[Editor's Note: This is a guest post from regular reader Alex Heisler. Alex just recently completed his residency in 2017 and is now a practicing psychiatrist at an academic center in Baltimore, Maryland. His wife, Samantha, is a pediatrician. There is a lot of information written on this site about student loan repayment programs but Alex takes a different angle focusing on how lowering your AGI can save you big money while paying off those loans. Alex calculates that he'll be saving about $42,300 from this year's tax/loan strategy alone. Alex and I have no financial relationship.]
The purpose of this post is to demonstrate the importance of understanding the basics of your financial situation. Learning the details of our student loan repayment program and our tax situation has helped my wife and I make informed financial decisions that will save us hundreds of thousands of dollars in taxes and student loan payments.
Why We Chose Public Service Loan Forgiveness (PSLF)
My wife and I recently finished residency. She's a pediatrician and I'm a psychiatrist. We both have significant student loan debt and are in relatively low paying specialties. We also live in a high cost of living area and have 2 children. Given our ridiculously high student loan debt and our relatively low income (relative for being doctors and being in this much debt), Public Service Loan Forgiveness is an obvious choice for us for a few reasons:
- It allows us to make monthly payments based on a percentage of our discretionary income under one of three income-driven repayment plans (IBR, PAYE or REPAYE).
- Our payments under our income-driven repayment plan are far lower than what we'd pay under a standard 10-year repayment plan.
Drs. Alex and Samantha Heisler
- After 10 years of payments, the remaining balance is forgiven tax-free (as long as the rules of the program stay the same between now and then).
- All we have to do to qualify for this program is work for a non-profit hospital or government entity.
- Under an income-driven repayment plan, our monthly payments probably won't even cover the interest on our debt, even when we're making payments that are calculated based on our attending salaries.
How to Pay Less in Taxes and Loan Payments Pursuing PSLF
Calculate If You Should File Taxes Jointly or Separately
One downside to PSLF is that we're basically forced to file our taxes as married filing separately until our loans are forgiven. In most cases, married couples pay less in taxes when they file jointly, although that's not always the case especially with two high-income earners. Under IBR and PAYE (but not REPAYE), if you and your spouse file taxes separately your payments will be calculated using your individual adjusted gross income rather than your combined household AGI. Under IBR the borrower pays 15% of their discretionary income toward loan repayment each year. This is calculated based on the previous year's AGI.
Discretionary income is defined as anything above 150% of the poverty line. The poverty line for 2017 is $24,600 for a family of 4. So 150% of the poverty line for us is 24,600 X 1.5 = $36,900. That means if we each have an AGI of $100,000, and we file separately, we would each pay $9,465 in loan repayment each year ((100,000-36,900) x 0.15). But if we filed jointly we would each pay $24,465 ((200,000-36,900) X 0.15) each year because both of our loan payments would be calculated based on our combined household AGI, rather than our individual AGI. Unfortunately, we don't qualify for PAYE, which would allow us to pay just 10% of our discretionary income toward loan repayment. The reason why we don't qualify is that we both took out federal student loans before October 1st, 2007.
Since payments under IBR and PAYE (but not REPAYE) are capped at what you would pay under a standard 10-year repayment plan, not every 2-income couple pursuing PSLF needs to file separately. Some may have low enough debt (and/or make enough money) that their payments would be capped at the 10-year repayment plan rate regardless of how they file their taxes. For example, if a 2 physician couple with 2 kids had a student loan debt of just $50,000 each, both at 7.25%, and had an AGI of $83,860 each, they’d each be paying the maximum under the IBR plan since the calculated payment under IBR would amount to $7,044 per year (83,360-36,900) X 0.15), or $587 per month, which is equal to the estimated monthly payment for a standard 10 year repayment plan. Any additional income would not increase either of their payments at that point so they may as well file jointly. Couples in this situation may still want to pursue PSLF (even though their payments are the same as they would be under a standard 10 year repayment plan) because they can benefit from lower payments during the 3-7 years of residency and then get tax free forgiveness after just a few more years of making the full payments as attendings.
The REPAYE income-driven repayment program does not cap payments at the standard 10-year repayment plan. REPAYE also will not calculate payments off of your income alone if you're married, even if you file separately.
[Update from post author: There is an error here. Both spouse’s loans are taken into account when calculating your payments under REPAYE, IBR or PAYE. They will adjust your payment so each spouse pays an amount proportional to their share of the total loan debt. Assuming we each have an equal amount of student debt, in the example above we would each pay $12,232.50 annually (half of the $24,465 I calculated previously)
Based on this information we should actually change our repayment program. Since we would each pay an amount proportional to our share of the debt rather than being “double charged,” we’d be better off enrolling in REPAYE since paying 10% (instead of 15% under IBR) would more than make up for the fact that our payments would be calculated based on a higher AGI ($200,000 vs. $100,000), and therefore a higher discretionary income. Under REPAYE our payments would be $16,310 annually combined (200,000-36,900) X 0.10), or $8155 each.]
Utilize Tax-Deferred Retirement Accounts to Lower AGI
As mentioned earlier, payments under income-driven repayment plans are calculated based on the previous year's AGI. So anything we can do to lower our AGI will not only lower our tax bill, but it also lowers our loan payments the following year. You can lower your AGI through increasing payroll deductions (such as 401k, 457b, HSA and FSA contributions) and through above the line deductions. Below the line deductions and exemptions will obviously lower your tax bill but will not lower your AGI and therefore won’t lower student loan payments under income-driven repayment plans. [Note: A significant downside of using tax-deferred retirement accounts to lower AGI and thus IBR/PAYE/REPAYE payments is that otherwise a Roth account would be the ideal place to invest during residency. There is likely a future unknown tax cost associated with the decision to use a tax-deferred account during residency.-ed]
I also want to point out that some couples in our situation may be forced into a higher tax bracket by filing separately because they'll be phased out of certain tax credits and deductions. In our current situation, our tax bill isn't significantly affected by filing separately. But if you are forced into a higher tax bracket due to filing separately, that makes it even more important to lower your AGI.
Our marginal tax rate is roughly 35%. This includes federal, state, local and payroll taxes. As I said before, our loan payments next year will amount to 15% of our discretionary income this year. Since discretionary income is calculated using our AGI, for every dollar we are able to lower our AGI, we'll pay 35 cents less in taxes this year (our marginal tax rate) and 15 cents less in loan repayment next year.
