PSLF, starting new job

[mercredis]

Current loans I have:

• Federal Stafford loans which qualify for PSLF: $131K at 6.55% (currently 0%, which will end in 1/2022). I've made 60 qualifying payments thus far while on IBR, but I always paid more than the minimum required for IBR to avoid things ballooning out of control (and currently kicking myself for being too ignorant/not knowing about PSLF side fund strategy).
• Federal Perkins loans (does not qualify for PSLF): $9K at 5%
• Private loan: $6K at 5.375%

Some background: Just finished fellowship, will be starting 1st job at VA hospital. I was told I may be eligible for VA Student Loan Repayment Program ($10K per year with lifetime max of $60K) -- will certainly plan on getting more information about this as I'm onboarding.

My thoughts are the following: I should pay off the Perkins loan and private loan ASAP with first few paychecks I get. For the Stafford loans, my minimum IBR payments will go up as an attending, but it should not be more than the standard repayment. Using salary of ~$320K and calculators on studentaid.gov, it looks like my monthly payment will be about $1500 x 60 more qualifying payments = $90K. This means potentially I could get the remaining ~40K+ forgiven ($131K - $90K).

The alternative would be to refinance and pay it off fast -- and I would absolutely love to be rid of student loans ASAP, but it seems to me that I should just keep going with PSLF and save along the way for retirement and other funds. Am I thinking this through correctly? Appreciate the guidance.

[wa2106]

Pay off perkins and private loan

Look into VA loan repayment - if it seems easy go for it

I like your plan just make sure you're in PAYE not repaye to cap payments at $1500 standard repayment. If in repaye your payment will be (AGI - 1.5* federal poverty level)/12/10. Or roughly $1900/mo.

Also remember that your benefit from PSLF is more than the current loan balance - it's the current loan balance PLUS interest which would have accrued if you refinanced. So probably more like $150,000 - $90,000 = $60,000.

You could get the same benefit from pursuing the VA program and you wouldn't have to wait 6 years to get it - if you leave after 3 at least you've gotten $30k benefit. I'd go for that if possible.

[jfoxcpacfp]

I dunno, you’re not gaining a whole lot on this one, but $40k is $40k and you’re 5 yrs in. As for the other alternative (no PSLF and no saving along the way for retirement and other funds), couldn’t you still save pretty significantly even while paying off the debt? Of course, there may be other issues we’re not aware of (several kids, parental support, HCOL area, etc).

I suppose it depends on how much having that debt for another 5 years is going to bother you. Some doctors couldn’t stand it, others won’t have an issue with it. Over your lifespan, it’s not going to make a huge impact, so do what you’re most comfortable with.

Hope to hear some other perspectives.

[Andrew StudentLoanAdvice]

Pay off the perkins and private loan. You'll be able to private refinance those to lower rates and you can use some of your VA repayment bonus for those.

Why are you working at the VA? For PSLF or because this is the job you wanted?

If you're doing it for PSLF reasons, you might just be better off finding a private practice job and private refinancing. Yes, you have to pay more than staying on PSLF but if the potential earnings at the PP job outweigh the benefits of PSLF, then it's worth it.

If you're doing PSLF and want to work at the VA, why not stay on PSLF and make the minimum payments while maxing out your 403b, HSA (if eligible) and contributing to a taxable account as a PSLF side fund. You'll have a nice nest egg in 5 years and be debt free.

Either way you should be done with your loans ~ 5 years.

[mercredis]

Thank you all for the feedback & guidance. The VA job is the one I wanted. I'm definitely taking a pay cut compared to my co-fellows who are out in PP, but it has other things I value, such as academics (working with/training residents/fellows, university hospital affiliation, non-clinical time to contribute to education/QI/etc.) and geographic location. I hope to stay in this job for a long while, but I also know none of us can predict these things.

