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About once every 3 months I put myself into a panic about my student loans. I went to PA school right out of college and thought the better reputation school would be better for me, even though it was significantly more expensive. I know now that that was a terrible decision. After my first panic about student loans I started living significantly cheaper but I still have the debt hanging over my head. Is this a feasible amount to pay off as a single woman after graduating? Will I ever be able to not live as cheaply as I do now... at least within 10 years?

 

Any advice would be appreciated. After looking at the cost of other schools, there has to be more people in my shoes out there and I'd love to hear some stories/advice from fellow PAs. 

 

Thank you! 

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I have about the same amount of student loans. The school I chose was the one closest to my mom, who has health issues, and was a private school. I've been out of school for just over 4 years. How long ago did you graduate? About 2/3 of my loans are federal and I work at a nonprofit hospital, so I qualify for the Public Service Loan Forgiveness program. Even though my salary is great, I qualify for income-based repayment, which basically halves my monthly federal loan payment. My private loan payment is high as well, but more manageable. I have the benefit of my husband also having a good job, but we live very comfortably. 

 

If you haven't looked into it, DEFINITELY look into the public service loan forgiveness!

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See this thread.

 

Former profligate borrower here. The stupidity of student debt is usually only realized retrospectively. Knowing what I know now, my debt to income ratio, values, etc....I would choose not to go to PA school. But, what's done is done. Now we have to do something about it. I've looked at this from every possible angle, and have way more debt than you.

 

The short answer is the PSLF is the best thing going (by far) for those with high levels (150k+) of student debt. If you do this you will want to be on the REPAYE plan. There are other partial forgiveness/payoff options (NHSC, IHS, military, etc), but all involve significant personal sacrifices and do not forgive debt in full for heavy borrowers like us. 

 

If you have relatively low overhead expenses right now---e.g. no mortgage, live with parents, no vehicle debt, no consumer debt, etc---you can pay down your debts like a lunatic and live modestly for 3-5 years. This would be preferable if you can.

 

If you have other bills and debt, then chances are PSLF will cost you the least amount of money in the long run, and allow you start saving and investing now rather than later. The trade off is 10 years of indentured servitude, but chances are you would be a PA for 10 more years anyway.

 

My overarching goal is to be financially independent by age 45 (10 years from now), and the PSLF is  a cornerstone to my strategy. I rue the day I took on these debt anchors, truly, so I can empathize.

 

Also check out the White Coat Investor (book and website). They cover medical student debt in great detail from all angles.

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The short answer to your question is "YES!"  It is definitely possible, but your individual situation will obviously make a difference.

 

You mentioned you are a "single woman."  Do you have children?  That is an obvious example of something that could increase your time paying loans.

 

The fact is that new grad PAs should be making at least $85,000 annually, and often they can supplement their salary by moonlighting in the ED or other places.  The average household income in the US is around $52,000.  We make $30k more annually. Assuming your salary is $85k, it is possible to go on a "rice and beans" budget of $30k annually.  That would leave $55,000 to put toward loans.  Obviously those are pre-tax numbers, but if you are single then that would be paying off your loans in ~4 years.  I would add probably 1-2 more years if you have kids.

 

Bottom line, look at your options as you graduate.  If you can take advantage of PSLF then do it!!!  If not, then try looking for jobs that include loan repayment, or fight for it as you negotiate your compensation.  Otherwise, just make a strict budget for yourself.

 

While I don't completely agree with his system, I would look into Dave Ramsey.  He has some excellent books and good information.  

IT CAN BE DONE!!

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Thank you both so much for your advice and encouragement. Only problem I face with PSLF is more than half of my loans are private through my school. Again, probably a big mistake but I did not understand much about this when I applied for aid and the interest rate was much lower. So unfortunately I do not think my loans can be forgiven at this time. But if I live frugally for 3 years or so I'm sure I can take off a big chunk of them which will put be in a much more stable position financially. 

 

The short answer to your question is "YES!"  It is definitely possible, but your individual situation will obviously make a difference.

 

You mentioned you are a "single woman."  Do you have children?  That is an obvious example of something that could increase your time paying loans.

 

The fact is that new grad PAs should be making at least $85,000 annually, and often they can supplement their salary by moonlighting in the ED or other places.  The average household income in the US is around $52,000.  We make $30k more annually. Assuming your salary is $85k, it is possible to go on a "rice and beans" budget of $30k annually.  That would leave $55,000 to put toward loans.  Obviously those are pre-tax numbers, but if you are single then that would be paying off your loans in ~4 years.  I would add probably 1-2 more years if you have kids.

 

Bottom line, look at your options as you graduate.  If you can take advantage of PSLF then do it!!!  If not, then try looking for jobs that include loan repayment, or fight for it as you negotiate your compensation.  Otherwise, just make a strict budget for yourself.

 

While I don't completely agree with his system, I would look into Dave Ramsey.  He has some excellent books and good information.  

IT CAN BE DONE!!

 

 

See this thread.

