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Pay off loans or hold out for PSLF?

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  • Pay off loans or hold out for PSLF?

    Hey guys,

    I have about 170K in debt and ~65k lying around that I haven't decided what to do with. I was holding out on putting all of the money I have into loans because I wanted to wait until October (as I was expecting the government to slash PSLF after first round of forgiveness and that would be my cue to just pay all of the 65k into loans). What do you guys advise I do? I know that the smarter and safer thing would be to just pay it off....but was hoping for other insight.

    Thanks!

  • #2
    How far are you from PSLF? It sounds like they'll grandfather people in. Assuming you're in residency or just out, pslf is usually the way to go.

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    • #3
      Where are you in the pslf process? What are the interest rates on your loans? Are you maximizing tax favored retirement accounts you have access to? What are your post residency plans? These factor into the answer to your question.

      No one knows the future of this program. My understanding is that the program is in the promissory note of the loan and conventional wisdom is that current loans would be grandfathered in if the program was changed. Of course the government makes the rules and may find a way to cap or rewrite things retroactively but that seems less likely to me.

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      • #4
        Thanks for the replies. I''m just starting residency (PGY1, 5 months in, started medschool in 2013) and so I'm very new to PSLF. I am planning on fellowship so I would be paying IBR monthly for at least 6 years (which is why I thought it would be the smart thing to use PSLF as I would accumulate more interest but it would get forgiven in the end). The interest compounded is about 6%.

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        • #5
          Probably makes sense to do everything now as though you will get PSLF. Do what you can with Roth and 403b now, then as an attending after you max out those accounts have a taxable account too- which you can use to pay off loans in the event PSLF falls through. I suspect there will be some clarity one way or the other over the next year or so as the first rounds of forgiveness happen

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