponder... there are people worse off.
There are alot of variables, and mine will probably not be the same for you. But like I mentioned before, if you do it right and follow a plan you can get that paid off in 10 years easy, and live comfortably.. and hopefully paying off a mortgage while doing so.
My .02
Again all input is appreciated and a great way to hear what other people think/experience. I wish I had some financial advisor friends! haha maybe I need to make some soon!
Totally agree that the loan is do-able (though of course not ideal) with hard work and determination. Being from the Bay Area (San Francisco) where housing and cost of living are astronomical, I forget that not every city is so crazy expensive to live in. My dilemma is that I am deciding what program to attend and one is much less expensive (though the other is my first choice!). Things do vary from person to person and I have no idea where I am going to be professionally and personally in 10 years- I am just hoping I'm not in over my head with student debt. I haven't even begun thinking about owning a house/ having a mortage... YIKES!
National health service corps.... pay your loan 60,000 for 2 years of work..pay your loan 140,000 for to you work 5 years for them. That's in addition to your full salary. You can be banking all that cash into your own savings while the NHSC pays your loans for you. Stop stressing...it'll work out.
My boyfriend/PA has been out of school for about 4 years and just paid his last loan payment this month. (Yay!!) His loans were ~75,000. We lived fairly frugally (cheap apartment, very few nights out on the town), but he was also able to buy a car and pay it off within a year. The numbers are overwhelming to begin with, but it's all very do-able! The bad news is...I start school in August and we will have a whole new set of loans to conquer!
Emory University Class of 2014
JM,
That's great! My husband and I were doing the numbers and pretty much sound alot like yours. The way we were living before I was accepted to PA school (two days ago WOOO!) is where we are happiest. (That includes our recent medical upset and bills out the ears - I ALWAYS plan for that one..... Anyways
It sounds sufficient to me. Although, if anyone sees a flaw with it, PLEASE tell me!
Lincoln Memorial University - DeBusk College of Osteopathic Medicine
Physician Assistant - Class of 2014
I know a few PAs who did this. One is almost 2 years into her service and highly recommends it. The other is a new grad (Dec '11) and she hasn't been able to find a job that meets NHSC requirements. I was very excited about NHSC but after hearing about PA #2's struggles, I'm going to be more hesitant about signing up for anything without a guranteed job.
i've used that website before..with the needing to make $163,000 a year is assuming you are putting 10% of your yearly salary towards your loans. Obviously most new grads will want to use more of their salaries to pay their loans down.
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