 

Former profligate borrower here. The stupidity of student debt is usually only realized retrospectively. Knowing what I know now, my debt to income ratio, values, etc....I would choose not to go to PA school. But, what's done is done. Now we have to do something about it. I've looked at this from every possible angle, and have way more debt than you.

 

The short answer is the PSLF is the best thing going (by far) for those with high levels (150k+) of student debt. If you do this you will want to be on the REPAYE plan. There are other partial forgiveness/payoff options (NHSC, IHS, military, etc), but all involve significant personal sacrifices and do not forgive debt in full for heavy borrowers like us. 

 

If you have relatively low overhead expenses right now---e.g. no mortgage, live with parents, no vehicle debt, no consumer debt, etc---you can pay down your debts like a lunatic and live modestly for 3-5 years. This would be preferable if you can.

 

If you have other bills and debt, then chances are PSLF will cost you the least amount of money in the long run, and allow you start saving and investing now rather than later. The trade off is 10 years of indentured servitude, but chances are you would be a PA for 10 more years anyway.

 

My overarching goal is to be financially independent by age 45 (10 years from now), and the PSLF is  a cornerstone to my strategy. I rue the day I took on these debt anchors, truly, so I can empathize.

 

Also check out the White Coat Investor (book and website). They cover medical student debt in great detail from all angles.

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You're young & single.  I'm going to give you more of a philisophical approach.

Money = time, and time = money.  You are paid X amount of $$ for an hour of your time.

Money also = security & freedom.

You have indebted yourself $150,000 of your money, and therefore a commiserate amount of your TIME, toward the banks in exchange for your education.

You can change the $150,000 of money/time you owe to the banks into 10 YEARS of your life shackled to a specific location/hospital/clinic.

None of that sounds good to me.  Maybe you will love that PSLF job, but no matter what, you're shackled to it if you're relying on it to pay your loans off.  That isn't freedom.

Another approach, and one that I advocate, is maximizing the time/money ratio (ie: make as much $/hour as you can), and maximizing the number of hours you work.

As others have said, average income is $85K.  Don't be average.  Find the higher paying jobs.  When you find that job, keep looking for an even higher paying job. 

You're broke, even making a great income....you're broke.  You can't afford vacations, going out to dinner, expensive cars, etc.  Instead of doing those things, spend more time at work.

You're young with no family.  Work 60+ hours a week.  Then pick up a 24 hour shift in a rural ED over the weekend.

Meanwhile, cut your spending to beans & rice, cheap scrubs, good tennis shoes, and a Hyundai.  The $30K a year budget IS realistic in many places in the country...live there.

So, if $85K is average, make $110K this year.  Minus $25K for taxes, and $30K living expenses...you can pay off $55K THIS YEAR!

Next year make $120K, and then the next year make $130K.

In THREE to FOUR years you can be out of debt, financially independent, and be TRULY FREE.  You can go where you want, work the hours you want, take time off to start a family...the stress will be GONE.

It's 3 years of hell that pays off with financial freedom while you are still VERY young.  

 

Try listening to Dave Ramsey, he has a daily show you can find on IHeartRadio, and also has a good book (Total Money Makeover) that goes along with a 9 week class (Financial Peace University). I don't necessarily agree with everything that he says, but if you have a decent income then I don't think you can fail by using his common sense system.

Best of luck to you!



 

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You're young & single.  I'm going to give you more of a philisophical approach.

 

Money = time, and time = money.  You are paid X amount of $$ for an hour of your time.

 

Money also = security & freedom.

 

You have indebted yourself $150,000 of your money, and therefore a commiserate amount of your TIME, toward the banks in exchange for your education.

 

You can change the $150,000 of money/time you owe to the banks into 10 YEARS of your life shackled to a specific location/hospital/clinic.

 

None of that sounds good to me.  Maybe you will love that PSLF job, but no matter what, you're shackled to it if you're relying on it to pay your loans off.  That isn't freedom.

 

Another approach, and one that I advocate, is maximizing the time/money ratio (ie: make as much $/hour as you can), and maximizing the number of hours you work.

 

As others have said, average income is $85K.  Don't be average.  Find the higher paying jobs.  When you find that job, keep looking for an even higher paying job. 

 

You're broke, even making a great income....you're broke.  You can't afford vacations, going out to dinner, expensive cars, etc.  Instead of doing those things, spend more time at work.

 

You're young with no family.  Work 60+ hours a week.  Then pick up a 24 hour shift in a rural ED over the weekend.

 

Meanwhile, cut your spending to beans & rice, cheap scrubs, good tennis shoes, and a Hyundai.  The $30K a year budget IS realistic in many places in the country...live there.

 

So, if $85K is average, make $110K this year.  Minus $25K for taxes, and $30K living expenses...you can pay off $55K THIS YEAR!

 

Next year make $120K, and then the next year make $130K.

 

In THREE to FOUR years you can be out of debt, financially independent, and be TRULY FREE.  You can go where you want, work the hours you want, take time off to start a family...the stress will be GONE.

 

It's 3 years of hell that pays off with financial freedom while you are still VERY young.  

