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As a disclaimer, I'm assuming that PSLF will actually be around for a while, at least for those who have already started making payments toward it.
A few of my buddies and I were at the bar discussing our loans and PSLF and throwing a few ideas around and figured that you could go back to school without paying any extra for it with PSLF. I wasn't too sure about it, but after discussing with my loan servicer, this should be entirely possible.
Here's how it works: once you start making your 120 qualifying payments, you can return to school taking out Direct Loans. If you are working full-time while in school, you can continue to make your payments as usual, if not you will need to defer your loans with an in-school deferment. Once you graduate, you can consolidate your new loans into your prior PSLF qualified loan and continue making your payments wherever you left off. Those prior qualified payments will count towards the entire loan amount.
Here's a quick example:
Graduate Med School with 250k debt and residency AGI of 60k. You make PAYE payments of $352 monthly. After 5 years (60 payments) or residency you decide you want to pursue an MBA. This takes two years and adds 120K principal to your student loan debt, which you consolidate into your prior loan on which you had made 60 qualified payments and now has a principal balance of 370k. You take a job with an AGI 300k after graduation and now your PAYE payment has increased $2352, the same amount it would've been had you not gone back for the MBA. At this point you continue to make 60 qualified payments and after the combined 120 payments, you have paid just $162,240 on a principal balance of 370k. This saves you over 200k, not including any interest!
Of course this assumes that PSLF is still around. This also does not take into account the opportunity cost of those two years off, however this could be dampened by taking an "executive" route and studying while working.
Please double check my math on this, but if I am correct, this could be a great deal for those interested in pursuing another graduate degree after finishing training.
What are your thoughts? Is this something that could be viable?
A few of my buddies and I were at the bar discussing our loans and PSLF and throwing a few ideas around and figured that you could go back to school without paying any extra for it with PSLF. I wasn't too sure about it, but after discussing with my loan servicer, this should be entirely possible.
Here's how it works: once you start making your 120 qualifying payments, you can return to school taking out Direct Loans. If you are working full-time while in school, you can continue to make your payments as usual, if not you will need to defer your loans with an in-school deferment. Once you graduate, you can consolidate your new loans into your prior PSLF qualified loan and continue making your payments wherever you left off. Those prior qualified payments will count towards the entire loan amount.
Here's a quick example:
Graduate Med School with 250k debt and residency AGI of 60k. You make PAYE payments of $352 monthly. After 5 years (60 payments) or residency you decide you want to pursue an MBA. This takes two years and adds 120K principal to your student loan debt, which you consolidate into your prior loan on which you had made 60 qualified payments and now has a principal balance of 370k. You take a job with an AGI 300k after graduation and now your PAYE payment has increased $2352, the same amount it would've been had you not gone back for the MBA. At this point you continue to make 60 qualified payments and after the combined 120 payments, you have paid just $162,240 on a principal balance of 370k. This saves you over 200k, not including any interest!
Of course this assumes that PSLF is still around. This also does not take into account the opportunity cost of those two years off, however this could be dampened by taking an "executive" route and studying while working.
Please double check my math on this, but if I am correct, this could be a great deal for those interested in pursuing another graduate degree after finishing training.
What are your thoughts? Is this something that could be viable?
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