This year we were able to lower my AGI by $46,100. $41,100 of that is through payroll deductions and the other $5,000 is due to moving expenses which is an above the line deduction. We lowered my wife’s AGI by $38,500, all of which is through payroll deductions. The payroll deductions we had available to us through our employers were 403b contributions ($18,000 each), 457b contributions ($18,000 each), dependent care FSA’s ($2,500 each) and my healthcare FSA ($2,600).
Assuming a marginal tax rate of 35% for each of us, lowering our respective AGIs by $46,100 and $38,500 lowered our tax bill by roughly $29,610 this year and lowered our loan payments by $12,690 for next year. That's a total savings of roughly $42,300. We will eventually have to pay taxes on the tax-deferred contributions but that will be at our effective tax rate in retirement, which will be much lower than our marginal tax rate during our peak earning years.
The benefits of a 403b or HSA may seem obvious to a typical reader of this blog. But I think our situation underscores the importance of understanding your financial situation and making informed decisions about your finances. We could easily have contributed $20,000 less to retirement accounts and still been above the 15-20% savings rate advocated for by WCI. But now that we know half of that money would just end up going to taxes and student loans, it seems silly to not use up all the tax-deferred space available to us.
[Editor's Note: In these situations, as a resident you are weighing the loss of Roth account benefits and a higher tax bill against lower IDR payments and thus higher PSLF amounts. It can be a difficult calculation, especially since some of the variables are unknown and cannot be known with certainty. If you need help doing it, consider hiring one of our recommended student loan advising companies. If you are NOT going for PSLF (and for any private loans you may have) you should give very serious consideration to refinancing your student loans. Recommended companies and special deals for WCI readers (i.e. get paid to do something you should do anyway) can be found here. There is a lot of money to be saved by managing your student loans well. The more you owe, the more potential benefit you could see from good decisions in this area.]
What do you think? What advice do you have for those pursuing PSLF? What strategies are you using to lower your loan payments and taxes? Comment below!
Yep this is exactly what I do. I think the 15 (under IBR) cents on the dollar saved next year balances out the risk of tax implications down the road. I wish we had an HSA available to us – I can’t stomach putting money into the FSAs and losing it or spending frivolously just to use it.
The other part of the strategy is always submitting your taxes for the previous year, not the anticipated income for the year moving forward, to calculate your monthly payments. As our incomes rise, this one year delay can save considerable income. Although I’m not sure they even allow the income moving forward part any more.
Lastly, if you happen to have a side business (consulting, etc) with a home office and the associated business expenses that go along with it (cellular service, internet service, etc), and happen to have a net operating loss, that comes out of your AGI too. I had a consulting business for years that had losses which happened to lower my AGI. Now it’s in the black but for awhile, I was okay with operating at a loss to save those 15 cents on the dollar next year. Now, of course, this was/is all above board (ie a real company, doing real business, just not having enough customers to offset expenses), but it helps defray the losses of setting it up and marketing while you find a customer base.
If you don’t make a profit in I think 2 out of 5 years you’re in danger of the IRS reclassifying your business as a hobby and having to pay back the taxes saved from deducting that loss.
The author mentioned dependent care FSAs rather than healthcare FSAs. The dependent care FSA is used to pay up to $5k for daycare tax-free. It’s a pretty safe bet that with 2 kids the total daycare bill for the year is well over $5k, so no frivolous spending required to make sure it’s used. Most people know what their daycare expenses will be for the year up front so if for some reason it’s less than $5k you could adjust the FSA accordingly
I had a student ask me about PSLF yesterday. Question -is there any contract/note that you sign that will obligate the government to forgive the full or any loans? There wasn’t when I graduated in 2009, which didn’t give me confidence that I’d have much grounds to sue if the government reneged in the deal. I can easily see them creating a new retroactive cap on forgiveness totals (maybe 50k max) especially given worsening budget deficits. Many of the author’s strategies have you paying less than even interest on the debt, which seems like a gamble that the government will come through. What would be the prudent advice to this student?
I like WCI’s advice on this one. If you think there is a chance the government may default on their promise, you should put what a typical repayment would be into a taxable account (after maxing out all of your retirement account options). When you’ve gotten to the 120 payment period’s end you will certainly have enough money in that account to pay it off if the government reneges on forgiving the loans.
If you do this, the worst situation is that you have the money to pay your debt off that has grown in the market and have to write a check using money you would have paid through refinancing anyway. The best situation is that the government lives up to its promise and now you have a sizeable taxable account. Pretty good insurance plan that WCI often recommends.
I’m not so sure. When the interest is 7.9% on $400,000 in loans, your payments under PSLF won’t even cover interest. So the loan balance keeps growing. To pay both the sizable payment under PSLF, and save in a taxable account, that also keeps up with the growth of unpaid interest (7.9% on $400,000 grows fast, even if you do pay some of it), is a stretch. You’d have to save $400,000 + capitalized interest in 10 years (typically 3-5 of those were in residency), while still paying almost $30,000 a year to the government in loan repayments. It’s a stretch.
It’s likely that even if they change the rules, those that are already in the program will be grandfathered in. But I agree there is a risk you could end up paying more in interest if the government pulls the rug out from under you.
But there’s also a risk that if you don’t do pslf and the program stays in place, you could pay back hundreds of thousands in loan repayment that could have been forgiven.
It comes down a lot as to the trust level you have in the government to do the right thing regarding what would become $500,000+ in student loans. I’ll be the first to admit after my interactions with them trying to get them to process paperwork related to PSLF, months of delayed responses and the wrong information, the incompetence
Of many of their loan providers on the phone, and the general political will in Washington by both parties to limit or eliminate this program…my trust is low. Particularly given I haven’t found anyone who actually had their loans forgiven. (Either in law or medicine.)
That’s why you have to live like a resident during those 2-5 years.
Earn $250K.
Pay $75K in taxes.
Live on $50K.
That leaves $125K for building wealth. 8% * $400K = $32K in interest. The other $93K goes toward principle if paying off loans or the side fund if not. If it were going toward principle, might as well refinance an reduce the amount going to interest. If going toward the side fund, hopefully the side fund makes some money on the investments, further increasing growth.
Nothing difficult about the math. The only difficult thing is to avoid a lifestyle explosion after finishing residency.
Ha – agree re: lifestyle inflation. Even though it’s more like $200k in a higher cost of living coastal area w/ closer to 31.5-32% taxes/entitlements, but it’s also that I didn’t meet him until several years after residency. It’s insane just how critical those first few years out of graduate school are for setting up your financial path.
