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I married a frugal person, so I am now frugal by proxy (which really helps with saving/planning). So... If you're single, keep you're eye out for someone with a sense of budget! ; )

 

It sounds like you're planning ahead & on the right track! And there is definitely some good advice on here, so thank you for the post, as it is helpful to many!

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average salary for PA years 1-5 = 90-95k (that is an average could be higher if in certain specialty)   A family of four can comfortably live off of 45k a year in many parts of the country. Take wha

Here's what I did:   1) Got into PA school near my parents' house in my early 20s. 2) Got a military scholarship and joined up. 3) Stay single (not difficult, given where I was stationed) 4) Got

I'm really wary of sharing too much here, but here goes. If you have any specific questions I'm happy to answer through PM if you think it will help you.   We currently owe $293,000 in stude

when you enter a 10-year loan forgiveness plan and elect to pay the "minimum," what does "minimum" exactly mean? Would a 100k loan and 150k loan have the same minimum monthly fee? what about a 120k loan and 125k loan? 

 

 

https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

 

Married, $45k in unsubsidized loans @ 6%, $100k in grad plus at 8%, $90k gross family income: Income based repayment is $826/month.  That is going to be your minimum payment.  If you do the 10 year non-profit payment the remaining balance after 10 years is forgiven (most hospital systems at non-profit, fyi), but you can not miss a payment and you must work non-profit for the 10 years.  If you don't you won't get the forgiveness and your principle will be minimally reduced, meaning your overall costs will be higher....

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https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

 

Married, $45k in unsubsidized loans @ 6%, $100k in grad plus at 8%, $90k gross family income: Income based repayment is $826/month. That is going to be your minimum payment. If you do the 10 year non-profit payment the remaining balance after 10 years is forgiven (most hospital systems at non-profit, fyi), but you can not miss a payment and you must work non-profit for the 10 years. If you don't you won't get the forgiveness and your principle will be minimally reduced, meaning your overall costs will be higher....

You can miss a payment, you just don't get credit for that month. I missed one already by a day. I was not happy
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https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

 

Married, $45k in unsubsidized loans @ 6%, $100k in grad plus at 8%, $90k gross family income: Income based repayment is $826/month.  That is going to be your minimum payment.  If you do the 10 year non-profit payment the remaining balance after 10 years is forgiven (most hospital systems at non-profit, fyi), but you can not miss a payment and you must work non-profit for the 10 years.  If you don't you won't get the forgiveness and your principle will be minimally reduced, meaning your overall costs will be higher....

I'm confused by this calculator tool. I'm projected to have a total of ~$70,000 in student loans by the time I graduate. I put that I'm single and I'm projected to make $90,000, assuming that's the going base graduate salary in the beginning of 2018. It says my payments will be $769/mo. Multiply that by 120 (minimum payment for 10 years) and it's already paid off ($92,272)... How does the forgiveness thing even come into play?... My minimum payments would already pay all of my loans + interest in 10 years... I thought the purpose of the forgiveness was that you'd be making payments on a much lesser scale for 10 years and have a big chunk of it forgiven?

 

Am I missing something or is this all a hoax?...

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I'm confused by this calculator tool. I'm projected to have a total of ~$70,000 in student loans by the time I graduate. I put that I'm single and I'm projected to make $90,000, assuming that's the going base graduate salary in the beginning of 2018. It says my payments will be $769/mo. Multiply that by 120 (minimum payment for 10 years) and it's already paid off ($92,272)... How does the forgiveness thing even come into play?... My minimum payments would already pay all of my loans + interest in 10 years... I thought the purpose of the forgiveness was that you'd be making payments on a much lesser scale for 10 years and have a big chunk of it forgiven?

 

Am I missing something or is this all a hoax?...

 

 

13.What is the best repayment plan if I’m seeking PSLF?

 

An income-driven plan is your best option. Although the 10-Year Standard Repayment Plan qualifies for PSLF, it requires you to fully pay off your loan within 10 years (120 monthly payments). Therefore, you will not have any remaining loan balance to be forgiven if you make all of your 120 qualifying payments under the 10-Year Standard Repayment Plan. The 10-Year Standard Repayment Plan and other plans with payments that are equal to the 10-Year Standard Repayment Plan amount are included as eligible repayment plans for PSLF purposes so that borrowers may receive credit toward the required 120 PSLF payments for any payments they may have made under those plans before switching to an income-driven plan.