 

Try listening to Dave Ramsey, he has a daily show you can find on IHeartRadio, and also has a good book (Total Money Makeover) that goes along with a 9 week class (Financial Peace University). I don't necessarily agree with everything that he says, but if you have a decent income then I don't think you can fail by using his common sense system.

 

Best of luck to you!

 

 

 

 

^ THIS x 100000

 

Stated my comment much more thoroughly and usefully.

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You're young & single.  I'm going to give you more of a philisophical approach.

 

Money = time, and time = money.  You are paid X amount of $$ for an hour of your time.

 

Money also = security & freedom.

 

You have indebted yourself $150,000 of your money, and therefore a commiserate amount of your TIME, toward the banks in exchange for your education.

 

You can change the $150,000 of money/time you owe to the banks into 10 YEARS of your life shackled to a specific location/hospital/clinic.

 

None of that sounds good to me.  Maybe you will love that PSLF job, but no matter what, you're shackled to it if you're relying on it to pay your loans off.  That isn't freedom.

 

Another approach, and one that I advocate, is maximizing the time/money ratio (ie: make as much $/hour as you can), and maximizing the number of hours you work.

 

As others have said, average income is $85K.  Don't be average.  Find the higher paying jobs.  When you find that job, keep looking for an even higher paying job. 

 

You're broke, even making a great income....you're broke.  You can't afford vacations, going out to dinner, expensive cars, etc.  Instead of doing those things, spend more time at work.

 

You're young with no family.  Work 60+ hours a week.  Then pick up a 24 hour shift in a rural ED over the weekend.

 

Meanwhile, cut your spending to beans & rice, cheap scrubs, good tennis shoes, and a Hyundai.  The $30K a year budget IS realistic in many places in the country...live there.

 

So, if $85K is average, make $110K this year.  Minus $25K for taxes, and $30K living expenses...you can pay off $55K THIS YEAR!

 

Next year make $120K, and then the next year make $130K.

 

In THREE to FOUR years you can be out of debt, financially independent, and be TRULY FREE.  You can go where you want, work the hours you want, take time off to start a family...the stress will be GONE.

 

It's 3 years of hell that pays off with financial freedom while you are still VERY young.  

 

Try listening to Dave Ramsey, he has a daily show you can find on IHeartRadio, and also has a good book (Total Money Makeover) that goes along with a 9 week class (Financial Peace University). I don't necessarily agree with everything that he says, but if you have a decent income then I don't think you can fail by using his common sense system.

 

Best of luck to you!

 

 

 

 

PSLF doesnt shackle one to a certain hospital or region.  You can move around, as long as the new job is a non-profit.  I like what you have to say, but this one point should be corrected.

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But you are shackled to 10 years of debt when you could be done in 3 or 4 if you put your nose to the grindstone. And its not like banks say "oh lets not count this debt because it will be forgiven in 9 years." No, it impacts your ability to buy a house. It impacts which jobs you can take. And it straps you to a payment for 10 years! 

 

My wife and I have already started working on our debt while I am in school, managed to pay off 6,000-7000 since we got married in May. And then when I get out I plan on working those extra weekends every month in a rural ED (one because I want to be debt free, but more importantly because I want that emergency medicine mindset). And like the previous poster said, you don't have to agree with everything Dave Ramsey says, but if put an emphasis on living below your means and capitalizing on your income potential by taking a second job early in your career, you can literally be making a 120k debt free (including your house) while your MD colleagues are still 300,000 dollars in debt (just in student loans) making 50k a year.

 

Maybe you don't hate debt as much as me and only care about your student loans think about this. The average American spends 115% of what they make every year. All you have to do is not be average and you can knock down whatever student loans in way less than then the 10 years required for "loan forgiveness." Not to mention you are putting your financial future in the hands of the government. What if they don't honor their commitment? I don't know how big possibility that is, but I don't want the US government in control of my financial future either. 

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But you are shackled to 10 years of debt when you could be done in 3 or 4 if you put your nose to the grindstone. And its not like banks say "oh lets not count this debt because it will be forgiven in 9 years." No, it impacts your ability to buy a house. It impacts which jobs you can take. And it straps you to a payment for 10 years! 

 

My wife and I have already started working on our debt while I am in school, managed to pay off 6,000-7000 since we got married in May. And then when I get out I plan on working those extra weekends every month in a rural ED (one because I want to be debt free, but more importantly because I want that emergency medicine mindset). And like the previous poster said, you don't have to agree with everything Dave Ramsey says, but if put an emphasis on living below your means and capitalizing on your income potential by taking a second job early in your career, you can literally be making a 120k debt free (including your house) while your MD colleagues are still 300,000 dollars in debt (just in student loans) making 50k a year.

 

Maybe you don't hate debt as much as me and only care about your student loans think about this. The average American spends 115% of what they make every year. All you have to do is not be average and you can knock down whatever student loans in way less than then the 10 years required for "loan forgiveness." Not to mention you are putting your financial future in the hands of the government. What if they don't honor their commitment? I don't know how big possibility that is, but I don't want the US government in control of my financial future either. 