[mercredis]

Just wanted to post an update:

• I paid off the private loan ($6K at 5.375%)
• I also paid off the Federal Perkins loan ($9K at 5%)
• I still have the Federal Stafford loans ($131 K at 6.55%, though currently 0% which will end in 1/2022), and plan is to continue with PSLF. I started the application process for VA Student Loan Repayment Program ($10K per year with lifetime max of $60K), and most challenging thing thus far has been that I can't seem to get in touch with the loan servicer to fill out their part of the application (just give me a signature please!)

My short-term goal is to max out my 2021 contributions to my TSP fund. Earlier in 2021, I only made mandatory contributions to a 401(a) DCP fund, so now I get the chance to contribute $19.5K to my TSP fund by end of 2021, but that isn't leaving me with very much take-home pay. I don't have a backdoor Roth IRA, and I don't think I'll have enough to fund one this year (live in a HCOL area, plus helping my parents financially). If the proposed changes go through, it seems like I might miss out on it entirely. On a positive note, though, I really like my job.

[wa2106]

I would prioritize Roth over TSP for this year since you have to choose (presumably down income year, possible Roth won't be there next year) but at least do the 5% TSP contributions to get match.

[resident_1]

I would:
1. Stay in PSLF. You want to be in VA for at least 5 straight years so you get vested into their pension system. This is your 60 pslf payments to reach 120 goal.

2. What is this $60k loan repayment they gave you?
current Education Debt Forgiveness Program in VA is $200k forgiveness over 5years. Ask HR to give you that program.

3. contribute max to TSP (i.e. $19500)
4. Make backdoor Roth IRA

[hebel]

I would:
1. Stay in PSLF. You want to be in VA for at least 5 straight years so you get vested into their pension system. This is your 60 pslf payments to reach 120 goal.

2. What is this $60k loan repayment they gave you?
current Education Debt Forgiveness Program in VA is $200k forgiveness over 5years. Ask HR to give you that program.

3. contribute max to TSP (i.e. $19500)
4. Make backdoor Roth IRA

How does the VA pension work. You get some portion of a pension after only 5 years? Do you have to be fully retired to get it, or could you leave the VA after 5 years and get the pension throughout the remainder of your career somewhere else?

[mercredis]

I would:
1. Stay in PSLF. You want to be in VA for at least 5 straight years so you get vested into their pension system. This is your 60 pslf payments to reach 120 goal.

2. What is this $60k loan repayment they gave you?
current Education Debt Forgiveness Program in VA is $200k forgiveness over 5years. Ask HR to give you that program.

3. contribute max to TSP (i.e. $19500)
4. Make backdoor Roth IRA

Thanks for that information. I will definitely look into that. My employment offer came with eligibility for the Student Loan Repayment Program (https://www.opm.gov/policy-data-over...oan-repayment/) which is $10,000 per year, lifetime max of $60,000.

[resident_1]

You are part of Federal Employee Retirement System.
it consists of basic benefit plan (this is your “pension”, social security, and TSP (ie 401k)).

Salary over last 3yrs x years of service x pension multiplier = pension benefit

You need to have at least 5 consecutive years of work to be eligible for pension (it kicks in at 62years old).

So some people start at VA and leave after 5 years and then return later in career and continue accumulating retirement years.

Some join VA when older to get that pension.

[mercredis]

Newer employees (hired in 2013 or later) have higher contribution rates for FERS (Federal Employee Retirement System), 4.4% of salary. I believe prior employees were contributing 0.8% of salary.

The FERS basic benefit is also known as the "high-3" average pay, since it's generally highest average basic pay during 3 consecutive years of service (which is usually your last 3 years of service) x years of service x 1%.

[Hank]

You are part of Federal Employee Retirement System.
it consists of basic benefit plan (this is your “pension”, social security, and TSP (ie 401k)).

Salary over last 3yrs x years of service x pension multiplier = pension benefit

You need to have at least 5 consecutive years of work to be eligible for pension (it kicks in at 62years old).

So some people start at VA and leave after 5 years and then return later in career and continue accumulating retirement years.

Some join VA when older to get that pension.

Please keep in mind the difference between an immediate annuity vs. a deferred annuity (retirement) for the purpose of eligibility for federal employees health benefits and federal employees group life insurance.