 

https://studentaid.ed.gov/sa/sites/default/files/public-service-loan-forgiveness-common-questions.pdf

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I'm confused by this calculator tool. I'm projected to have a total of ~$70,000 in student loans by the time I graduate. I put that I'm single and I'm projected to make $90,000, assuming that's the going base graduate salary in the beginning of 2018. It says my payments will be $769/mo. Multiply that by 120 (minimum payment for 10 years) and it's already paid off ($92,272)... How does the forgiveness thing even come into play?... My minimum payments would already pay all of my loans + interest in 10 years... I thought the purpose of the forgiveness was that you'd be making payments on a much lesser scale for 10 years and have a big chunk of it forgiven?

 

Am I missing something or is this all a hoax?...

Hahaha...Hahaha...Hahaha!!! Bingo. You make too much $. ;)
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I'm confused by this calculator tool. I'm projected to have a total of ~$70,000 in student loans by the time I graduate. I put that I'm single and I'm projected to make $90,000, assuming that's the going base graduate salary in the beginning of 2018. It says my payments will be $769/mo. Multiply that by 120 (minimum payment for 10 years) and it's already paid off ($92,272)... How does the forgiveness thing even come into play?... My minimum payments would already pay all of my loans + interest in 10 years... I thought the purpose of the forgiveness was that you'd be making payments on a much lesser scale for 10 years and have a big chunk of it forgiven?

 

Am I missing something or is this all a hoax?...

You haven't taken into account the interest. What is the interest rate on the loans? Close to 8% I believe. Find a calculator that will take this into effect when you're looking at repayment. Compound interest is great when it's working for you.... But painful when it's against you.

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You haven't taken into account the interest. What is the interest rate on the loans? Close to 8% I believe. Find a calculator that will take this into effect when you're looking at repayment. Compound interest is great when it's working for you.... But painful when it's against you.

I said i'll have ~$70k in student loans. With interest it'll be $92,272. This will be paid off after 120 payments. Nothing will be forgiven if I pay the standard payments because nothing will be left over according to this calculator, which is a government site dedicated to student loans...

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I said i'll have ~$70k in student loans. With interest it'll be $92,272. This will be paid off after 120 payments. Nothing will be forgiven if I pay the standard payments because nothing will be left over according to this calculator, which is a government site dedicated to student loans...

 

Income based repayment is basically only a good idea for people who have more than loans than their current salary. So if you make more than $70k as a PA (and I hope you do!) it makes more sense to do the standard repayment.

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I said i'll have ~$70k in student loans. With interest it'll be $92,272. This will be paid off after 120 payments. Nothing will be forgiven if I pay the standard payments because nothing will be left over according to this calculator, which is a government site dedicated to student loans...

Exactly - the govt is basically saying that based on the income you will make ($90k/yr), paying less than $800/month in loan payments should be completely doable.  And it should be.

 

If you use that site (and I recommend it! It's super helpful!) you will see that in order to even qualify for the income based repayment you must have 'partial financial hardship' and payments are calculated based on income vs 150% of poverty guidelines.  So yea - you will make too much money.  One of the key things I look at in that nice little chart that is produced is 'total amount paid' because honestly, with the standard repayment it is often the least amount overall.  Very few situations allow for a significant loan forgiveness and the ones that do - the forgiveness is treated as taxable income so you could owe a hefty tax amount the year it is forgiven.

 

Yes, saying goodbye to $1000/mo in loan payments won't be fun, but in the long run, it probably is the best financial option.  

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Contrary to popular belief, the well-off people are not crazy spenders, and got where they are as much by saving a ton and being savvy buyers as by having a good salary. They may buy higher-quality stuff, but they're not usually out their just buying more stuff. And, if you get pre-approved for, say, a $400,000 house, don't look for houses at your max - find the steal at $260,000, for example (to speak to one major reason why so many people lost their houses in the Great Recession).