Worst case: You paid 6%+ interest instead of 3% interest you could have gotten refinancing.
The Obama administration proposed limiting it to $55K in 2013. Never happened, but it easily could. In more recent times, the Republican-controlled house has proposed some changes to student loan programs (Prosper Act, still in the House) but it didn’t look to me like it would change PSLF.
This is a real risk of the program, best managed by investing a “side fund” that would be larger enough to pay off your loans within 2-5 years of residency graduation. If PSLF materializes, you add it to your nest egg. If it goes away, you pay off the loan. But my honest belief is that those already in residency, and maybe even those in med school, will be grandfathered in if PSLF goes away or is significantly changed.
Great post. Never thought about the doubly advantage of being able to subtract the 150% poverty line twice if you file separately. Making changes to your AGI to save on these payments seems like an obvious, but no less true idea! It’s solid advice for those reading the WCI blog considering refinancing loans!
Also, it should be mentioned that for those that are not married with a high double income, REPAYE is usually the better program in training because half of the interest not paid is forgiven in that program. Since it doesn’t have a cap on the payment, though, it is not usually a great option for high-earners after training. PAYE is usually the better option there.
Yes, single folks or married to a stay at home parent and going for PSLF should go REPAYE during residency then switch to PAYE after residency.
Thank you so much for this insight, Dr. Heisler.
My wife and I are both about to start PM&R and psychiatry residencies, respectively. We hope to take advantage of PLSF via working at the Veteran’s Health Administration upon graduation. All our loans are under the federal umbrella and total $455k at 5.5%. We are currently registered for the IBR.
We have considered maxing out our Roth IRAs and Traditional 401 (k) options during residency. I estimate our residency salary will be around $54k each. The following are my calculations for my wife and I hypothetically contributing $18k to 401 (k), while filing separately:
(1) Federal tax: would be decreased to $2,100 each (if maxing out 401 (k) savings)
(2) IBR payments: AGI after 401k contribution = $54k – $18k = $36k. This is less than the discretionary income cutoff of $36,900, which is used to calculate yearly IBR payments. (Ignoring tax-deferred savings, filing separately would decrease our IBR payment total from $10.5k to $5k annually.)
My two questions are:
(1) What do you think our IBR payment would be during residency if we maxed out our 401 (k) in this way and filed separately?
(2) Do you have any advice or wisdom for our situation?
We are new to WCI and appreciate any advice/wisdom!
I think the VA also has a loan repayment program you can take advantage of too.
Why IBR and not PAYE?
1) There are calculators for this. But almost surely lower than filing jointly, especially if you max out tax-deferred accounts. Might even be $0. Is $36K really 150% of YOUR poverty line as a single person in your area? You know that changes by # of family members and location, right?
2) It’s worth paying a couple hundred bucks to help you run the numbers.
Thanks immensely for your guidance.
I felt like IBR was a happy middle ground in case PSLF did not pan out. (I recognize that PAYE would decrease each monthly payment, but I was cautious about PAYE’s higher, deferred interest that would accrue in the absence of government forgiveness.) Maybe, I am wrong for thinking about it that way?!
Thank you for the heads-up!
Yes, you’re likely wrong. You can always pay extra under PAYE.
Honestly though, if your goal is to get forgiveness, pay as little as possible. If your goal is to pay off the loans, REPAYE and refinancing are usually the best bets.
Excellent point. Thanks for helping me realize this misconception early.
The Education Debt Reduction Program (EDRP) is the VA’s loan forgiveness program. It isn’t talked about much, but you can google search to find some of the VA documents about it. It is supposedly reserved for positions in need, but I had a colleague push our local VA office’s HR department upon hiring and they approved him. You need to apply within 90 days of hire, I believe.
I was approved in April of last year for $24,000 reimbursement per year for 5 years, tax-free. I’m crossing my fingers that it works out in a couple of months and I receive a check. You never really know with the government…
Definitely look into it, and push for it if you can!
Based on your calculations it looks like you would have $0 payments in residency if you maxed out your 401k and filed separately.
maxing out traditional 401k vs roth is a tough decision in residency if you’re going for PSLF. I think it depends on what your tax rate ends up being in retirement. The bigger the difference between your tax rate in residency vs. retirement, the more it makes sense to do roth instead. But if you expect to have a low tax rate in retirement, it could be worth doing the tax deferred option to lower your loan payments and invest the savings.
I’m not sure how exactly to do that calculation. It might make sense to contribute enough to tax deferred to get your AGI down to the exact cutoff of 36,900 and then contribute the rest to roth. That way you won’t pay anything in loan repayment next year and still have some roth savings.
Thanks for your help. Do you think those months where we would pay $0 would still count toward the 120 pay periods? Almost seems too good to be true. I appreciate it.
Yes the months that you pay $0 still count towards the 120 payments, as long as the $0 payments are under the IBR/PAYE/REPAYE programs and otherwise qualify
Yes, they count.
I’m currently with Fedloan, consolidated immediately upon graduating medical school and went straight into repayment. I should have received 10 or 11 months worth of $0 payments that counted towards my 120—- Fedloan still has yet to acknowledge those payments. They say they are “counted on the back end” when they look at their information but no where on their website where I verify that is the case. They also have not counted all my actual payments under REPAY on their website. I am still going for PSLF but am getting very suspicious that I am going to get screwed on my 120 payments because Fedloan isn’t keeping an accurate account of my payments. Anyone else having issues with this problem? What has been your solution?
Keep pushing and keep excellent records. And build a side fund just in case. Yes, lots of people are having this solution. You can either stick with it and keep good records and a side fund and hope for the best, or refinance and pay them off. There are WCI readers in both schools of thought.
Yes- a lesson painfully learned now, I didn’t keep better records earlier. Definitely am now. Still going to push Fedloan to provide me documentation that proves my $0 payments are counted as well as my actual payments.
Good point. No sense giving up all the Roth benefits if you don’t have to.
While it is true that if you file taxes jointly both spouse’s incomes will be factored in for repayment plans, both spouse’s loans will be looked at as well. For IBR I had to manually send my loan servicer proof of my wife’s loans (and she mine), though it’s possible they now pull that information automatically. With REPAYE this is definetely done automatically now. It helps us out significantly since after having a baby my wife now no longer works–our monthly payment together is basically what my monthly payment would’ve been alone (a bit lower actually, now that we have a kid), plus now we get the benefits of filing jointly.