 

Aggressive debt paydown isn't an option for everyone. The Ramsey minions will disagree, but like most things financial there is a philosophical/value element to it.

 

Financial independence (FI) can be loosely defined as the point at which your passive income (investments) meet or exceed your expenses. In other words, simply not having student loans any more doesnt equate to FI, it's just a big anchor that one needs to be free from.

 

So for someone with other obligations, such as kids, a mortgage, vehicle loans, etc; aggressive debt paydown utilizing 25-50% of your net pay precludes the high savings rate necessary for FI, and effectively puts you behind the clock because of the opportunity cost of time, which is necessary to harness compound interest.

 

When people give financial advice they tend to unconsciously assume that everyone else is in the same boat or capable of being in the same boat as them with a few minor changes. E.g., "why dont you just live at home" or "why dont you just ride your bike everywhere and eat beans and rice" or "why dont you just work 70 hours a week and pay off your debts in X number of years?"

 

Not bad solutions on paper, but not applicable to everyone. 

 

PSLF is by far the BEST solution for heavy-debt carriers who do not have the ability or option to put half their net pay into loans. 

 

Further, when we are talking about total money paid, PSLF is always the cheaper option in the long run---we just need to be clear on that---and the benefit of earlier debt paydown is one of time and psychology.

 

And lastly, I dont know if any of you know this (I didnt), but the PSLF is written into the language of all promissory notes after 2007. So while PSLF can and will likely change in the next 10 years, the standard grandfathering applied by the Department of Education will almost certainly apply. In other words, if you get on the PSLF now, you can be reasonably assured you are on it until they are paid off, otherwise the Dept. of Ed would be in breach of contract with millions of borrowers. The people affected by upcoming changes will be future borrowers.

 

I fully expect the government will cap the forgiveness amount and throw in clauses for high earners like no cap on payment amounts, etc, so now is the time to get in.

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You make some valid points Bruce. I have no problems with good debt. Now I don't necessarily agree that "aggressive debt paydown utilizing 25-50% of your net pay precludes the high savings rate necessary for FI, and effectively puts you behind the clock because of the opportunity cost of time, which is necessary to harness compound interest." For example if your debt has an average of 10% and your average return is 9%, the compounding effect is hurting you, not helping you. Not to mention investment interest is never guaranteed while debt interest is.  

 

But again you make some valid points. I would like to see the actual numbers of total paid in 10 years of minimum payments versus paying everything off in 3 to 4 years. But whether you do the PSLF or pay it off as quick is possible or pay it over 30 years, the key is living within your means. I'll repeat that the average American household spends 115% of what they make yearly. That is my take away. If you spend less than 100% of what you make I have no problem with how you invest that money. That can be your retirement account or starting a business or buying rental properties or investing in the stock market, I'm fine with all of it.  The issue is how much people, and that goes for people with kids or cars or pets or mortgages or all or none of the above. 

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You make some valid points Bruce. I have no problems with good debt. Now I don't necessarily agree that "aggressive debt paydown utilizing 25-50% of your net pay precludes the high savings rate necessary for FI, and effectively puts you behind the clock because of the opportunity cost of time, which is necessary to harness compound interest." For example if your debt has an average of 10% and your average return is 9%, the compounding effect is hurting you, not helping you. Not to mention investment interest is never guaranteed while debt interest is.  

 

But again you make some valid points. I would like to see the actual numbers of total paid in 10 years of minimum payments versus paying everything off in 3 to 4 years. But whether you do the PSLF or pay it off as quick is possible or pay it over 30 years, the key is living within your means. I'll repeat that the average American household spends 115% of what they make yearly. That is my take away. If you spend less than 100% of what you make I have no problem with how you invest that money. That can be your retirement account or starting a business or buying rental properties or investing in the stock market, I'm fine with all of it.  The issue is how much people, and that goes for people with kids or cars or pets or mortgages or all or none of the above. 

 

No doubt that lifestyle inflation and spending are the #1 reason why people remain in debt so long, or never get out. It's especially bad for docs/PAs, who feel they 'deserve' the good life to some extent after years of schooling and being poor, and indirect social pressures from provider peers.

 

 

As for the payoff differential, I took the liberty to do that for you :)

 

 

Let's assume some constants: $150k in debt, with a 6% average interest rate, with a $100k starting salary, family size of 1, and 5% income increase per year:

 

For a 4-year payoff at average salary of $100k per year, she would pay $169,092 total, with payments of about $3,522/mo, and a debt-to-income ratio of 42.5%. 

 

With PSLF, assuming she got on the best (lowest) repayment plan (which is REPAYE currently), she would pay $105,960 total, with payments ranging from $685 to $1110, with a total forgiveness of $131,394.

 

So, $63,132 more would be paid with an aggressive payoff plan, but a 6-year gain in debt freedom. This can be extrapolated back or forward easily with the calculators below.

 

This is of course assuming she 1) stays single, 2) does not have kids, and 3) does not take on any new debt or significant lifestyle inflation.

