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PSLF vs Paying off loans ASAP

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On 1/17/2019 at 7:52 AM, LT_Oneal_PAC said:

this is incorrect, at least legally. I'm sure Betsy Devos is doing everything she can to keep from paying out.

https://studentloansherpa.com/ffel-consolidation-loan-forgiveness/

Thank you, I edited my post to reflect this. I wish the department of education would show some transparency in regards to PSLF. It’s crazy we have to search the internet for reputable “sources” rather than pull up the government site. 

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Thought I would throw my 2 cents in here. I graduated this past year with 135K in debt, here is what I've done since:

- THE DAY after I graduated I consolidated my loans and started under the REPAYE plan and waived my 6 month forbearance period

- Transferred my loans to Fedloan servicing  by submitting their employment certification form (ECF), this needs to be done yearly and keep your records for yourself!

- I'm working at a non-profit so they sent me a letter back a month or so later saying I am indeed qualified and I have made X amount of qualifying payments thus far. FYI its only retroactive they do not have a running tally of your current qualifying payments they only count them up when you submit the ECF annually.

- Little caveat- since its based off income from the prior years tax return- in 2017 I made $0 as a student, so I'm paying $0 per month this year on those loans. I made less then the deduction for 1.5 months of work for 2018 so in 2019 I will also pay $0. I will have effectively paid 24/120 "payments" of $0 by the time I actually start giving those soul suckers money.

- Do whatever you can to lower your AGI (max out 401K, contribute to HSA, write off loan interest paid).

- I have researched this pretty at length and I should be due for tens of thousands of forgiveness, have a nice nest egg start for retirement by maxing out my 401K over 10 years, and also allowing me to get on my feet by not paying loans for the first 2 years.

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Lab rat- your plan probably makes great sense mathematically (although your plan may prohibit you from chasing any exceptionally high paying positions which could skew the math against you).

But what your plan doesnt take into account the risk you are taking with this plan.  20+ years ago most Americans would work at the same place for decades.  This is no longer true, ESPECIALLY in healthcare, and ESPECIALLY for PAs. The odds that you will spend 10 years at this position is small.  The chance that you will WANT to be at this position in 10 years is even smaller.  Just look on these boards for the repeated stories of PAs who are miserable in their jobs.  I truly hope you wont be one of them.

With $135k in stuloan debt you could reasonably be out of debt in 3-4 years giving you much more freedom to as you build wealth.

Good luck!

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Pay off your own loans you chose to take out or pass the burden onto taxpayers? I don’t mean to sound judgmental, but if you think about it, that’s exactly what these programs do. The debt doesn’t just vanish. Of course the right (and probably wiser, especially given the uncertainty of the program) thing to do is to just pay off the debt meaning you just live within your means and make paying off debt a priority. 

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On 2/2/2019 at 9:47 AM, Boatswain2PA said:

Lab rat- your plan probably makes great sense mathematically (although your plan may prohibit you from chasing any exceptionally high paying positions which could skew the math against you).

But what your plan doesnt take into account the risk you are taking with this plan.  20+ years ago most Americans would work at the same place for decades.  This is no longer true, ESPECIALLY in healthcare, and ESPECIALLY for PAs. The odds that you will spend 10 years at this position is small.  The chance that you will WANT to be at this position in 10 years is even smaller.  Just look on these boards for the repeated stories of PAs who are miserable in their jobs.  I truly hope you wont be one of them.

With $135k in stuloan debt you could reasonably be out of debt in 3-4 years giving you much more freedom to as you build wealth.

Good luck!

This is good thinking. I'm in this same boat right now, and 20-40k forgiveness is not worth the extra years of paying student loans and having to seek out non-profit job opportunities.

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On 2/2/2019 at 9:47 AM, Boatswain2PA said:

Lab rat- your plan probably makes great sense mathematically (although your plan may prohibit you from chasing any exceptionally high paying positions which could skew the math against you).

But what your plan doesnt take into account the risk you are taking with this plan.  20+ years ago most Americans would work at the same place for decades.  This is no longer true, ESPECIALLY in healthcare, and ESPECIALLY for PAs. The odds that you will spend 10 years at this position is small.  The chance that you will WANT to be at this position in 10 years is even smaller.  Just look on these boards for the repeated stories of PAs who are miserable in their jobs.  I truly hope you wont be one of them.

With $135k in stuloan debt you could reasonably be out of debt in 3-4 years giving you much more freedom to as you build wealth.

Good luck!

Boatswain, I 100% get your point but have a question on this specifically as a PA-S inclined to pursue IM/ER - I thought about the PSLF and considered that it would be a viable option given that ~75-80% or so of hospitals are non-profit/government. I recognize I do not have a full understanding of this though and I want to know what the complications are. Do ER / Internist 'doctors groups' or contractors that are brought in to staff the hospitals technically not count as non-profit orgs? Would I have to stick to Gov/Academic hospitals? Or would I be safe for PSLF in those fields due to being in hospitals but be missing out on pay not being at the ~20% of for-profit hospitals?