I believe the only time it is worth filing separately is when only one spouse has loans. This would be particularly true for a resident with low income and high debt if their spouse is in a higher-earning field and has no debt–filing separately allows the resident to “hide” their spouse’s higher income/no debt from the repayment plans.
No, that’s not the case. You get a higher total “poverty line” (two of them) by filing separately. That’s why PAYE + MFS works.
You may get the higher poverty line by filing separately. However, you absolutely get your spouse’s loans factored in with REPAYE–my payment is much lower than if I had filed singly. Our total payment is roughly what I would be paying if I filed singly, and we get all the tax benefits of MFJ.
I can’t say it’s absolutely cheaper than if we both filed separately (my wife’s payments would be $0). But you lose all sorts of benefits when you file singly, and you each pay taxes at a higher rate MFS than MFJ. Certainly it simplifies a lot of things to file jointly. Also, with the new pass-through deduction (only applicable to attendings or those who moonlight significantly), you get phased out much earlier. Filing separately results in the loss of a lot of other benefits.
Agreed. You’re weighing a higher tax bill against potentially more forgiveness.
The math exhibited here is incorrect. The author would save more on REPAYE, because the choice is NOT filing jointly with IBR vs filing separately with IBR. It’s between filing jointly and doing REPAYE vs filing separate and doing IBR.
Consider the math used:
“That means if we each have an AGI of $100,000, and we file separately, we would each pay $9,465 in loan repayment each year ((100,000-36,900) x 0.15). But if we filed jointly we would each pay $24,465 ((200,000-36,900) X 0.15) each year because both of our loan payments would be calculated based on our combined household AGI, rather than our individual AGI.”
This is not correct. Both spouses loans and income are taken into account and you would NOT each pay $24,465 if you filed jointly. You’d pay that divided by 2. Reading the federal Q&A for income based plans shows that they take into account the other spouse’s loan payments and do not double charge you. If this is happening to you, it’s because of incompetent loan servicing by FedLoan. And this is if the assumption about allowing you to use a family size of 4 for each person is correct. My guess is that this would not be allowed long term and they would force you to each claim a dependent and yourself. Not sure about that part, but it’s a minor detail.
So you would pay a total of $9,465 times 2 if you filed separately under this scenario, which is $18,930.
The math for REPAYE’s joint payment is (200,000-36,900) X 0.10) = $16,310. You do not each pay this, it’s the total payments. So the individual payments would be $8,155.
So by my calculation the author is costing themselves about $2,620 a year by pursuing this strategy. Once more, that doesn’t include any tax penalties he’s paying since incomes are rarely almost identical except if both doctors are in training.
I commend you for the AGI minimization part though. The vast majority of physicians do not do that. I would suggest a modification or note to the article that amends this part “But if we filed jointly we would each pay $24,465” because it’s factually inaccurate and could cause people to pay thousands in additional taxes unnecessarily.
Thanks for the correction! I’m going to look into this to be sure but I believe you that they aren’t supposed to double charge you. If you have time could you post a link to that Q and A on fedloan you were talking about?
I have to say though I did get an entirely different answer with someone over the phone at fedloan but, like you said, that could just be someone who didn’t know what they’re doing.
If you’re right, the calculation of which program to choose could get pretty complicated depending on the difference in income between spouses.
Take a look at question 32 on this PDF. You can also ctrl + f “proportion” and you’ll find it.
I think that’s why there is a cottage industry of loan consultants (disclosure that’s what I do). The FedLoan rep maybe makes 15 to 20 bucks an hour and has no clue about how to maximize the present value of loan savings. Their goal is to say something to get you off the phone.
In another comical conversation someone told me, the borrower asked to switch from PAYE to REPAYE because they were undecided about an academic vs private practice job and they wanted the interest subsidies.
The phone rep didn’t want to let him switch because “I’ve been doing this for 3 years and the REPAYE and PAYE plans are exactly the same thing! You aren’t gonna tell me otherwise because I know what I’m talking about.”
I told the borrower if they ever doubt what a FedLoan rep tells them, hang up and call back and ask someone else. If you’re still doubting, do it a third time. Most likely you’ll get a different answer every time.
The govt pays for cost and default prevention in the awarding of loan servicing contracts. There is no incentive whatsoever to provide accurate and helpful information.
I’d highly suggest looking into switching to REPAYE and filing joint assuming you’re not going to cross the Standard 10 year cap. You might get a couple thousand bucks back in lower tax penalties in addition to lower PSLF payments.
https://studentaid.ed.gov/sa/sites/default/files/income-driven-repayment-q-and-a.pdf
And I mean this sincerely Alex way to go on the max 457 and 403b contributions. I wish more people would do that.
Sincerely I appreciate the correction because I don’t want to tell people the wrong thing. It looks like you are right about that.
In my defense we actually did file jointly 2 or 3 years ago and both of our loans were calculated based on our combined AGI. So we were “double charged.” At that time I spent like an hour on the phone with fedloan and they insisted that was how the program worked. So they either changed the rule or we payed more than we should have had to. Good thing we were in residency so it wasn’t as much money as it could have been.
Want to type up a one paragraph “update” for me to insert into the main body of the post?
Yes. Will email you the update now
Yes. Working on it now. Thanks
Email or posting it right here are fine. I’ll get it up after I return from the ski resort.
This is how IBR works – we filed IBR + Married Filing Separately during residency for this reason. REPAYE (new program in 2015) takes the student loan burden of each spouse into account, and in our situation allowed us to file jointly for the tax benefits and get a lower monthly loan repayment amount as well – see my comment below and the forum post for the math/details.
This is a very timely post for me as I’m in my last year of residency and have 2 more years of fellowship ahead. My wife graduated from dental school last summer with no debt. I’m still looking at all the options. The one thing that is keeping me from pulling the trigger on refinancing is we don’t yet have a job lined up for her when we move to NY state (need to have done dental residency or already practice for 2 years before getting regular license). This post definitely gives me more direction as I’ve had trouble figuring out how to maneuver this. Thanks!
I am doing exactly this as well. Family Medicine attending with high student loan burden. Am now 4.5 years into PSLF. Maxing out retirement accounts to lower AGI as much as possible.
As a side note, has anybody had this forgiven yet? I know WCI was looking for somebody who has gone through the actual forgiveness process, but haven’t heard anything about it yet. Supposedly, October 2017 was the first month that somebody could have technically qualified for this. Anybody??
I’ve e-met one person (not a doc) and heard of several others. Per government sources, only a few hundred people have become eligible so far.