 

Now during those 4 years she would likely not be investing much of anything, but when she has the loans paid off she could go gonzo with investing if she maintains her same standard of living. So, totally a personal value/preference thing; but again, this is assuming IDEAL debt payoff circumstances: no other debts, high income, and no dependents!!

 

I think the take-home is that the sooner you can pay off student debt, the better off you will be. If you have other debts, family, etc; then PSLF might make more sense since it would take you 10 years to pay off the loans anyway. But if you are single or a married DINK (double income, no kids), with no other debt than say a modest mortgage, then yes, absolutely the better way to go is aggressive self-payoff!!

 

 

https://studentloanhero.com/calculators/public-service-loan-forgiveness-calculator/

https://navient.wealthmsi.com/loanrepay.php

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Make sure you look at interest rate. I refinanced to SoFi from federal loans and went from 8% interest rate to 4%. My payments went up but in the long run I'll be paying significantly less. You won't be able to do income based payments with this option but be careful with those bc you're still accruing interest and that's racking up while you're paying the minimum. I just started working for a company that may get NHSC loan repayment I hope it goes through. We're all in the same boat. Good luck you're not alone!

 

 

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Young, single...hmmmm

 

Could join the service; National Guard (Oregon, at least) was still doing SLR/Incentive pays at a rate of 20-25k/year.

 

I got 3 years of each on my initial 6 yr commission contract; offered 25k/yr x 2 yr committment to keep going.

 

Plus you get to have fun once a month.

 

Worth a thought if you are open to it.

 

Best thing I ever did.

 

-J

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PSLF doesnt shackle one to a certain hospital or region.  You can move around, as long as the new job is a non-profit.  I like what you have to say, but this one point should be corrected.

 

I didn't know that, thanks.  But you're still shackled to certain jobs.  If that dream job in Dermatology opened up, making $220K a year for working 10-4 M-T....you couldn't take it because you're shackled to the PSLF.

 

 

.... PSLF is by far the BEST solution for heavy-debt carriers who do not have the ability or option to put half their net pay into loans. 

 

Further, when we are talking about total money paid, PSLF is always the cheaper option in the long run---we just need to be clear on that---and the benefit of earlier debt paydown is one of time and psychology.....

 

I agree PSLF is likely very good for people with an enormous student loan debt to income ratio  (4:1, 5:1).  So if you're a PA making $100K a year and looking at $400K or $500K in loans, then yeah..I think you're in trouble and the PSLF might be for you.

 

The second sentence there is correct, but again is specifically talking about total money PAID. It does not take into account LOST EARNINGS that typically occur with working for PSLF approved facilities, nor does it take into account the incredible spending/saving power that the OP (or any other PA) has once they pay off their student (and other) loans.

 

Most PSLF jobs pay much less than the higher market jobs.  I got a job offer of $34/hr from a PSLF approved clinic....well less than HALF of what I make an hour today.

 

 

 

 

No doubt that lifestyle inflation and spending are the #1 reason why people remain in debt so long, or never get out. It's especially bad for docs/PAs, who feel they 'deserve' the good life to some extent after years of schooling and being poor, and indirect social pressures from provider peers.

 

 

As for the payoff differential, I took the liberty to do that for you :)

 

 

Let's assume some constants: $150k in debt, with a 6% average interest rate, with a $100k starting salary, family size of 1, and 5% income increase per year:

 

For a 4-year payoff at average salary of $100k per year, she would pay $169,092 total, with payments of about $3,522/mo, and a debt-to-income ratio of 42.5%. 

 

With PSLF, assuming she got on the best (lowest) repayment plan (which is REPAYE currently), she would pay $105,960 total, with payments ranging from $685 to $1110, with a total forgiveness of $131,394.

 

So, $63,132 more would be paid with an aggressive payoff plan, but a 6-year gain in debt freedom. This can be extrapolated back or forward easily with the calculators below.

 

This is of course assuming she 1) stays single, 2) does not have kids, and 3) does not take on any new debt or significant lifestyle inflation.

 

Now during those 4 years she would likely not be investing much of anything, but when she has the loans paid off she could go gonzo with investing if she maintains her same standard of living. So, totally a personal value/preference thing; but again, this is assuming IDEAL debt payoff circumstances: no other debts, high income, and no dependents!!

 

I think the take-home is that the sooner you can pay off student debt, the better off you will be. If you have other debts, family, etc; then PSLF might make more sense since it would take you 10 years to pay off the loans anyway. But if you are single or a married DINK (double income, no kids), with no other debt than say a modest mortgage, then yes, absolutely the better way to go is aggressive self-payoff!!

 

 

https://studentloanhero.com/calculators/public-service-loan-forgiveness-calculator/

https://navient.wealthmsi.com/loanrepay.php

 

As I stated above, this doesn't take into account the typical wage difference between the PSLF jobs and higher-market jobs.  Re-run the numbers with the quick payer making $130K a year vice $100K a year and the cost-benefit analysis reverses itself.

