Federal loan repayment/finance (Resident)

[diabeticfootdr]

The Public Service Loan Forgiveness (PSLF) program is another great option. As long as you work for a qualified employer and you make 120 consecutive, on-time payments (10 years), the remainder of your balance is forgiven by the federal government.

There is no exclusionary income cap. Most public universities qualify - including UT We even have a new faculty member coming from another university who completed 8 years on the program and the program will transfer to a new qualified employer.

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[Hybrocure]

The Public Service Loan Forgiveness (PSLF) program is another great option. As long as you work for a qualified employer and you make 120 consecutive, on-time payments (10 years), the remainder of your balance is forgiven by the federal government.

There is no exclusionary income cap. Most public universities qualify - including UT We even have a new faculty member coming from another university who completed 8 years on the program and the program will transfer to a new qualified employer.

This is true. But unfortunately every PSLF job that opens up gets hit with hundreds of applications simply because of our loan problem

 

[Feli]

Disagree with the vast majority of DPMs will be paying down the debt with standard payments as much as possible.

The average monthly payment on a standard payment is about 3k a month with current school loans. This only outweighs a PAYE/SAVE plan if you’re bringing in over 300k a year.

The majority of new grad DPMs are not making a salary to pay that off and live comfortably. The majority of new grad DPMs are making half that.

I get that, but I am saying that SAVE or IBR or any minimum payments plan is not most working DPMs' overall best interest (or any grad student).

It's silly to pay $2000 or less per month and have $1700 of that go to interest (7% interest on $300k debt = 21k/yr = 1700/mo interest).... or pay $1500/mo or $1700/mo or whatever on IBR/SAVE/REPAYE and be paying interest only (by lowering payment with some income-based plan). That seems comfortable, but after a 5 or 10 years of those minimum payments, you've paid six figures in loan payments and principal will be same or higher (if any gaps). The minimal pays does nothing to address the elephant (loan principal), and with minimal payments, you're then tethered indefinitely to hoping for the govt 25 or 20yrs loan bail out. That debt and constantly re-applying for Uncle Sam's kindness is tremendous negative psychology.

...The DPMs working for basically any hospital or owner/partner in PP pod/MSG/ortho should be making $200-300k+. Nearly all will make that (either base or base + bonus), with possible exception to some VA and small hospital FTEs, who should progress up to $250k+ ...or be looking for other jobs. Either way, they can all make a standard $3k or $4k or 5k/mo payment easily... and should be paying significantly more than that per month to chop into principal. It is the same way to attack a house mortgage. It is very reasonable to pay $10k/mo on student loans with $300k gross income by tightening expenses and deciding to eliminate the student loans to then turbo-fund retirement afterwards.

Yes, the many pod associates making around $150k will have a tougher time, particularly if their partner is not financially competent... but it is just not hard to pay $3k/mo (pay standard 15yr repay or overpay SAVE/IBR... which basically negates the point of those plans). That $36k/yr loan payments (plus 6.5k /ROTH) can definitely be done when you net over 100k, which the vast majority of DPMs will. Numerous other health and overall professionals do that payment (particularly if they went to private school). We all lived on less than that ~60k net income as residents. If it's tough, that's a motivation to continue to look for better jobs or create an owner path.

The idea is not to 'live comfortably' when you have huge 7% interest debt on your mind (and your credit) every day. It is going to be a crunch. Lowering the monthly loan payment to up the standard of living is an absolute killer, though. Not only will that delay retirement and make bad jobs/income seem ok, it'll also make retirement cost more due to needing more $ to support lifestyle habits. WCI and others go over this 100x with the "live like a resident" dogma to paying down loans. It is a heck of a lot easier for MDs since most of them earn twice what DPMs do, but the same logic applies.

In this >5% interest rate environment, minimizing the monthly loan payment to keep more money in the pocket is very dangerous. The exception is for clear loophole bail out plans like PSLF, but that's a small minority of DPMs and still has its own downsides (fairly limited job options, can fail back to standard loan repay). The loans are large, and they have high interest... but most DPMs can pay it off if they structure a budget (some obviously faster than others). There are tons of hobbies and fun things that are cheap.

 

[Boba Foot]

It's silly to pay $2000 or less per month and have $1700 of that go to interest

It doesn’t matter if your payment goes to principle, interest, or down the toilet if your loan balance is forgiven after 20 years. It’s all the same. A balance that goes away.