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You can miss a payment, you just don't get credit for that month. I missed one already by a day. I was not happy

missed and late are two different things.  Missed means the next payment comes due and you haven't made a payment.  Late usually means a fine unless your lender has a grace period

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missed and late are two different things. Missed means the next payment comes due and you haven't made a payment. Late usually means a fine unless your lender has a grace period

Very definition of pedantic.

 

You perhaps missed the point

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I don't really understand this based on my experience with loans thus far. I have a LOT of loans from grad school (not PA)- $189k (hush, I don't want to hear it). However last year on IRB making around 50-60k I was only paying about $50 a month. Even if I make double this as a PA wouldn't my payments be $100 a month?

 

 

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No, that is not how IBR works at all.  It is based of of your percentage of disposable income.  Which is a calculation of your family size and the current federal poverty level.  Meaning the more money you make the more money you pay.  Actually use the IBR calculator studentloans.gov provides and you will see $289,000 (which is a conservative estimate putting PA school loans at 100k) at 6% for a single person is $954 a month that balloons to $3200 a month towards the end of the loan. That is assuming you make $115K a year and take the standard deduction.

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No, that is not how IBR works at all. It is based of of your percentage of disposable income. Which is a calculation of your family size and the current federal poverty level. Meaning the more money you make the more money you pay. Actually use the IBR calculator studentloans.gov provides and you will see $289,000 (which is a conservative estimate putting PA school loans at 100k) at 6% for a single person is $954 a month that balloons to $3200 a month towards the end of the loan. That is assuming you make $115K a year and take the standard deduction.

But the maximum is 15% of your income. Am I missing something? I have no idea how I was paying $50 a month really.

15% of 50k is over 600.

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No, that is not how IBR works at all.  It is based of of your percentage of disposable income.  Which is a calculation of your family size and the current federal poverty level.  Meaning the more money you make the more money you pay.  Actually use the IBR calculator studentloans.gov provides and you will see $289,000 (which is a conservative estimate putting PA school loans at 100k) at 6% for a single person is $954 a month that balloons to $3200 a month towards the end of the loan. That is assuming you make $115K a year and take the standard deduction.

The reason it balloons is that it assumes you will get a 5% increase every year AND that the standard deduction and inflation will increase. 

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But the maximum is 15% of your income. Am I missing something? I have no idea how I was paying $50 a month really.

15% of 50k is over 600.

it because it isn't based on your gross income.  It is based on discretionary income which is your adjusted gross income (after deductions) - 150% of the poverty level for your household size divided by 12 (12 months in a year....).  So to be paying $50 a month your adjusted gross income would have to be like $4500, so I am not sure how you were paying $50 a month.  This doesn't even begin to touch the interest on that loan, so really all you really did was throw away $50 a month in exchange for not getting dinged for missing a payment.  

 

Figuring 6% interest on $189k that is $945 a month in interest alone, and that is just to keep your principal from increasing without reducing your owed amount.  You are tacking almost $12,000 a year on to your principal.  Last year it was $189k, this year it is probably a touch over $200k.  

 

In order to have paid your loan back in 10 years you would have needed to be paying over $2000/month....  It sounds like you really need to talk to a financial advisor about your debt....

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it because it isn't based on your gross income. It is based on discretionary income which is your adjusted gross income (after deductions) - 150% of the poverty level for your household size divided by 12 (12 months in a year....). So to be paying $50 a month your adjusted gross income would have to be like $4500, so I am not sure how you were paying $50 a month. This doesn't even begin to touch the interest on that loan, so really all you really did was throw away $50 a month in exchange for not getting dinged for missing a payment.

 

Figuring 6% interest on $189k that is $945 a month in interest alone, and that is just to keep your principal from increasing without reducing your owed amount. You are tacking almost $12,000 a year on to your principal. Last year it was $189k, this year it is probably a touch over $200k.

 

In order to have paid your loan back in 10 years you would have needed to be paying over $2000/month.... It sounds like you really need to talk to a financial advisor about your debt....

not planning to pay it back in 10 yrs unless it's dismissed for public service. Otherwise will be dismissed at 25 years.
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not planning to pay it back in 10 yrs unless it's dismissed for public service. Otherwise will be dismissed at 25 years.

