Paying for school

[juano_juano]

Hi all,

I was just recently accepted into Columbia for their 2022 cycle. Prior to applying, I randomly met some students from the program in more than one occasion, and they all said to be under full scholarship. This put me under the impression that Columbia offers financial assitance to their students. After acceptance, I was informed they offer limited financial aid. I spoke with someone who also got accepted and got some money, but they only gave him 7K (which is comical considering how expensive Columbia is).

My question is, what are these scholarships people are speaking of?! I just don’t see how I’d be able to do this without any financial help. As a second career student, I would be dead before I finish paying off all the loans lol.

Any and all help is appreciated.

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[SATXDPT]

It is time for you to do a deep dive into Federal Student Loans, Public Service Loan Forgiveness, Income based Repayment and the tax ramifications of student loan forgiveness.

Here's a nugget, even if you never qualify for PSLF, if you do everything right, you can pay 10% of your income per month for 20 years, at which point your loans are forgiven and you pay taxes on the forgiven amount. Do not fall into the trap that you have to pay off your loans in full.

For some reason lots of PTs take offense at this approach, but look into the forums for MD, DO, DDS, and DV and this is what most of them plan to do.

 

[juano_juano]

It is time for you to do a deep dive into Federal Student Loans, Public Service Loan Forgiveness, Income based Repayment and the tax ramifications of student loan forgiveness.

Here's a nugget, even if you never qualify for PSLF, if you do everything right, you can pay 10% of your income per month for 20 years, at which point your loans are forgiven and you pay taxes on the forgiven amount. Do not fall into the trap that you have to pay off your loans in full.

For some reason lots of PTs take offense at this approach, but look into the forums for MD, DO, DDS, and DV and this is what most of them plan to do.

This is very helpful, thank you!

Just to clarify, say I never qualify for PSLF. What do you mean by "if you do everything right"? Are we talking on time payments and taking only federal loans?

 

[kdubz7w7]

Hi all,

I was just recently accepted into Columbia for their 2022 cycle. Prior to applying, I randomly met some students from the program in more than one occasion, and they all said to be under full scholarship. This put me under the impression that Columbia offers financial assitance to their students. After acceptance, I was informed they offer limited financial aid. I spoke with someone who also got accepted and got some money, but they only gave him 7K (which is comical considering how expensive Columbia is).

My question is, what are these scholarships people are speaking of?! I just don’t see how I’d be able to do this without any financial help. As a second career student, I would be dead before I finish paying off all the loans lol.

Any and all help is appreciated.

Disclaimer, I am NOT a financial guru.

I was also a second career student, and also went to a disgustingly expensive private school*. There is not a chance in hell I will ever repay my loans - I spoke to a PT finance specialist and my payments would almost equal my income.....lol.

I am doing income-based repayments. This is how it was explained to me / my understanding of it (please someone correct me if I screwed something up): Essentially, my payments will be manageable proportionately to my income, I'll make those payments for 20 years and as I do, the principal will grow exponentially since I will be paying so little. In 20 years it'll be forgiven BUT the amount forgiven is considered your income that year. So say you have $300k left at the end of the 20 years. When you file your taxes, they'll tax you like you made $300k PLUS your actual salary. I'll have a giant tax bill, but nothing like if I had killed myself to pay off the loan entirely. It is not perfect, but it is doable.

So, knowing that, I can set aside money to prepare for that day.

By no means did I choose the brightest, most prudent route to do all this....but it is the route I chose. A lot of factors went into my decisions.

And I couldn't find scholarships either. I took out grad PLUS loans. Unlike many DPT students, I do not come from a wealthy family, or indeed have any financial support from my family whatsoever (they're poor), so this was the only way I could survive.

*Yes, I know this was a choice. It is extremely difficult to get into cheaper state schools and aside from that, moving was not an option for me. I went into all of this with open eyes. As long as you know what you are getting into, thoroughly do your research, and you accept the financial ramifications, you can get by.

 

[SATXDPT]

This is very helpful, thank you!

Just to clarify, say I never qualify for PSLF. What do you mean by "if you do everything right"? Are we talking on time payments and taking only federal loans?

Yes, you have to have the right kind of loans, and you have to consolidate them just once (so that that interest is capitalized just once) and you have to pick the right income base repayment plan, and you have to plan to pay the taxes on year 20.
You also have to submit your proof of income each year so you can stay on IBR, don't default, don't ask for deferments.
Most people don't know that even if you never pay enough to even pay the interest, the interest is not capitalized. So the principal amount never changes.
In most cases, it is still smarter and cheaper to pay the IBR and put money into a 401k for the future taxes than it is to pay off the loans. So try the calculator at www.vin.com/studentdebtcenter and do the math.

 

[howdoiknow]

It is time for you to do a deep dive into Federal Student Loans, Public Service Loan Forgiveness, Income based Repayment and the tax ramifications of student loan forgiveness.

Here's a nugget, even if you never qualify for PSLF, if you do everything right, you can pay 10% of your income per month for 20 years, at which point your loans are forgiven and you pay taxes on the forgiven amount. Do not fall into the trap that you have to pay off your loans in full.

For some reason lots of PTs take offense at this approach, but look into the forums for MD, DO, DDS, and DV and this is what most of them plan to do.

As an MD student, I can tell you that very few of us plan to pay our loans for 20-25 years (it's nearly impossible to have our loans for that long) only then to be responsible for a tax bomb. 30% of (MD) students are debt-free (Parents, scholarships, military) while the average owe $250k (some owe less like 100k while some at private MD and DO schools can owe $400k+).

