Announcement

Collapse
No announcement yet.

Managing student loan transition from training to attending

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Managing student loan transition from training to attending

    What do posters think of this plan? I think there could be some interesting strategies here for people in a similar boat. Also shout out to Andrew if he is willing to engage on this post.

    My situation:
    I worked for government in residency/fellowship and took a job for a 501c3 as an attending starting next month and will be pursuing PSLF.
    Consolidated immediately upon entering internship -> 6.5 years of being in residency RePAYE/COVID pause assuming payments restart Jan 2023.
    $152,000 in federal student loans for medical school @ 5.825%.

    Start my attending job next month:
    1) Jan to July 2023 will pay at resident rate in RePAYE due to 6mo delay after repayements start before new income recertification is required. This will increase my loan to $154,000. I could either recert prior to tax day 4/2023 or file for a tax extension in early 2023 in order to recertify for IDR using 2021 income which was much lower due to being in fellowship.
    2) July 2023 recert based on fellowship income in 2021 and move to PAYE. Will pay on PAYE for 12 months paying $819/mo which was 10% of my 2021 discretionary income, and my loan will be $153,000 at the end of this payment period.
    3) In July 2024 will be paying on PAYE plan. My 10% DI will be over the standard repayment plan payment so they will have me pay the standard plan repayment of $1,690/mo until July 2026 when I will be eligible for PSLF forgiveness. This would leave $129,362 as the balance to be forgiven. I will have paid about $60,000 as well as worked for 10 years for governments and non-profits on my end of the bargain.

    My question for the posters is:
    1) When do you suggest for recert of income in 2023? It seems according to the article I linked there is no legal grey zone anymore as far as filing tax extension so I can use the 2021 income. I save maybe $2,400 (800mo difference) if I file the tax extension. But if there is any suggestion that isn't legal then I would just recert electively before April 2023.
    2) Am I understanding the PAYE program correctly as an attending with a good salary? No discretionary income used and instead use the 10 year standard plan repayements using calculator like this one? Which in my case for $153,000 loan at 5.825% would equate to $1,690/mo payments.
    Last edited by akwho; 08-26-2022, 03:40 PM.

  • #2
    First off, you are savvy and have a great plan thus far. PSLF is a great investment for you because you
    -Consolidated right when you graduated
    -Enrolled in REPAYE
    -Benefitted from close to 3 years of no payments and interest
    -And switching to PAYE to cap your monthly payments as an attending

    1.) I see people file an extension on their taxes all the time which allows them to have lower student loan payments when they recertify next. I think your logic makes sense of filing an extension to be able to submit your next recert with 2021 income. You want to make sure you switch to PAYE before you file your first tax return that has a years worth of attending income. Reason being, PAYE requires you to qualify for a partial financial hardship. Which basically means you can't enroll in PAYE when you make more than you owe.

    2.) Yes. You take your loan balance at the time you enter into PAYE to calculate your payment cap.
    Loan balance 153,000
    Interest rate 5.825%
    Term 10 years
    =PMT(5.825%/12,10*12,153000,0,0)

    Monthly Payment cap = $1,685

    Plan looks great. Only thing I would add is to contribute to pre-tax retirement accounts to bring down those payments even more.
    Helping student loan borrowers manage their student loans. StudentLoanAdvice.com. [email protected]

    Comment


    • #3
      Originally posted by Andrew StudentLoanAdvice View Post
      First off, you are savvy and have a great plan thus far. PSLF is a great investment for you because you
      -Consolidated right when you graduated
      -Enrolled in REPAYE
      -Benefitted from close to 3 years of no payments and interest
      -And switching to PAYE to cap your monthly payments as an attending

      1.) I see people file an extension on their taxes all the time which allows them to have lower student loan payments when they recertify next. I think your logic makes sense of filing an extension to be able to submit your next recert with 2021 income. You want to make sure you switch to PAYE before you file your first tax return that has a years worth of attending income. Reason being, PAYE requires you to qualify for a partial financial hardship. Which basically means you can't enroll in PAYE when you make more than you owe.

      2.) Yes. You take your loan balance at the time you enter into PAYE to calculate your payment cap.
      Loan balance 153,000
      Interest rate 5.825%
      Term 10 years
      =PMT(5.825%/12,10*12,153000,0,0)

      Monthly Payment cap = $1,685

      Plan looks great. Only thing I would add is to contribute to pre-tax retirement accounts to bring down those payments even more.

      Awesome Andrew, thank you so much. You are an incredible resource for this site.

      Comment


      • #4
        Originally posted by Andrew StudentLoanAdvice View Post

        2.) Yes. You take your loan balance at the time you enter into PAYE to calculate your payment cap.
        Loan balance 153,000
        Interest rate 5.825%
        Term 10 years
        =PMT(5.825%/12,10*12,153000,0,0)

        Monthly Payment cap = $1,685

        .
        Very I formative post! Andrew how is the max payment calculated under PAYE for those of us consolidating loans currently? So i have my regular direct loans (about 150k) and then now consolidating my LDS loans to them (about 50k). I hope the LDS loan will qualify for PAYE, so how will the max payment be calculated?

        Comment


        • #5
          Originally posted by matia View Post

          Very I formative post! Andrew how is the max payment calculated under PAYE for those of us consolidating loans currently? So i have my regular direct loans (about 150k) and then now consolidating my LDS loans to them (about 50k). I hope the LDS loan will qualify for PAYE, so how will the max payment be calculated?
          They will calculate it the same way I did it in the OP's example. They will take your consolidation loan balance into account when they calculate your payment cap.
          Loan balance 200k
          Interest rate 6%
          Term 10 years
          =PMT(6%/12,10*12,200000,0,0)

          Monthly Payment cap = $2,220


          Please note though...if you are making above what you owe already and you'll end up using that tax return when you consolidate, you probably won't be able to enroll into PAYE because of the partial financial hardship requirement.
          Helping student loan borrowers manage their student loans. StudentLoanAdvice.com. [email protected]

          Comment


          • #6
            This is an excellent post! Not to hijack the post but I am in a similar situation, dual physician couple and was hoping to do the same but am running into issues. My payment plan was placed in PAYE and my wife's in REPAYE and I am not sure why the discrepancy as we filled the info identically all throughout residency. We attempted to change hers to PAYE recently but it is not offering that as an option. Her REPAYE monthly amount is estimated at $7001/month according to most recent tax info. We have been attendings for 2-3 years so our income makes the 10% discretionary quite high and our tax information has been uploaded into the Student Aid system, which in hindsight may be the issue but at the time it seemed like it was required to proceed. Is there a way to change her to PAYE before the extension ends? It looks like ICR is the only other option listed with the projected payment at 3711/month which is better but certainly not ideal. Any help would be appreciated.

            Comment

            Working...
            X