Interest only matters if you’re trying to pay it all off. In which case you want it as low as possible and gone as quickly as possible.

There may or may not be a tax bomb on that amount forgiven. Hopefully not. Right now there is not one. Vote for politicians that are willing to permanently codify that.

 

[air bud]

I get that, but I am saying that SAVE or IBR or any minimum payments plan is not most working DPMs' overall best interest (or any grad student).

It's silly to pay $2000 or less per month and have $1700 of that go to interest (7% interest on $300k debt = 21k/yr = 1700/mo interest).... or pay $1500/mo or $1700/mo or whatever on IBR/SAVE/REPAYE and be paying interest only (by lowering payment with some income-based plan). That seems comfortable, but after a 5 or 10 years of those minimum payments, you've paid six figures in loan payments and principal will be same or higher (if any gaps). The minimal pays does nothing to address the elephant (loan principal), and with minimal payments, you're then tethered indefinitely to hoping for the govt 25 or 20yrs loan bail out. That debt and constantly re-applying for Uncle Sam's kindness is tremendous negative psychology.

...The DPMs working for basically any hospital or owner/partner in PP pod/MSG/ortho should be making $200-300k+. Nearly all will make that (either base or base + bonus), with possible exception to some VA and small hospital FTEs, who should progress up to $250k+ ...or be looking for other jobs. Either way, they can all make a standard $3k or $4k or 5k/mo payment easily... and should be paying significantly more than that per month to chop into principal. It is the same way to attack a house mortgage. It is very reasonable to pay $10k/mo on student loans with $300k gross income by tightening expenses and deciding to eliminate the student loans to then turbo-fund retirement afterwards.

Yes, the many pod associates making around $150k will have a tougher time, particularly if their partner is not financially competent... but it is just not hard to pay $3k/mo (pay standard 15yr repay or overpay SAVE/IBR... which basically negates the point of those plans). That $36k/yr loan payments (plus 6.5k /ROTH) can definitely be done when you net over 100k, which the vast majority of DPMs will. Numerous other health and overall professionals do that payment (particularly if they went to private school). We all lived on less than that ~60k net income as residents. If it's tough, that's a motivation to continue to look for better jobs or create an owner path.

The idea is not to 'live comfortably' when you have huge 7% interest debt on your mind (and your credit) every day. It is going to be a crunch. Lowering the monthly loan payment to up the standard of living is an absolute killer, though. Not only will that delay retirement and make bad jobs/income seem ok, it'll also make retirement cost more due to needing more $ to support lifestyle habits. WCI and others go over this 100x with the "live like a resident" dogma to paying down loans. It is a heck of a lot easier for MDs since most of them earn twice what DPMs do, but the same logic applies.

In this >5% interest rate environment, minimizing the monthly loan payment to keep more money in the pocket is very dangerous. The exception is for clear loophole bail out plans like PSLF, but that's a small minority of DPMs and still has its own downsides (fairly limited job options, can fail back to standard loan repay). The loans are large, and they have high interest... but most DPMs can pay it off if they structure a budget (some obviously faster than others). There are tons of hobbies and fun things that are cheap.

But wen boat?

 

[air bud]

Live like a resident is cool for 3 or 4 years tops.

 

[air bud]

It doesn’t matter if your payment goes to principle, interest, or down the toilet if your loan balance is forgiven after 20 years. It’s all the same. A balance that goes away.

Interest only matters if you’re trying to pay it all off. In which case you want it as low as possible and gone as quickly as possible.

There may or may not be a tax bomb on that amount forgiven. Hopefully not. Right now there is not one. Vote for politicians that are willing to permanently codify that.

Agree. Where the world is these days, it's about the payment, that's all. You will own nothing and be happy.

 

[icebreaker32]

Paying off your loan in 10 years used to be great advice, but times are different based on how student loans are treated now. Also you must consider the typically poor benefits and poor earnings in the early years of this profession.

If you are doing very well it probably makes sense to pay off your loans fairly quickly, but in that case a high payment will be required anyways. Otherwise make the minimum payment and keep your AGI as low as possible and also save for opening an office or maybe you will be making payments towards partnership and/or a surgery center buy in. Keep a healthy emergency fund, buy a home when your job is stable, max out retirement, start a 529 if that is applicable and important to you. You also deserve to take reasonable vacations and drive a car that won’t break down unless you are sacrificing to open or keep an a new office afloat. If you can do all the above and still happen to have some principal left that is written off…..oh well you got a break. If you live in one of the few states that tax the amount written off then prepare for that.