Our school has personal finance lectures where physicians (recent grads) tell us what they did. The EM docs told us they refinanced to 3% and paid it off in 2-3 years (it's easy when you're making $350k working 1560 hrs/year). It makes zero sense to leave it as federal loans @ 7-8% interest and pay 10% of your income a month (most doctors make so much it would be paid off in 10-15 years so why pay a higher interest?).

On the other hand, if someone wants to do ENT/radiology (6 years w/fellowship), plastics/nsg/ortho (6-9 years w/fellowship) then PSLF is a great option especially if that individual attends a $400k+ school (and as interest accrues). It would only be 1-4 more years working at a non-profit hospital to do PSLF and have the rest forgiven (it works out that they'd pay $120-$160k and the rest would be forgiven).

In my area, if you do family medicine (3 years) there are TONS of hospitals within a 1-hour drive that will happily pay off $200k/5 years while also paying you $300k/year.

IBR might be great for the DVM who owes $400k but makes $80k or the USC/NYU dentist who owes $700k (and wants to live in a big city where they make $120k). They'd pay ~$400k over 20-25 years then owe a tax bomb of another $300k or so.

 

[howdoiknow]

Yes, you have to have the right kind of loans, and you have to consolidate them just once (so that that interest is capitalized just once) and you have to pick the right income base repayment plan, and you have to plan to pay the taxes on year 20.
You also have to submit your proof of income each year so you can stay on IBR, don't default, don't ask for deferments.
Most people don't know that even if you never pay enough to even pay the interest, the interest is not capitalized. So the principal amount never changes.
In most cases, it is still smarter and cheaper to pay the IBR and put money into a 401k for the future taxes than it is to pay off the loans. So try the calculator at www.vin.com/studentdebtcenter and do the math.

PSLF is 10 years and is tax-free. You're confusing it with IBR. Please do your research first and don't listen to dave ramsey and other shills

 

[juano_juano]

Disclaimer, I am NOT a financial guru.

I was also a second career student, and also went to a disgustingly expensive private school*. There is not a chance in hell I will ever repay my loans - I spoke to a PT finance specialist and my payments would almost equal my income.....lol.

I am doing income-based repayments. This is how it was explained to me / my understanding of it (please someone correct me if I screwed something up): Essentially, my payments will be manageable proportionately to my income, I'll make those payments for 20 years and as I do, the principal will grow exponentially since I will be paying so little. In 20 years it'll be forgiven BUT the amount forgiven is considered your income that year. So say you have $300k left at the end of the 20 years. When you file your taxes, they'll tax you like you made $300k PLUS your actual salary. I'll have a giant tax bill, but nothing like if I had killed myself to pay off the loan entirely. It is not perfect, but it is doable.

So, knowing that, I can set aside money to prepare for that day.

By no means did I choose the brightest, most prudent route to do all this....but it is the route I chose. A lot of factors went into my decisions.

And I couldn't find scholarships either. I took out grad PLUS loans. Unlike many DPT students, I do not come from a wealthy family, or indeed have any financial support from my family whatsoever (they're poor), so this was the only way I could survive.

*Yes, I know this was a choice. It is extremely difficult to get into cheaper state schools and aside from that, moving was not an option for me. I went into all of this with open eyes. As long as you know what you are getting into, thoroughly do your research, and you accept the financial ramifications, you can get by.

I am literally in the same situation you were in then. Thank you for sharing, this is very helpful.

 

[SATXDPT]

As an MD student, I can tell you that very few of us plan to pay our loans for 20-25 years (it's nearly impossible to have our loans for that long) only then to be responsible for a tax bomb. 30% of (MD) students are debt-free (Parents, scholarships, military) while the average owe $250k (some owe less like 100k while some at private MD and DO schools can owe $400k+).

Our school has personal finance lectures where physicians (recent grads) tell us what they did. The EM docs told us they refinanced to 3% and paid it off in 2-3 years (it's easy when you're making $350k working 1560 hrs/year). It makes zero sense to leave it as federal loans @ 7-8% interest and pay 10% of your income a month (most doctors make so much it would be paid off in 10-15 years so why pay a higher interest?).

On the other hand, if someone wants to do ENT/radiology (6 years w/fellowship), plastics/nsg/ortho (6-9 years w/fellowship) then PSLF is a great option especially if that individual attends a $400k+ school (and as interest accrues). It would only be 1-4 more years working at a non-profit hospital to do PSLF and have the rest forgiven (it works out that they'd pay $120-$160k and the rest would be forgiven).

In my area, if you do family medicine (3 years) there are TONS of hospitals within a 1-hour drive that will happily pay off $200k/5 years while also paying you $300k/year.

IBR might be great for the DVM who owes $400k but makes $80k or the USC/NYU dentist who owes $700k (and wants to live in a big city where they make $120k). They'd pay ~$400k over 20-25 years then owe a tax bomb of another $300k or so.

This is all exactly right... except that a PT makes no where near the same amount of salary as an MD or DO. IBR only works if 10% of your income is less than the payment would be on a 20 year payment plan... so if you pass that threshold, then IBR and PSLF is not longer an option.
An MD might take this approach for a few early years in their career, but eventually will out-earn this option.

 

[SATXDPT]

PSLF is 10 years and is tax-free. You're confusing it with IBR. Please do your research first and don't listen to dave ramsey and other shills

You have to be on an IBR to qualify for PSLF, so you need to be aware of both. You can also start off in a for-profit job and later end up in a non-profit job that qualifies for PSLF, so you might as well pick an IBR plan from the very beginning and stay on it.

 

[DVR582]

Got an offer for the Columbia DPT as well also was not offered much financial assistance. Have decided that I don’t like the program and will probably decline the offer. Unfortunately it’s right in the middle of NYC which is run down imo and there seem to be other programs that are better.