 

At the end of the 4 years, you're making $130K while you're OUT OF DEBT, versus your friend in the PSLF program who is making $100K and is still $120K in debt.

 

Who can then take the extra vacations with the family?  Who can then cut back to working 3 days a week?  Who can then take that dream derm job??

 

Young, single...hmmmm

 

Could join the service; National Guard (Oregon, at least) was still doing SLR/Incentive pays at a rate of 20-25k/year.

 

I got 3 years of each on my initial 6 yr commission contract; offered 25k/yr x 2 yr committment to keep going.

 

Plus you get to have fun once a month.

 

Worth a thought if you are open to it.

 

Best thing I ever did.

 

-J

Another way of exchanging your $150K in debt for another type of debt.  Worth it to some, but still a debt.

 

Great conversation!

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Just as important as paying off debt...is starting to save for retirement!  Try and make room for both...max out your 401K or IRA contributions every year while you are working...especially in your 20's and 30's...invest them aggressively for the next 30 years...do this even if this means adding a few more years of loan repayment.  Average return on investment over a period of 30 years in aggressive "growth-oriented" funds is usually around 11% as long as you don't touch the money, just sit and ride the waves of the stock market for the next few decades.

 

The earlier you start saving for retirement, the more money you'll have to truly be free later in life. 

 

A financial advisor taught me this! 

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Just as important as paying off debt...is starting to save for retirement!  Try and make room for both...max out your 401K or IRA contributions every year while you are working...especially in your 20's and 30's...invest them aggressively for the next 30 years...do this even if this means adding a few more years of loan repayment.  Average return on investment over a period of 30 years in aggressive "growth-oriented" funds is usually around 11% as long as you don't touch the money, just sit and ride the waves of the stock market for the next few decades.

 

The earlier you start saving for retirement, the more money you'll have to truly be free later in life. 

 

A financial advisor taught me this! 

I don't disagree with this....but this is where Bruce's comments about "not everyone is the same" is especially true.

 

I don't know that everyone should max out retirement while they are still in debt.  It would depend on the type of debt they have, how old they are, and what the rest of their financial situation is.

 

I think it's a balancing act.  Everyone should max out their ROTH IRA for maximum tax-free growth.  Then get any employer match into their 401K/403B....while hitting their debt in the face with a brick.

 

If they are making great traction on their debts (ie: Paying off MANY thousands of dollars every month) then maybe put a little more into retirement...perhaps by partially/fully funding an investment HSA (pre-tax investment, non-taxed growth, non-taxed withdrawals), and/or increasing 401K contributions. 

 

But if, after funding the ROTH and hitting the employer matching money, you don't have traction on paying off debts, then I wouldn't put more money into retirement because there are spending/lifestyle habits that need to be fixed first.  

 

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You're young & single.  I'm going to give you more of a philisophical approach.

 

Money = time, and time = money.  You are paid X amount of $$ for an hour of your time.

 

Money also = security & freedom.

 

You have indebted yourself $150,000 of your money, and therefore a commiserate amount of your TIME, toward the banks in exchange for your education.

 

You can change the $150,000 of money/time you owe to the banks into 10 YEARS of your life shackled to a specific location/hospital/clinic.

 

None of that sounds good to me.  Maybe you will love that PSLF job, but no matter what, you're shackled to it if you're relying on it to pay your loans off.  That isn't freedom.

 

Another approach, and one that I advocate, is maximizing the time/money ratio (ie: make as much $/hour as you can), and maximizing the number of hours you work.

 

As others have said, average income is $85K.  Don't be average.  Find the higher paying jobs.  When you find that job, keep looking for an even higher paying job. 

 

You're broke, even making a great income....you're broke.  You can't afford vacations, going out to dinner, expensive cars, etc.  Instead of doing those things, spend more time at work.

 

You're young with no family.  Work 60+ hours a week.  Then pick up a 24 hour shift in a rural ED over the weekend.

 

Meanwhile, cut your spending to beans & rice, cheap scrubs, good tennis shoes, and a Hyundai.  The $30K a year budget IS realistic in many places in the country...live there.

 

So, if $85K is average, make $110K this year.  Minus $25K for taxes, and $30K living expenses...you can pay off $55K THIS YEAR!

 

Next year make $120K, and then the next year make $130K.

 

In THREE to FOUR years you can be out of debt, financially independent, and be TRULY FREE.  You can go where you want, work the hours you want, take time off to start a family...the stress will be GONE.

 

It's 3 years of hell that pays off with financial freedom while you are still VERY young.  

 

Try listening to Dave Ramsey, he has a daily show you can find on IHeartRadio, and also has a good book (Total Money Makeover) that goes along with a 9 week class (Financial Peace University). I don't necessarily agree with everything that he says, but if you have a decent income then I don't think you can fail by using his common sense system.

 

Best of luck to you!

 

 

 

 

 

^^^^^

This is one of the best posts I have ever read about loan debt.

 

-Straight talk.  Everything said is 100% true.