When I get someone willing to let me tell their story, there will be a blog post.
Side note: If you’ve received PSLF, please email me at editor (at) whitecoatinvestor.com. You can stay anonymous.
If you’re still looking for stories in 5 years, I’ll write something up for you haha
I probably will be. Thanks for the offer.
It looks like there’s an update/correction being worked on, but would definitely advocate caution to the conclusion that for two physicians in low paying specialties with high student loan debt, that IBR + Married Filing Separately would be the best option. Everyone should do their own math and use the federal repayment calculator (https://studentloans.gov/myDirectLoan/repaymentEstimator.action), but for most in this situation, Married Filing Jointly + REPAYE will likely be the best option.
https://www.whitecoatinvestor.com/forums/topic/switch-to-repaye-and-married-filing-jointly-for-two-physician-couple/
Here’s the update. WCI will add it later this afternoon.
Update: I’d like to thank Travis from Student Loan planner for pointing out that there is an error here. Both spouse’s loans are taken into account when calculating your payments under REPAYE, IBR or PAYE. They will adjust your payment so each spouse pays an amount proportional to their share of the total loan debt. Assuming we each have an equal amount of student debt, in the example above we would each pay $12,232.50 annually (half of the $24,465 I calculated previously)
Based on this information we should actually change our repayment program. Since we would each pay an amount proportional to our share of the debt rather than being “double charged,” we’d be better off enrolling in REPAYE since paying 10% (instead of 15% under IBR) would more than make up for the fact that our payments would be calculated based on a higher AGI ($200,000 vs. $100,000), and therefore a higher discretionary income. As Travis from Student Loan Planner mentioned in the comments section, under REPAYE our payments would be $16,310 annually combined (200,000-36,900) X 0.10), or $8155 each.
Looking down the federal student loan/interest rate tunnel, we could have a major earthquake.
Reading the WSJ, I’ve noted increasing articles on the cost of the federal student loans ( > $1 tillion debts ). The newest congressional proposal :
“The bill would also end loan-forgiveness programs for public-service employees, who currently can make 10 years of payments and then have their remaining debt forgiven, tax-free.
It would preserve an option known as “income-driven repayment,” which ties borrowers’ monthly bills to their earnings, but would eliminate the ability of borrowers to have balances forgiven under them. Currently, borrowers can make payments of 10% or 15% of their discretionary incomes—as determined by a formula—and have remaining balances forgiven after 20 or 25 years. Under the bill, borrowers would pay 15% of discretionary incomes for as long as it took to cover the amount they would have paid under a 10-year standard repayment plan. Current participants in both programs would be grandfathered in.”
Now combine this with increasing interest rates, and limited opportunities for refinance.
The medical-education-complex is a bloated monstrosity on track to crush increasing numbers of it’s supplicants.
Have you read the bill? I searched it for “forgiveness” and didn’t see anything remotely resembling that first paragraph from your WSJ quote. At any rate, it’s still just a bill and if it ever gets passed, it is likely to look differently than it does now. Something to pay attention to, but not something to make changes to your plans because of.
good challenge. Read section 451.
(d)Student eligibility beginning with award year 2019
(1)New borrowers
No loan may be made under this part to a new borrower for which the first disbursement is after June 30, 2019.
Uhhhh….okay. Where does it say PSLF is going away again? I read the entire Section 451 and I see nothing about PSLF going away. All I see is that people won’t be able to take out loans under some of the old programs (IDR?) after 2019/2024.
Here’s the text to save everyone else some trouble finding it. But explain it to me like I’m really dumb because I don’t see where people are making the jump from this to “PSLF is going away if this bill is passed in its current form.”
PART D—FEDERAL DIRECT STUDENT LOAN
11 PROGRAM
12 SEC. 451. TERMINATION OF FEDERAL DIRECT LOAN PRO13
GRAM UNDER PART D AND OTHER CON14
FORMING AMENDMENTS.
15 (a) APPROPRIATIONS.—Section 451 (20 U.S.C.
16 1087a) is amended—
17 (1) in subsection (a), by adding at the end the
18 following: ‘‘No sums may be expended after Sep19
tember 30, 2024, with respect to loans under this
20 part for which the first disbursement is after such
21 date.’’; and
22 (2) by adding at the end, the following:
23 ‘‘(c) TERMINATION OF AUTHORITY TO MAKE NEW
24 LOANS.—Notwithstanding subsection (a) or any other
25 provision of law—
‘‘(1) no new loans may be made under this part
2 after September 30, 2024; and
3 ‘‘(2) no funds are authorized to be appro4
priated, or may be expended, under this Act, or any
5 other Act to make loans under this part for which
6 the first disbursement is after September 30, 2024,
7 except as expressly authorized by an Act of Congress en8
acted after the date of enactment of the PROSPER Act.
9 ‘‘(d) STUDENT ELIGIBILITY BEGINNING WITH
10 AWARD YEAR 2019.—
11 ‘‘(1) NEW BORROWERS.—No loan may be made
12 under this part to a new borrower for which the first
13 disbursement is after June 30, 2019.
14 ‘‘(2) BORROWERS WITH OUTSTANDING BAL15
ANCES.—Subject to paragraph (3), with respect to a
16 borrower who, as of July 1, 2019, has an out17
standing balance of principal or interest owing on a
18 loan made under this part, such borrower may—
19 ‘‘(A) in the case of such a loan made to
20 the borrower for enrollment in a program of un21
dergraduate education, borrow loans made
22 under this part for any program of under23
graduate education through the close of Sep24
tember 30, 2024;
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1 ‘‘(B) in the case of such a loan made to
2 the borrower for enrollment in a program of
3 graduate or professional education, borrow
4 loans made under this part for any program of
5 graduate or professional education through the
6 close of September 30, 2024; and
7 ‘‘(C) in the case of such a loan made to
8 the borrower on behalf of a dependent student
9 for the student’s enrollment in a program of
10 undergraduate education, borrow loans made
11 under this part on behalf of such student
12 through the close of September 30, 2024.
13 ‘‘(3) LOSS OF ELIGIBILITY.—A borrower de14
scribed in paragraph (2) who borrows a loan made
15 under part E for which the first disbursement is
16 made on or after July 1, 2019, shall lose the bor17
rower’s eligibility to borrow loans made under this
18 part in accordance with paragraph (2).’’.