If you are a Dave Ramsey fanatic or it is necessary for your mental health to just have the loans gone then disregard all the above advice and just pay of the loans rapidly, eat only beans and rice and remain an associate.

 

[Feli]

It doesn’t matter if your payment goes to principle, interest, or down the toilet if your loan balance is forgiven after 20 years. It’s all the same. A balance that goes away.

Interest only matters if you’re trying to pay it all off. In which case you want it as low as possible and gone as quickly as possible.

There may or may not be a tax bomb on that amount forgiven. Hopefully not. Right now there is not one. Vote for politicians that are willing to permanently codify that.

Yeah, that's a fine path also... it depends on the situation and goal.

That's what I had said in #99: lower-your-payment attempt plans are only useful if you are going to try for the bail out options: pslf forgiveness, forgiveness after 20yrs or 25yrs on-time pays, IHS job grants, etc.

...For people who get DPM MSG/hospital jobs or open their own office or decent PP partner job out of training or soon after, it's not practical to apply every year for IBR... only to be told they need to pay standard payment anyways, due to their income.

For people who don't have those 200k+ jobs, it's probably good to still strive towards getting them one day. It is not an awesome plan to stay in those lower pay associate jobs to minimize the loan payment for 20-25yrs, though. If that happens, it happens. That won't be the majority of DPMs I have seen; there certainly are the 50+ year old associates making 35% or even doing mobile pod... but many others became owner/partner or found at least a VA job or something.

The one decent use of the IBR path is to minimize payment and save hard for opening/buying a PP, but that really only takes a year or two. Having debt paid down also helps for opening/running PP due to better credit and rates if you need them. There's hardly a CFP in the world who'd tell you there's a better place to put any invest $ than on a guaranteed 7.x% return. It's not fun, but it's the best play.

 

[Boba Foot]

It is not an awesome plan to stay in those lower pay associate jobs to minimize the loan payment for 20-25yrs, though. If that happens, it happens

There’s plenty of other ways to lower your AGI even if you have a decent paying job. Max contribute to 401k, max contribute to HSA, etc etc. All much more beneficial in the long run than paying off your student loans.

I got lucky with residency timing and have had my loan payments at 0 since 2020 so when I have to begin repayment in 2024, it’ll essentially be a 15 year forgiveness plan.

 

[MoostashPod]

A little refreshment. Take it or leave it, either you like the idea or not, it's your decision on what to do. You took out the loans, you pay for it. Don't depend on the government to change your life.

I started with ~$350K in debt (with interests added and after residency), and have $157K left to go. This is just two years out and into the workforce. You can do this. I'm not depending on the government to solve my problem.

 

[JustAPedicurist]

A little refreshment. Take it or leave it, either you like the idea or not, it's your decision on what to do. You took out the loans, you pay for it. Don't depend on the government to change your life.

I started with ~$350K in debt (with interests added and after residency), and have $157K left to go. This is just two years out and into the workforce. You can do this. I'm not depending on the government to solve my problem.

Good for you. No one cares

 

[MoostashPod]

...until it hits them. And that's where America is wrong. Best to pay it off and as fast as you can.

 

[Boba Foot]

I’m almost 40 and still have never met a well-off person who attributes that to Dave Ramsey’s advice. Take that however you want.

 

[Feli]

I’m almost 40 and still have never met a well-off person who attributes that to Dave Ramsey’s advice. Take that however you want.

There are really no wrong answers.
Like I said, a lot can depend on your job.
It is easy for the MDs on WCI making 300k-600k+ right out of residency, but it can be a lot harder for DPM wages.

For some pod jobs with lower pay or PSLF potential, the strategy of pay minimum and don't worry about principal and hope for forgiveness of loans after 10 or 20 or 25yrs or whatever can be the best - only way - to go. There really is no other option if making less than $125k or so... should be paying minimum and looking for new job and saving for opening solo PP.

For others, it's better to attack debt and be done with it. This much more true now with high interest rate on the loans. I am early 40s now, and most of my co-residents and friends of similar age have paid their pod school loans or pretty close. Some are hospital FTE, some owner PP, some just reasonably paid pod/MSG associates who hit 200k-300k+ with bonus. I would still maintain that even a $150k pod should be able to pay $3k/mo and make some progress on principal balance. Paying it off does then allow you to then superfund retirement by not having a $3k or $4k or $5k+ monthly payment anymore.