 

So many new grads graduate, buy a new car, get married have kids right away.  If they just did what this poster recommends for only a few years, it would unshackle them debt wise for the next 20.  Don't do it?  You will spend 25-30 years paying off $150k.  That's a small house with a worse interest payment.  They don't give 30 year home loans for nothing!  You are lucky in that you are single with no kids and can go into "bunker mode", and that is exactly what I recommend.  Have a kid and watch all that extra loan debt money fly away.  Also, 2 thumbs up for Dave Ramsey.  VERY VERY VERY well respected.

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^^^^^

This is one of the best posts I have ever read about loan debt.

 

-Straight talk.  Everything said is 100% true.

 

So many new grads graduate, buy a new car, get married have kids right away.  If they just did what this poster recommends for only a few years, it would unshackle them debt wise for the next 20.  Don't do it?  You will spend 25-30 years paying off $150k.  That's a small house with a worse interest payment.  They don't give 30 year home loans for nothing!  You are lucky in that you are single with no kids and can go into "bunker mode", and that is exactly what I recommend.  Have a kid and watch all that extra loan debt money fly away.  Also, 2 thumbs up for Dave Ramsey.  VERY VERY VERY well respected.

trade off, those 3-4 years of no life are the prime years of your life, you will lose relationships, miss precious time with loved ones, watch those you love age and die

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trade off, those 3-4 years of no life are the prime years of your life, you will lose relationships, miss precious time with loved ones, watch those you love age and die

Come on....young people will find a way to look for mates.  How many of your classmates found their spouse while they were in PA school??  I think half of my class got married within a year of graduating.  

 

Miss precious time with loved ones?  Of course, it's called being adult and working.  See my philosophical post above that money=time.  Do you want to miss some precious time now, or miss MORE precious time later?

 

Watch those you love age and die?  Gonna happen whether you extend your debt out 10-20 years, or if you work like mad and get it paid off in 3-4.  

 

We're not talking about joining the military for 20 years and never being able to see your grandparents again until their funeral.

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It really is a horrible situation to be in, but you really have to look at your education as an investment. 

 

I am a new graduate (May 2016) who finished up with an amount of debt equivalent to a very nice house in the area that I practice. Paying back loans has been my number one priority so far. I am also young, single, and not really incurring too much expenses. It's been a big challenge and a source of angst. It feels like no matter what I do, I make such tiny progress. I have been lucky enough to have some help along the way, but have run into some hard luck with interest rates (a few of my loans are up to 8.5%). 

 

I have government and private loans. Since I know that I absolutely have to pay back the private loans in full, I have been just tossing an absurd amount of money toward those (about $3000 per month). I have slowly dwindled away about $60,000 in those loans down to about $25,000. I am fortunate to live in a low cost of living area as well as have an excellent job that compensates me well. I also got a good amount of loan repayment from my job. 

 

I've been trying to be frugal as possible and saving as much money as possible. Aside from a new work bag, I have not really bought any new wardrobe/shirts/ties for work. I've also been able to cut costs by using coupons at the grocery store (about $5 a week), not going to starbucks during the week (save about $8 a week), and just generally trying to live with finances as my number one priority.  I am additionally contributing about 8% of my net pay into my 401k.

 

It's very difficult not to get down on the situation. When you're young, it is extremely difficult to see a reason to put money into a retirement account or savings account, especially since my loans have an 8.5% interest rate while my savings account has a 0.05%. It's actually really difficult to wrap your head around that....

 

Just try to live frugally and do the best you can. That's all you can ask of yourself. 

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I have government and private loans. Since I know that I absolutely have to pay back the private loans in full, I have been just tossing an absurd amount of money toward those (about $3000 per month). I have slowly dwindled away about $60,000 in those loans down to about $25,000. I am fortunate to live in a low cost of living area as well as have an excellent job that compensates me well. I also got a good amount of loan repayment from my job. 

 

I've been trying to be frugal as possible and saving as much money as possible. Aside from a new work bag, I have not really bought any new wardrobe/shirts/ties for work. I've also been able to cut costs by using coupons at the grocery store (about $5 a week), not going to starbucks during the week (save about $8 a week), and just generally trying to live with finances as my number one priority.  I am additionally contributing about 8% of my net pay into my 401k.

 

It's very difficult not to get down on the situation. When you're young, it is extremely difficult to see a reason to put money into a retirement account or savings account, especially since my loans have an 8.5% interest rate while my savings account has a 0.05%. It's actually really difficult to wrap your head around that....

 

Just try to live frugally and do the best you can. That's all you can ask of yourself. 

Congrats, you're killing it!  You're paying off your loans at $36K a year!!  Imagine what that's going to feel like when you get them paid off!!

Regarding savings:  Other than an emergency savings (which acts like an insurance policy), or savings for a specific purpose (like buying a car), having money in a savings account is probably counter-productive (like you pointed out, no need for you to have $10K in savings account making 0.05% interest while you have $25K in loans costing you 8.5%).

 

Regarding retirement: Most young people will get the best bang for their buck if they max out a ROTH first, then a matched 401K, then an investment HSA, before they put additional money into an unmatched 401K.  But at this point in your life, you may want to consider cutting back on your retirement savings so you can throw more money at your student loans/debt....especially if you still have some at 8.5%.