19 (b) PERKINS LOAN CONFORMING AMENDMENT.—
20 Section 453(c)(2)(A) (20 U.S.C. 1087c(c)(2)(A)) is
21 amended by inserting ‘‘, as in effect on the day before
22 the date of enactment of the PROSPER Act and pursuant
23 to subsection 461(a),’’ after ‘‘part E’’.
(c) APPLICABLE INTEREST RATES AND OTHER
2 TERMS AND CONDITIONS.—Section 455 (20 U.S.C.
3 1087e) is amended—
4 (1) in subsection (a)—
5 (A) in paragraph (1), by inserting ‘‘, and
6 first disbursed before October 1, 2024,’’ after
7 ‘‘under this part’’; and
8 (B) in paragraph (2), by inserting ‘‘, and
9 first disbursed before October 1, 2024,’’ after
10 ‘‘under this part’’;
11 (2) in subsection (b)(8)—
12 (A) in the section heading, by inserting
13 ‘‘AND BEFORE OCTOBER 1, 2024’’ after ‘‘2013’’;
14 (B) in subparagraph (A), by inserting
15 ‘‘and before October 1, 2024,’’ after ‘‘July 1,
16 2013,’’;
17 (C) in subparagraph (B), by inserting
18 ‘‘and before October 1, 2024,’’ after ‘‘July 1,
19 2013,’’;
20 (D) in subparagraph (C), by inserting
21 ‘‘and before October 1, 2024,’’ after ‘‘July 1,
22 2013,’’; and
23 (E) in subparagraph (D), by inserting
24 ‘‘and before October 1, 2024,’’ after ‘‘July 1,
25 2013,’’;
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1 (3) in subsection (c)(2)(E), by inserting ‘‘, and
2 before October 1, 2024’’ after ‘‘July 1, 2010’’;
3 (4) in subsection (e)(7), in the matter preceding
4 subparagraph (A), by inserting ‘‘, as in effect on the
5 day before the date of enactment of the PROSPER
6 Act and pursuant to subsection 461(a)’’ after ‘‘part
7 E’’;
8 (5) in subsection (g)—
9 (A) by inserting ‘‘, and first disbursed be10
fore October 1, 2024,’’ after ‘‘under this part’’;
11 and
12 (B) by adding at the end the following:
13 ‘‘The authority to make consolidation loans
14 under this subsection expires at the close of
15 September 30, 2024. No loan may be made
16 under this subsection for which the disburse17
ment is on or after October 1, 2024.’’; and
18 (6) in subsection (o)—
19 (A) in paragraph (1), by inserting ‘‘, and
20 before October 1, 2024,’’ after ‘‘October 1,
21 2008’’; and
22 (B) in paragraph (2)—
23 (i) by inserting ‘‘and before October
24 1, 2024,’’ after ‘‘October 1, 2008,’’; and
(ii) by inserting ‘‘, and before October
2 1, 2024’’ after ‘‘October 1, 2008’’.
I lack the interest to dig in deeper. The WSJ has published 3 articles / 2 months regarding congressional proposals to eliminate PSLF. The drumbeat is $1 trillion, $1 trillion, $1 trillion. I predict an end will come to this entitlement program.
Yes, but when and who gets grandfathered in? That is the question. If it ends in 10 years and everybody in med school at that point is grandfathered in, then I should be recommending this to people for at least another 10-15 years.
I do not believe it is fair for taxpayers to pay off these loans.
Call your congressman. Seriously. There are a lot of laws that some people view as being unfair. I can’t fault anyone who is playing by the rules, whether I agree with them or not.
Agree. This is peak elitism. Taxes paid by truck drivers, electricians, plumbers transferred to pay for graduate degrees.
Also keep in mind that the marriage penalty for married filing separately was greatly reduced at a federal level with the new tax laws for 2018.
IBR (and PAYE if you qualify) seem to be the best bet for those with a difference in incomes between couples while PAYE [I think he means REPAYE-ed] takes the other spouse into account and can dramatically add to repayment costs.
Finally, as has been previously mentioned- this program had its first batch of eligible applicants in Oct 2017. I suspect that there will be clarification on who qualifies and a more clear path forward in the next year as more go through the program. I also expect it to go away long term but hope to get grandfathering for existing people in the program solidified soon.
Here’s the future of PSLF:
http://money.cnn.com/2018/01/02/pf/college/public-service-loan-forgiveness-lawsuits/index.html
For those who don’t want to read the article, it’s basically a story of multiple layers of lies and thievery that will drag on for years for these poor fools hoping for loan forgiveness.
I paid off my medical school student loans a couple years ago rather than risk my financial future on these crooks. Even assuming that you can completely trust our honorable government (laugh), the loan servicers will never let these loans go without a multi-year/decade legal battle…they even fight tooth and nail to resist paying off the loans in full! In a way I’m glad to have had the experience because it taught me the value of money. I used to live like Rockefeller before (never did carry a credit card balance though), and now I save and invest a great deal more than most of my so-called rich doctor peers.
Do not rely on PSLF. The whole fiasco is like a huge, fungating malignant tumor – better to cut it out of your life completely, whatever it takes. It’s a sort of delusion and fantasy to rely on so many other dishonest people for something this important in your life. You can do it yourself, and come out much better in the end for having done so.
I wanted to add one more thing: many will undoubtedly think something like, “oh this wont happen to me, I’m extremely careful to follow the letter of the law, looking at paragraph 25 subparagraph 3 subsection 59 of the US legal code, it guarantees me so and so if I do just this and this!” Well, I’ve got news for you. Someone along the line is going to reply with a big F-U; “WE WANT YOUR MONEY AND YOUR SERVITUDE, FOR LIFE, ALL ELSE BE DAMNED!”
They will create the cracks and sweep you into them. In time of greed, the law falls silent.
That story is about a lady who had FFEL loans, which don’t qualify for PSLF. If you’re going to rely on PSLF, you need to become an expert on the program. I think a better approach than yours is simply to save up in a side fund. That way if “the cracks appear” you simply pay off the loans with the side fund and all you lose is the difference in interest between your loans and what you could have refinanced them to, offset by what the investments earned. I don’t think that panicking and paying off loans someone else would have paid off out of fear of government is the right move.