...Taking the strategy of paying the loans asap does have its definite advantages. I'd be getting 21% and not 11% business credit card offers, higher rates (or denials) on all kinds of equipment/LOC/home/auto/etc loans, etc if I still had high debt-to-income ratio. Perhaps the biggest advantage is just that you're not depressed every time you have to re-apply for lower payments, see the balances, or use credit score. It felt fairly hopeless to me to have those headaches again and again... then a bit better when the balance was shrinking and loan groups disappearing. Even though I have ok credit (now), I still use debit card for almost all biz stuff, pay my biz rent ahead, keep healthy biz savings, etc. It is nice to know that I could get a vehicle, hire a new employee, start another office, or even weather another COVID-type income drought.

 

[MoostashPod]

There are really no wrong answers.
Like I said, a lot can depend on your job.
It is easy for the MDs on WCI making 300k-600k+ right out of residency, but it can be a lot harder for DPM wages.

For some pod jobs with lower pay or PSLF potential, the strategy of pay minimum an don't worry about principal and hope for forgiveness of loans after 10 or 20 or 25yrs or whatever can be the only way to go. There really is no other option if making less than $125k or so... should be paying minimum and looking for new job and saving for opening solo PP.

For others, it's better to attack debt and be done with it. This much more true now with high interest rate on the loans. I am early 40s now, and most of my co-residents and friends of similar age have paid their pod school loans or pretty close. Some are hospital FTE, some owner PP, some just reasonably paid pod/MSG associates who hit 200k-300k+ with bonus. I would still maintain that even a $150k pod should be able to pay $3k/mo and make some progress on principal balance. Paying it off does then allow you to then superfund retirement by not having a $3k or $4k or $5k+ monthly payment anymore.

...Taking the strategy of paying the loans asap does have its definite advantages. I'd be getting 21% and not 11% business credit card offers, higher rates (or denials) on all kinds of equipment/LOC/home/auto/etc loans, etc if I still had high debt-to-income ratio. Perhaps the biggest advantage is just that you're not depressed every time you have to re-apply for lower payments, see the balances, or use credit score. It felt fairly hopeless to me to have those headaches again and again... then a bit better when the balance was shrinking and loan groups disappearing. Even though I have ok credit (now), I still use debit card for almost all biz stuff, pay my biz rent ahead, keep healthy biz savings, etc. It is nice to know that I could get a vehicle, hire a new employee, start another office, or even weather another COVID-type income drought.

Exactly. The debt burden monthly prevents people to invest, save for retirement, etc. The longer people have their student loans hanging on their backs, the more banks line their pockets. You're basically making them richer. You're not winning. Imagine being debt free and the extra money (not throwing towards any loans with high interests) can go towards something better for your life. This is all relative to ones focus of course, but being debt free (the sooner the better) should be everyone's goal with a debt load.

 

[wakaflocka88]

PSLF for me. Retro active residency plus my current job already shaving off 6 years. 4 years left of minimum IDR payments. I rather use the extra money to grow into more money

 

[bigf00t1989]

A little refreshment. Take it or leave it, either you like the idea or not, it's your decision on what to do. You took out the loans, you pay for it. Don't depend on the government to change your life.

I started with ~$350K in debt (with interests added and after residency), and have $157K left to go. This is just two years out and into the workforce. You can do this. I'm not depending on the government to solve my problem.

What type of income do you have to be able to pay off the loans so quickly ? Congratulations

 

[wakaflocka88]

What type of income do you have to be able to pay off the loans so quickly ? Congratulations

A non predatory mustache PP job offer at the minimum. A quick browse of job listings on ACFAS webpage says it all.

 

[bigf00t1989]

A non predatory mustache PP job offer at the minimum. A quick browse of job listings on ACFAS webpage says it all.

im a little slow, most jobs listed on that site are less than 200k. You’re saying you would need higher pay to pay off loans this fast?

 

[wakaflocka88]

im a little slow, most jobs listed on that site are less than 200k. You’re saying you would need higher pay to pay off loans this fast?

market rate tuition at pod schools with interest: possibly over 300k

Job offer: 200k

Something isn’t adding up here my friend….numbers don’t lie.

 

[MoostashPod]

What type of income do you have to be able to pay off the loans so quickly ? Congratulations

My first year I was making ~$175K and this year a bit over $200K. And that's before taxes. Doing basic, non surgical podiatry, M-F, no calls. I saved some money during residency and a bit during the Covid pause to tackle student loans. I'm okay overall, but still not happy.