Still worth talking to a financial planner.  Any loans applicable to the public service forgiveness (health care education associated loans) can be paid off after 120 payments made while working for a non-profit, and it's not considered taxable income.  If your existing loans don't fall under that umbrella then in theory you could have them forgiven at 25 years, but the balance that is forgive at 25 years is taxable income.  If you have $40k forgiven then that is consider $40k in income that you didn't have taxes taken out during the year to cover.  If you are married making less than $150k a year (or whatever the rate is then) you would be looking at a tax bill of $10k due immediately.  It's worse if your principle is higher or a spouse has student loan debt.  

 

Doing a very quick repayment calculator (married filing jointly, $125k a year with 2 kids.  anymore than that and your IBR repayments are high enough that results in loans being paid off at 25 years) you'd have roughly $65k forgiven after paying $362k in payments on a $189k.  You'd face a one time tax of about $15,000.  

 

So to have $65k forgiven you'd have to keep your income down and pay $100k extra in interest charges over that 25 years (versus paying the loan down in 10 years) plus a $15k-ish tax bill.  So pay an extra $115k or so to have $65k forgiven.  All of this is, of course, assuming your current loans don't count under the loan forgiveness for service program, which based on your reply, probably doesn't.

 

And you haven't even added in your PA school loans.

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Still worth talking to a financial planner. Any loans applicable to the public service forgiveness (health care education associated loans) can be paid off after 120 payments made while working for a non-profit, and it's not considered taxable income. If your existing loans don't fall under that umbrella then in theory you could have them forgiven at 25 years, but the balance that is forgive at 25 years is taxable income. If you have $40k forgiven then that is consider $40k in income that you didn't have taxes taken out during the year to cover. If you are married making less than $150k a year (or whatever the rate is then) you would be looking at a tax bill of $10k due immediately. It's worse if your principle is higher or a spouse has student loan debt.

 

Doing a very quick repayment calculator (married filing jointly, $125k a year with 2 kids. anymore than that and your IBR repayments are high enough that results in loans being paid off at 25 years) you'd have roughly $65k forgiven after paying $362k in payments on a $189k. You'd face a one time tax of about $15,000.

 

So to have $65k forgiven you'd have to keep your income down and pay $100k extra in interest charges over that 25 years (versus paying the loan down in 10 years) plus a $15k-ish tax bill. So pay an extra $115k or so to have $65k forgiven. All of this is, of course, assuming your current loans don't count under the loan forgiveness for service program, which based on your reply, probably doesn't.

 

And you haven't even added in your PA school loans.

I like the way you do the maths. *tear*
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I like the way you do the maths. *tear*

 

 

for fun I checked to see what was given up by not paying off in 10 years.

 

You take that $115k and divide it by the 15 years, that is $7666 a year you save. If, instead of continuing to pay that towards your loans, you yearly invest that money in an index fund with a less than typical 4% return your total value after 15 years (25 year loan forgiveness window - 10 year pay off plan) is $173, 446.  

 

Here is where you need a financial advisor because I am not certain of the formulas involved, so I am winging it here:  Not only do you pay an additional $115k to your loan provider but you miss out on almost $60k in growth.  Assuming you graduated at 30 and paid your loans off by 40, then continued paying that $7666 yearly "savings" towards an index fund until 55, then stopped paying to it and retired 10 years later at 65 that sum grows to $256,000 at retirement. (if you never stopped paying that $7666 a year, which you never had to spend in the first place so what are you really missing, that value grows to $352,000 at 65)

 

So by retirement you miss out on $140,000 in growth, and throw out $256,000 gross, by not paying the loan off in 10 years and instead waiting for it to be forgiven.  Again, this doesn't have anything to do with any 401(k) or pensions you or a spouse might have, nor is it applicable if the $189k is forgivable under the loan forgiveness for service program, and this is living no differently between year 10 and 25 than if you had not paid your loans off in 10 years.

 

This is all amateur spitballing.  There is a reason why you need a financial advisor when you start talking about this level of debt and income.

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  All of this is, of course, assuming your current loans don't count under the loan forgiveness for service program, which based on your reply, probably doesn't.

 

 

Why are you assuming that? Almost all government loans, with the exception of parent plus loans and perkins, are eligible.

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