We will have to agree to disagree on the basic philosophy of this question. I concede your point that the loans in the article do not qualify. In that respect, perhaps it was a poor example. The point is that there is always something, and always will be something, that is not quite right and doesn’t quite work out to get these loans forgiven, for most if not all people. I did not fear the government – I feared the private corporation. Also of note, I am not an eccentric that hoards ammunition and gold (I have neither, but I do have vtsax). These days, my debt long gone, I have lost track altogether of the intricacies of PSLF and the new repayment programs, what qualifies, etc. When I believed in the PSLF program years ago, I was an expert as you state, but found that the servicing corporation did not apply the Department of Education guidelines or the law. They did whatever they wanted to make money, and the government couldn’t have cared less. Again, my point is that, it is not realistic to expect a positive outcome based on the sequential and simultaneous cooperation of say, one hundred profoundly dishonest and dishonorable people in a variety of positions both in and out of government.
One last comment on your side fund. I don’t know what the rates are these days, but my loans were 6.8%. I think it is far from certain that returns on investment after taxes will be able to match compounding interest at 6.8% on a multi-hundred-thousand dollar loan balance.
I agree, that return is far from certain. You may very likely underperform 6.8%, but when you calculate in the potential forgiveness, it’s probably worth that risk for loans that qualify. Refinance the rest and pay them off quickly by living like a resident.
I think the psychological benefit of not having student loans over your head and paying off your loans in 4yrs or less (certainly doable) outweighs what you may save by doing PSLF and hoping for forgiveness.
I am also doing PSLF, have 5yrs until forgiveness, but still its worth more to me to get rid of loans quicker and be done with it.
I don’t see how you’re “doing PSLF” but still planning to pay off your loans. It’s either one or the other. You can’t get loans forgiven that you pay off.
Thanks for this informative post albeit one with complicated calculations and nuances that are different for everyone – amazing the power of a comment section though to keep things clean and vetted!
This post has me reviewing the particular situation my wife and I are in, actually in same fields as op, pediatrics and psychiatry. Here are some details:
– Her – 368k in medical school student loans, 53k PGY-2 salary
– Currently on PAYE repayment plan – $230/mo
– Participating in PSLF
– His – 22k in undergrad loans (none from med school due to NHSC scholarship), 53k PGY-2 salary –
-Std 10 year repayment plan and in process of refinancing, goal is to pay off all loans this year since moonlighting is possible
-File taxes as MFJ
-2016 (PGY1year) AGI – 57k
– I’m looking for advice on what I am missing about our current situation that would suggest the REPAYE is better than the PAYE? I entered our info into the calculator at studentloans.gov and it spits out a lower total sum doing PAYE vs REPAYE. Thanks for any clarification.
I suspect you guys would be better off with PAYE/MFS, but you’d have to run the numbers. Remember you’re weighing the tax advantages and possible subsidy with REPAYE/MFJ against the increased forgiveness on her loans with PAYE/MFS.
Ok, thanks for the heads up on what to keep in mind. I will run the numbers again…
Agree – PAYE/MFS is probably going to work out the best. Without federal loans of your own, all of the repayment programs are going to use your combined AGI to calculate your monthly payment. If that $230/month payment is based on a combined AGI of 57K (I’m guessing that’s your combined AGI from 2016 if you each had half a year of intern income), when you submit your IDR update later this year, if your 2017 AGI is now even 90k, her payment is going to jump to around $550 if you file your 2017 taxes as MFJ. If you file MFS and her AGI is 50k, her payment may even go down a little (I got $214 using the Repayment Estimator taking a few guesses I didn’t know about your details). So, you’ll have to determine if the tax benefits of MFJ will offset the increase in her monthly payment. Even if it does this year, it may not next year with the new tax bill and you adding some moonlighting income. Once your incomes jump as attendings, MFS is likely to save you > $1,000/month on her payments.
Play around with different numbers in the Repayment Estimator, and you can create an extra account in TurboTax for free to try out a different filing status and different numbers if you want as well to see how your tax bill will be affected. Make sure you file her PSLF Employment Certification Form every year.
Hey thanks for the feedback on our situation and taking the time to run some numbers for us too! I’m glad i asked. after putting in some extra effort on running the different scenarios, we’re definitely switching to MFS and staying on the PAYE plan : )
I don’t know if i’m just zonked from all this number crunching this weekend but i’m confused again by the refinancing on my end. If I apply for a IBR plan and approved, the estimator suggesting “you will pay a total of ‘$x'” over 120 months has me wondering why I wouldn’t do that over refinancing. The estimator suggests I would pay far less (ie between 6-11k depending on plan) in total than what I am seeing my estimated total payments come to from the refinance company. What am I missing that I can’t assume I could pay the 6-11k before the 120 months is up and then see the rest forgiven if I stuck with the fed IBR program?
You’re likely paying down the loan faster when you refinance. It isn’t just about having a lower payment.
I’m not sure what you’re asking at the end. You lost me.
The student loans.gov estimator spits out that with my $22k in loans I could expect to pay back 11k total over 120 mo if I did the PAYE plan. So why wouldn’t I do that if I only had to pay back 11k vs the 24k total owed to the refinance company after the 5 year period of making payments to them?
I can’t quite tell what you’re saying. I need more information to give any sort of recommendation. I don’t know if you’re going for PSLF, whether REPAYE would subsidize your payments at all, what the potential refinancing rates and terms you’re looking at etc.
Are you factoring in your bump in salary as an attending? I can’t imagine you wouldn’t end up paying off all of the 22k before you got to 120 months of payments, and with that low loan amount you may not even qualify for PAYE anymore. If that’s the case, I would stick with your original plan and refinance to get rid of yours. Only other thought is that it might be possible for you to use REPAYE and stay MFS – I think this would take your joint income, but also her federal debt into account, so you could end up coming out ahead this way. May be worth asking that to one of the student loan consulting companies that advertise on the site, or at least post the question in the forum to get input from others in case I’m missing something.
Why would you stay MFS if you use REPAYE? That eliminates the point of MFS.
He has to stay MFS so his spouse can do PAYE/MFS, where there definitely seems to be benefit. He probably won’t be eligible for PAYE with 22k of loans once his salary bumps as an attending, or even if he is, he would likely have payments such that he would pay it all off. He would still be able to do REPAYE, and even MFS I think it would take her high loan burden into account and thus lower his payments on the 22k (that’s what the Repayment Estimator makes it look like, anyway) to the point he may end up paying back less than 22k if he does PSLF. If it were me, I would just refinance and pay them off – I don’t think there’s enough potential benefit there to make it worth the hassle and dragging it out.
I see what you’re saying. I agree about the refinancing, but if the effective REPAYE rate were lower than the refinancing rate (it probably isn’t), sure, why not?