 

[heybrother]

My first year I was making ~$175K and this year a bit over $200K. And that's before taxes. Doing basic, non surgical podiatry, M-F, no calls. I saved some money during residency and a bit during the Covid pause to tackle student loans. I'm okay overall, but still not happy.

Why would you be happy ?

Paying student loans is like going on a home improvement show to sell your house and then finding out that 90% of the money is going to repair a structural foundation issue that has to be done but no one can see or enjoy.

You're doing a wonderful thing but it sucks. Much better to marry a rich person and have their family pay it off for you.

You should try and find out if that anesthesiology assistant girl is single. You can talk about your student loan pay-off strategies etc.

 

[Boba Foot]

Paying it off does then allow you to then superfund retirement by not having a $3k or $4k or $5k+ monthly payment anymore.

Exactly. The debt burden monthly prevents people to invest, save for retirement, etc.

Foolishness. The longer you have money growing, the bigger that growth (theoretically) will be when you retire. Not throwing a large chunk of your income for 3-5 years at student loan repayment and instead keeping it in investments for longer grows that money more substantially. Especially if you were lucky enough to put that money into an brokerage before all the giant COVID gains in the market or another huge growth event.

 

[Boba Foot]

Perhaps the biggest advantage is just that you're not depressed every time you have to re-apply for lower payments, see the balances, or use credit score

I literally have 800 credit with $370k in student loans. Student loans' effect on your credit is negligible. I also don't give a horses arse about my balances when I see them because I know I'm not going to end up paying all of it. It's just a number on a screen that goes away 16 years from now.

 

[MoostashPod]

I literally have 800 credit with $370k in student loans. Student loans' effect on your credit is negligible. I also don't give a horses arse about my balances when I see them because I know I'm not going to end up paying all of it. It's just a number on a screen that goes away 16 years from now.

I have 785 credit score and can care less about these dumb scores. The number basically tells you how good you are with debt and juggling it over time to satisfy the banks. I'd like mine to go to zero and use cash only if I could. Everybody has a different mindset with debt. Yours is different and I respect that. As for me, I'd like to sleep better at night not having $350K+ hanging over my shoulder for years and years. Sure, I'd be investing and saving a little later (two years from now), but at least all the money I have will not go to the predatory banks.

Question for you. What happens when the 16 years is up and for some odd reason they denied your forgiveness? The chances are 50/50. How many people with $300K+ debt had their loans forgiven that you know? I wouldn't rely on it, but I wish the best for you.

 

[Hybrocure]

I have 785 credit score and can care less about these dumb scores. The number basically tells you how good you are with debt and juggling it over time to satisfy the banks. I'd like mine to go to zero and use cash only if I could. Everybody has a different mindset with debt. Yours is different and I respect that. As for me, I'd like to sleep better at night not having $350K+ hanging over my shoulder for years and years. Sure, I'd be investing and saving a little later (two years from now), but at least all the money I have will not go to the predatory banks.

Question for you. What happens when the 16 years is up and for some odd reason they denied your forgiveness? The chances are 50/50. How many people with $300K+ debt had their loans forgiven that you know? I wouldn't rely on it, but I wish the best for you.

When my time is up and they deny the forgiveness I’m probably just gonna stop paying and live it up for the last few years of my life

 

[DYK343]

A little refreshment. Take it or leave it, either you like the idea or not, it's your decision on what to do. You took out the loans, you pay for it. Don't depend on the government to change your life.

I started with ~$350K in debt (with interests added and after residency), and have $157K left to go. This is just two years out and into the workforce. You can do this. I'm not depending on the government to solve my problem.

Both my siblings got theirs approved/paid off after 120 payments. One last year and one just a few months ago.

This video is likely old or it is going off old data where the first year of 10 year eligibility (10 years after the program was started) tons of people applied but didnt know the rules or did not make the correct number of payments.

Gotta read and follow the rules.

White coat investor broke this down back in 2018 right after everyone made headlines about it

 

[Feli]

Foolishness. The longer you have money growing, the bigger that growth (theoretically) will be when you retire. Not throwing a large chunk of your income for 3-5 years at student loan repayment and instead keeping it in investments for longer grows that money more substantially. Especially if you were lucky enough to put that money into an brokerage before all the giant COVID gains in the market or another huge growth event.