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Im in EM and doing PSLF. It’s really limits your employment options. I have managed to do okay, but TeamHealth , Athena, or whatever contract group is FOR PROFIT. It matters where your paycheck comes from, not the physical location of work. While most hospitals are non-profits, they almost always contract out EM and often do the same for hospitalist. Even some academic hospitals contract out EM if they don’t have a residency established. If you’re looking for true non-profit EM work, small county hospitals or large academics are the best bet. Large academics rarely hire new grads, however. Though you could have more options depending on where you live. I had 4-5 solid options within driving distance.

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Thanks, LT! That was pretty much the answer I expected. It does make residency sound like a not-so-bad idea if I shoot for EM though.

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9 minutes ago, EastCoastPA said:

Thanks, LT! That was pretty much the answer I expected. It does make residency sound like a not-so-bad idea if I shoot for EM though.

The lower pay in residency yielding a lower payment on PSLF through PAYE does help. I have made a pretty sweet set up for myself. Doing the military route, my housing allowance was tax free, thus didn't count towards the 10% discretionary income for PAYE payments. Now I'm using GI bill during residency (not an easy or guaranteed thing to accomplish in case you were wondering), which doesn't count towards taxable income either. So I've made nearly 5 years of pretty low payments that count towards PSLF. I also had a pretty high Ed loan burden due to a prior masters. So PSLF was a no brainer for me. It really depends on your situation. Not sure if I would have done it if I had <150K and went straight to the civilian world. I was looking for jobs in other states and the PSLF really limited my options. Remember, starting PSLF and then not being able to finish it is BAD. All those low payments don't even cover the interest, not even near, so it keeps compounding. I'm really forced into not accepting for profit jobs, but for 5 more years its not that big of a deal.

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22 hours ago, LT_Oneal_PAC said:

The lower pay in residency yielding a lower payment on PSLF through PAYE does help. I have made a pretty sweet set up for myself. Doing the military route, my housing allowance was tax free, thus didn't count towards the 10% discretionary income for PAYE payments. Now I'm using GI bill during residency (not an easy or guaranteed thing to accomplish in case you were wondering), which doesn't count towards taxable income either. So I've made nearly 5 years of pretty low payments that count towards PSLF. I also had a pretty high Ed loan burden due to a prior masters. So PSLF was a no brainer for me. It really depends on your situation. Not sure if I would have done it if I had <150K and went straight to the civilian world. I was looking for jobs in other states and the PSLF really limited my options. Remember, starting PSLF and then not being able to finish it is BAD. All those low payments don't even cover the interest, not even near, so it keeps compounding. I'm really forced into not accepting for profit jobs, but for 5 more years its not that big of a deal.

The low payments sound very appealing, but you have to hedge your bets at the same time. If I go this route, I'd save money in some kind of market account, and re-evaluate after 3,4,5 years to pay it all off versus continuing PSLF. Even then, if the market dips, you're pot committed to PSLF. I'd like to have a bit more freedom and options, so I think I may be steering clear of this route.

My pharmacist friend on the other hand, who has >300k of student loans, well PSLF is a no brainer.

@EastCoastPA my buddy is doing EM with a contract group, and does not get the non-profit title of the place he works at.

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On 6/8/2019 at 3:11 PM, EastCoastPA said:

Boatswain, I 100% get your point but have a question on this specifically as a PA-S inclined to pursue IM/ER - I thought about the PSLF and considered that it would be a viable option given that ~75-80% or so of hospitals are non-profit/government. I recognize I do not have a full understanding of this though and I want to know what the complications are. Do ER / Internist 'doctors groups' or contractors that are brought in to staff the hospitals technically not count as non-profit orgs? Would I have to stick to Gov/Academic hospitals? Or would I be safe for PSLF in those fields due to being in hospitals but be missing out on pay not being at the ~20% of for-profit hospitals?

There has to be money for the PSLF to give you and if you cross all your "T" and dot all your "I" on all the paperwork. One mistake and you could have nothing....I would live poor for 3-4 years and pay off all debt and not rely on someone else to pay it off. My wife and I had ~ $215,000 of student loans and we are down to ~$100,000 is less than 2 years. I graduated 5 years ago from PA school and wasn't smart about money until about 2 years ago and the first 3 years we hardly made any dent in the loans. We will have these loans paid off in 2 years and our house will be paid off in 3 years after that. It is not very hard to pay off student loans when PAs make good money. We make at least $160,000 combined (she works part time) and I also do side PRN jobs which I have already made ~$30,000 this year so netting at least $200,000 this year (only half way done with year so I should make at least another $30K) we can easily pay off these loans in 2 years (or less). We follow the Dave Ramsey method and do not have car payments, etc but we did just have to replace our roof, air conditioner, and my wife wanted new floors (against Dave, but we still did it!) cause our carpet was ruined by dogs and kids. But even at 2 years to pay off $100,000 is not bad. Better than dragging it out for 10 years....get to finical freedom and invest sooner which will make you more money in the long run! 🙂

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