ID Doc- my intention is to pay my loans off before reaching attending position. Oddly enough as I am typing this I am on hold with a Navient associate who suggests given my info (provided in orig post), I am ineligible for the PAYE or REPAYE plan. However, I am also on studentloans.gov and entered the same info into the repayment estimator and getting a message that says I may be eligible for either plan. Confused but having the Navient person look into this with a manager as I feel like this is imp info to know before accepting a refinance offer. The offer details are: interest rate of 3.65% fixed on 22k in loans (fed and private combined) for 5 year period.
All said, it looks like I should refinance and pay off these loans by the end of this year after hustling hard and doing lots of moonlighting.
Appreciate the attention ID Doc and WCI to these questions.
Glad thinking through your options was helpful. It’s probably a flip of a coin whether or not the Navient rep knew what they were talking about. I don’t know if I know enough details of your situation to say for sure, but as I mentioned previously, I think I agree with your thought to refinance, do some moonlighting, and be done thinking about that 22k within a year or so. I didn’t realize some of the 22k was private – the more of it that’s private, the more it makes sense to refinance and pay off, as the private debt wouldn’t be eligible for PSLF anyway. Good luck!
If I owed $22K in student loans I’d refinance it ASAP and have it paid off by Halloween after leaving residency. Maybe by the end of August.
He’s going to pay it off with moonlighting while in residency. His goal is still under a year, which is pretty commendable.
I can say a loan officer at fedloan did confirm for me last November/December that at least one person had their loans forgiven from their office by pslf. I found this hopeful and encouraging at least if someone was forgiven that it would be hard not to at least grandfather in others in the program.
Also, it would be helpful to run other common scenarios for folks on here in flushing out the intricacies of filing jointly or not. Examples like one high earner and one low earner both high debt? Or one high earner and one low earner with one high debt and one no debt? What to do with one partner in pslf and the other not? Etc.
The issue is you have to run the numbers for everyone because it depends on your taxes, your loan amounts, your income etc. Too much variation to say anything too definitive.
My wife and I are both trying for pslf. In short both have lots of loans and 6 figure income. We are both on repaye plan. My question is when we recertify each what should we be putting as family size for each of us when we have 1 child. 3? Wording is confusing only one of us can put 2 and the other 3? It says something about more than half support for children but sounds more like that is if you are seperated I dont what are your thoughts.
I don’t understand why it matters for PSLF, but if you’re in IBR/PAYE and doing MFS, then I can see why it matters. Here’s the PSLF annual certification form: https://studentaid.ed.gov/sa/sites/default/files/public-service-employment-certification-form.pdf and I don’t see it asking about family size there. Here’s the final PSLF application form: http://www.asa.org/wp-content/uploads/2017/09/public-service-application-for-forgiveness.pdf and I don’t see it asking about family size there. So, I don’t understand what you’re asking. If you’re in REPAYE your income and family size is all combined anyway, so I’d just put 3.
Sorry wasn’t that clear I meant when we recertify annually for income purposes and they calculate loan payments. You have to include family size and then it talks about if children receive more than half support from you. Curious because we are kind of both equals and half support comes from both. Thanks for getting back to me already on all other points doesn’t really matter for our situation and repaye because income and loan debt match, but if each cannot add children to family size then payments would be a little different correct as far as loan payments children and family size.
I don’t think so under REPAYE but I confess I haven’t filled out the form you’re talking about.
I agree this is confusing – I wonder about it every year when we fill out the form. WCI, here’s the form in question: https://static.studentloans.gov/images/idrPreview.pdf
It’s the Section 3, #5 question: “How many children, including unborn children, are in your family and receive more than half of their support from you?”
There’s a definition provided later in the form, but the “more than half” is the sticking point. Seems to me my wife and I provide our kids exactly half of their support. Would someone try to say that if one of our incomes is higher, that spouse provides more than half? I agree this seems more relevant to separated parents, and confusing for married parents that live with their kids.
We have two kids, and we each answer that question “2” so each have a family size of 4. I called fedloan about it once and that’s what they told us to do, though it’s always hard to know if the reps know what they’re talking about.
Okay, so it’s the IDR form not the PSLF form. I can see why that would be important info. I’d just take it at face value. If I had 3 kids, I’d put 3. So I’m not surprised that’s what fedloan told you to do.
Question about fluctuating income and PAYE:
My residency program requires two years of research after the 2nd clinical year (of 5). I have tripled my $60k income to $180k this year due to moonlighting, but I’m about to go back for my last 3 clinical years, when my salary will be back down to $60k with no opportunity for extra income.
My monthly payment amount recalculates each February based on my tax return from two years ago. So, I recalculated in 2/2018 using my tax return from 2016. Given this, there is a huge lag between my income rising and when I am required to increase payments through PAYE.
So, when I go back to clinical residency this June, can I just send the loan servicer a notice saying that my income has decreased and start paying the lower payments even though I never paid the higher monthly payments based on my temporary income bump? Or will FedLoan/PSLF look at my prior year tax returns and only count payments during that time as partial month payments since I technically was making more money than they were aware of?
Thanks for any help with this confusing situation!
Good question. Not sure. Why not try and let us know? Wouldn’t be surprised if you could work this to your advantage, but if they’re just going from tax returns, you’re going to pay the piper for that income eventually.
This has been an ongoing issue for many that I am unsure of the best approach. You are allowed to re-certify your loans using an alternative documentation of income form for these exact purposes. If your income changes, you can send in a pay stub of your current income to re-certify for your new salary. I also think there is a difficult question of moonlighting or overtime work which is not guaranteed and varies significantly for those still in training. One approach (to be determined if actually the right way) is to certify loans based off your guaranteed salary (in most cases lower than what you will actually make from moonlighting if you are still in training). The reason for doing it this way is that the full time salary you make is guaranteed, and you wouldn’t want to be depending on moonlighting to make payments since they are usually extra and not guaranteed shifts leaving you at higher risk for not being able to make payments. This of course leads to less money being paid ultimately to FedLoan, but often, it can be difficult to accurately predict how much moonlighting will be done and therefore how much AGI one person will have at years end.
Thanks for the comments. Agreed that moonlighting income is extremely variable and difficult to rely on for loan payments. Seems like the worst-case-scenario would be to pay less now and essentially have another 6-12 months tacked on at the end of my 10 year term because they count my two moonlighting years as only partial monthly payments. Even as an attending, my payments will be capped at the 10 yr repayment rate under PAYE. I’ll let you all know how it turns out in 2024. That’s assuming I’ll be grandfathered in whenever they decide to ax PSLF altogether.