Yes, but there is nowhere that will grow 7% guaranteed. That's what I was getting at with no CFP would advise not paying down the loans.

I get the plan of doing IBR or some plan, try to save the rest and invest for retirement. If you can actually do that Roth and other stock accounts, that is good... most ppl statistically just buy a nicer car or nicer rental, more trips, etc.

The problem with the student loan forgiveness plans is that 20yrs or 25yrs is a loooong time. Even though the DPM job market is mainly associate jobs making $150k or so, most ppl don't do that forever. If you get a better job or do PP owner, you will then have to pay the standard repays of at least $2k or $3k/mo (income will be too high). My buds in PP owner making 300, 400, 600k+ per year can't hide the income. Sure, they can buy a lot of "company vehicle" or "satellite office" stuff under the biz and re-invest some as the PP owner... but you run out of places to hide it and are just way too profitable after a year or two. Hospital FTEs making 250-350k or whatever obviously can't hide anything... they're W2. You have to take it as income, and you then have to pay the loans off. It's in their best interest to overpay it and knock it out fast due to the interest rates... you won't find an index fund, REIT, single stock, etc that gives over 7%... certainly not 7% guaranteed with no risk, which paying the loans does.

Like DYK or waka said, PSLF with only 10yrs to forgive is fine enough - esp for ppl with undergrad loans, but those jobs are hard to find in podiatry... and most are fairly underpaid.

At the end of the day, it's an individual call.
Paying off loans is certainly not impossible, though.

 

[Boba Foot]

Question for you. What happens when the 16 years is up and for some odd reason they denied your forgiveness? The chances are 50/50. How many people with $300K+ debt had their loans forgiven that you know? I wouldn't rely on it, but I wish the best for you.

Where are you even getting your "50/50 chances" number from? There are huge numbers of people having their loans forgiven over the last year or two. The recent IDR waiver was created to fix the mistakes of previous administrations of the Dept of Ed and their mismanagement. If you make your payments consistently and on time, they will be forgiven.

 

[air bud]

There are really no wrong answers.
Like I said, a lot can depend on your job.
It is easy for the MDs on WCI making 300k-600k+ right out of residency, but it can be a lot harder for DPM wages.

For some pod jobs with lower pay or PSLF potential, the strategy of pay minimum and don't worry about principal and hope for forgiveness of loans after 10 or 20 or 25yrs or whatever can be the best - only way - to go. There really is no other option if making less than $125k or so... should be paying minimum and looking for new job and saving for opening solo PP.

For others, it's better to attack debt and be done with it. This much more true now with high interest rate on the loans. I am early 40s now, and most of my co-residents and friends of similar age have paid their pod school loans or pretty close. Some are hospital FTE, some owner PP, some just reasonably paid pod/MSG associates who hit 200k-300k+ with bonus. I would still maintain that even a $150k pod should be able to pay $3k/mo and make some progress on principal balance. Paying it off does then allow you to then superfund retirement by not having a $3k or $4k or $5k+ monthly payment anymore.

...Taking the strategy of paying the loans asap does have its definite advantages. I'd be getting 21% and not 11% business credit card offers, higher rates (or denials) on all kinds of equipment/LOC/home/auto/etc loans, etc if I still had high debt-to-income ratio. Perhaps the biggest advantage is just that you're not depressed every time you have to re-apply for lower payments, see the balances, or use credit score. It felt fairly hopeless to me to have those headaches again and again... then a bit better when the balance was shrinking and loan groups disappearing. Even though I have ok credit (now), I still use debit card for almost all biz stuff, pay my biz rent ahead, keep healthy biz savings, etc. It is nice to know that I could get a vehicle, hire a new employee, start another office, or even weather another COVID-type income drought.

Early 40s?

 

[air bud]

I have 785 credit score and can care less about these dumb scores. The number basically tells you how good you are with debt and juggling it over time to satisfy the banks. I'd like mine to go to zero and use cash only if I could. Everybody has a different mindset with debt. Yours is different and I respect that. As for me, I'd like to sleep better at night not having $350K+ hanging over my shoulder for years and years. Sure, I'd be investing and saving a little later (two years from now), but at least all the money I have will not go to the predatory banks.

Question for you. What happens when the 16 years is up and for some odd reason they denied your forgiveness? The chances are 50/50. How many people with $300K+ debt had their loans forgiven that you know? I wouldn't rely on it, but I wish the best for you.

You have two kidneys for a reason.