 

What you are doing is HARD, but the payoff is going to come soon!  

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trade off, those 3-4 years of no life are the prime years of your life, you will lose relationships, miss precious time with loved ones, watch those you love age and die

 

 

 

I'm 48...what you described happens at ALL ages of your life.  The question is, do you want to spend the next 30 debt free or still under its shackle...?

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I agree PSLF is likely very good for people with an enormous student loan debt to income ratio  (4:1, 5:1).  So if you're a PA making $100K a year and looking at $400K or $500K in loans, then yeah..I think you're in trouble and the PSLF might be for you.

The second sentence there is correct, but again is specifically talking about total money PAID. It does not take into account LOST EARNINGS that typically occur with working for PSLF approved facilities, nor does it take into account the incredible spending/saving power that the OP (or any other PA) has once they pay off their student (and other) loans.

 

Most PSLF jobs pay much less than the higher market jobs.  I got a job offer of $34/hr from a PSLF approved clinic....well less than HALF of what I make an hour today.

 

I'm going to call you out on this because it's just not true.

 

Here's the top 20 501©3 healthcare orgs ranked by number of hospitals (not counting outpatient clinics):

 

1. Ascension Health (St. Louis) — 76 

2. Trinity Health (Livonia, Mich.) — 45 

3. Kaiser Permanente (Oakland, Calif.) — 37

4. Dignity Health (San Francisco) — 36 

5. Catholic Health Initiatives (Englewood, Colo.) — 33

6. Adventist Health System (Winter Park, Fla.) — 31

7. Sutter Health (Sacramento, Calif.) — 26 

7. Providence Health and Services (Renton, Wash.) — 26

8. Banner Health (Phoenix) — 20 

9. Baylor Scott & White Health (Dallas) — 19  

9. CHRISTUS Health (Irving, Texas) — 19

10. SSM Health Care (St. Louis) — 18

11. Intermountain Health Care (Salt Lake City) — 17  

11. Mercy Health (Cincinnati) — 17

*Formerly Catholic Healthcare Partners

11. NewYork-Presbyterian Healthcare System (New York City) — 17 

12. Adventist Health (Roseville, Calif.) — 16 

12. UPMC (Pittsburgh) — 16

13. North Shore-Long Island Jewish Health System (Great Neck, N.Y.) — 15

13. UnityPoint Health (Des Moines, Iowa) — 15

14. Hospital Sisters Health System (Springfield, Ill.) — 14

14. Mercy (Chesterfield, Mo.) — 14 

14. Texas Health Resources (Arlington) — 14

15. Aurora Health Care (Milwaukee) — 13

15. Baptist Memorial Health Care (Memphis, Tenn.) — 13

15. Franciscan Alliance (Mishawaka, Ind.) — 13 

15. Saint Joseph Health (Orange, Calif.) — 13 

16. Carolinas HealthCare System (Charlotte, N.C.) — 12 

17. Bon Secours Health System (Marriottsville, Md.) — 11

17. Mayo Clinic Health System (Rochester, Minn.) — 11

18. Sentara Healthcare (Norfolk, Va.) — 12 

19. Novant Health (Winston-Salem, N.C.) — 10

20. East Texas Medical Center Regional Healthcare System (Tyler) — 7

 

I mean come on. Not to mention almost EVERY state university system and their hospitals are non-profit. Competitive wages can be found.

 

I work for one of these and I'd put my salary up against anyone nationwide for primary care at <5 years experience. In 3 years I'll make as much as your typical experienced ER PA.

 

Opportunity costs are going to vary from person to person. For the OP, I'd say assuming she has minimal to no other debts, she should pay them off aggressively by herself.

 

For someone like me, PSLF actually puts me ahead of the game in 10 years because of the opportunity cost of lost investing years with an aggressive self-pay.

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So all it takes to qualify for the PSLF is to work for a 503C3 for 10 years?  Any 503C3??  No other requirements?? If so, then I concede that it may be very good for some people.  

Regarding pay - maybe these places do pay above average, but I suggested the OP chase the ABOVE average pay jobs.  Much more difficult to do if you are tied to non-profits (but, like you point out, not impossible).

However you ARE still shackled somewhat, because if that sweet job (at the hypothetical Derm clinic) comes open in 8 years....you're not going to go for it.

An additional concern:  Even in major cities there may only be one, or just a few, 503C3's in the area.  In the city that I live in there is only one...and the ED there is a flipping MESS!  Reasonable pay, but terrible working conditions, terrible quality, terrible patient mix, terrible systems, terrible mid-level autonomy (pretty much triage to beat door-to-doc time, and fast-track)...it's just a mess. If I were pursuing the PSLF, I would either have to stay there, or move more than a hundred miles away to find another non-profit ED.

BTW Bruce - I am in no way telling you that YOU are wrong for using the PSLF.  If you choose to trade 10 years of your time living with the restrictions you have with the loan repayment, then I hope it works out great for you.

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