 

[Hybrocure]

Better to be rich in your 30s and 40s than rich when you’re old that’s all I’m saying

 

[air bud]

People here saying they want to be able sleep at night knowing paid off debt....how can you sleep you are a podiatrist??? Between the fellowship bros, the saturation, Ortho and APPs, those should all keep you up...

 

[JustAPedicurist]

Better to be rich in your 30s and 40s than rich when you’re old that’s all I’m saying

No podiatrist is going to be rich in their 30’s

 

[Hybrocure]

No podiatrist is going to be rich

 

[BarryPod]

No podiatrist is going to be rich in their 30’s

I'm not doing too bad at 39.

 

[DYK343]

I'm not doing too bad at 39.

I got a nice nest egg in my late 30s.
Once I hit ~45 I believe I will have "financial freedom".
That 8 year market boom did me good.

 

[DYK343]

Also, If going for PSLF (10 year plan) I agree with the white coat investor to calculate the payment needed to have loans paid off in 10 years.

Then put that money aside every month. Either bonds or high interest savings. If you like to take risks put it in index fund.

Takes dedication but at 10 years you either have your loans gone and a big pot of cash or the ability to pay them off.

If the government didnt honor you wouldnt be out other than the ridiculous interest. But thats a risk you take.

 

[Boba Foot]

I got a nice nest egg in my late 30s.
Once I hit ~45 I believe I will have "financial freedom".
That 8 year market boom did me good.

Imagine if you'd spent those 8 years throwing everything at your student loans instead of investing it. Cheers to you for not.

 

[DYK343]

Imagine if you'd spent those 8 years throwing everything at your student loans instead of investing it. Cheers to you for not.

Its all a game and ever changing.

I had a home at 2.5% interest.
I had an investment home at 2.7% interest.
Sold both at a huge profit with other peoples money.
I took the right risks. Hit the stock market at the right time. Sold at the right time.
I admit a lot of luck in this.

I was investing 40% of my income and making 15+% in the markets for a decade. Not going to over pay a student loan with those rates.

With current mortgage interst rates (~8%) and a crapy market It is harder to take those risks.
If risk tolerance is high buy stocks "on sale" (which I am doing... look at market trends. Always goes up even when it goes down).

But covid with 15+% returns. Invest Invest Invest.

Gotta play the game. Current hand not a bad plan to pay off your high interest loans. I have the money to pay off my loans tomorrow. So my risk tolerance is high. So I invest.

- - -

I follow Dave Ramsey. But I kind of think he is a douche. He has good advice. But its not always a one way train like he describes.

That said I am not an expert and as I pointed out above I got lucky in the markets/graduated at right time w a lot of retirement options (401k/403B/IRA/HSA) and got a record low home loan.

 

[Feli]

Its all a game and ever changing....

...Gotta play the game. Current hand not a bad plan to pay off your high interest loans. I have the money to pay off my loans tomorrow. So my risk tolerance is high. So I invest...

Yeah, that's the bottom line.

When student loans were 2.x% and mortgages were 2.x or 3.x%, of course there are better investments... and no real payoff urgency to pay debts. That is why you see many older DPMs living large yet still making minimal pays on student loans: they had most/all fixed low interest rates (some 1.x%).

Now, with 7.x% loans and variable potentially even higher, payoff is a real good return. Not very many DPMs have Pslf jobs or IHS that will pay or forgive balances... so, the choices for 95% of podiatrists are payoff or try for 20 or 25yr forgiveness.

Personally, when student loans were low rate, I was paying minimums or slightly more (I had a mix of 2.x% and 6.x%), and I did investing and saving a bit. My income was low, but it worked out to have $ to start a PP later without adding debt.

Since student loan are now 7.x% on all of my remaining student loans, there is almost no way to beat that. Even though my income is higher and I could mask it to lower monthly payments, interest would crush me. I just created healthy biz and personal savings, now do the "boring" roughly triple payments on the standard student loan repayment rate. Most PP owners I know did the same.

Although I still buy them monthly, index funds and most single stocks have basically gone sideways. I have picked some good ones like NVO and LLY and outpaced the S&P, but index SPY and QQQ are still my major buys with returns pale in comparison to paying my loans in the past few years. My partner is doing same on 4.x% "15 year" mortgage we live in: doing a bit of investing, but mainly knocking out the house loan in the next couple years, as opposed to paying hundreds of thousands in additional interest (it was the opposite on her prior 2.x% house years ago... still paid it off early in less than 10yrs, but mainly did market investments in that rate climate).

The bottom line is that there are no always/never answers, but present day loans rates are very high with markets pretty unimpressive. Even if hoping for improvement in the markets, historical index S&P average returns are 7 or 8% avg not guaranteed... but loan payoff is now 7.x% guaranteed. It's never unwise to take a good guaranteed return rate.

 

[air bud]

Repeat, no kids makes all this easier. I only have one. Can't imagine you people with 3 plus.

Anyone coming out now with kids and in PP has ZERO chance of every paying of their loans on their own.

 

[Hybrocure]

Repeat, no kids makes all this easier. I only have one. Can't imagine you people with 3 plus.

Anyone coming out now with kids and in PP has ZERO chance of every paying of their loans on their own.

Agree completely. Especially if the spouse does not work

 

[air bud]

Agree completely. Especially if the spouse does not work

Yeah only fans/podiatry synergy to pay the bills....

 

[Utvolsdpm]

Yeah only fans/podiatry synergy to pay the bills....

Haven’t seen that yet but definitely some MLM stuff. Collagen supplements, etc.

 

[GreenHousePub]

Yeah, that's the bottom line.

When student loans were 2.x% and mortgages were 2.x or 3.x%, of course there are better investments... and no real payoff urgency to pay debts. That is why you see many older DPMs living large yet still making minimal pays on student loans: they had most/all fixed low interest rates (some 1.x%).

Now, with 7.x% loans and variable potentially even higher, payoff is a real good return. Not very many DPMs have Pslf jobs or IHS that will pay or forgive balances... so, the choices for 95% of podiatrists are payoff or try for 20 or 25yr forgiveness.

Personally, when student loans were low rate, I was paying minimums or slightly more (I had a mix of 2.x% and 6.x%), and I did investing and saving a bit. My income was low, but it worked out to have $ to start a PP later without adding debt.

Since student loan are now 7.x% on all of my remaining student loans, there is almost no way to beat that. Even though my income is higher and I could mask it to lower monthly payments, interest would crush me. I just created healthy biz and personal savings, now do the "boring" roughly triple payments on the standard student loan repayment rate. Most PP owners I know did the same.

Although I still buy them monthly, index funds and most single stocks have basically gone sideways. I have picked some good ones like NVO and LLY and outpaced the S&P, but index SPY and QQQ are still my major buys with returns pale in comparison to paying my loans in the past few years. My partner is doing same on 4.x% "15 year" mortgage we live in: doing a bit of investing, but mainly knocking out the house loan in the next couple years, as opposed to paying hundreds of thousands in additional interest (it was the opposite on her prior 2.x% house years ago... still paid it off early in less than 10yrs, but mainly did market investments in that rate climate).

The bottom line is that there are no always/never answers, but present day loans rates are very high with markets pretty unimpressive. Even if hoping for improvement in the markets, historical index S&P average returns are 7 or 8% avg not guaranteed... but loan payoff is now 7.x% guaranteed. It's never unwise to take a good guaranteed return rate.

When was student loan rates ever in the 2-3%? I took mine out 15 years ago and they gave me a 7-8% rate.

 

[Utvolsdpm]

When was student loan rates ever in the 2-3%? I took mine out 15 years ago and they gave me a 7-8% rate.

I think the early 2000s

 

[Feli]

When was student loan rates ever in the 2-3%? I took mine out 15 years ago and they gave me a 7-8% rate.

Yeah, it was early 2000s, maybe 2000-2006ish. Rates on everything were low... that was pre-crash time, when The Big Short housing bubble was going on. I was in undergrad then.

Funny thing is that I think those loans actually later became the highest of my loan groups with variable rates (can't say for sure as I paid them off once the rates rose).

 

[msion]

I paid off the last $20k of student loans before the restart date when I knew this Biden loan forgiveness wasn't going to happen.
And now I am just putting money into real estate and ETFs.
Being a podiatrist is the riskiest decision I ever made in my life, so I consider myself now a risk taker.
Just gotta find another stream of income. This field won't last forever. Medicare funding is a zero-sum game so more cuts will be coming.
The expenses are only going up. I think my ACFAS dues is now essentially more expensive than my term life policy, and about the same as my home insurance. I use Mint for budgeting and it asked me to look into all my podiatry dues, in addition to maybe cutting Netflix. I am definitely keeping the Netflix though.