Author Topic: Late 20s with $230k in Student Loans -- Help us to FIRE  (Read 3389 times)

STEMorbust

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Late 20s with $230k in Student Loans -- Help us to FIRE
« on: December 10, 2018, 02:52:09 PM »
Hi MMM community,

We're trying to get the jump on retirement planning. Not married yet. I have a reasonable income in tech space while she (F) has OK income in health space as physical therapist. I'll try to skip the fluff. Our goal is to be debt free and in a position retire early with a home and kids as soon as possible. Located in Oregon.

Earner #1
- M/27 salary of $93,153
- Salary will increase by 3% soon, also doing contract that will make ~$25k add'l in Spring 2019
- Paying 27.9% in taxes
- 15% of income going to 401k & ~$500 per month to Roth
- Loans: $4k student at 3.15%
- Net worth is about $50k, all in retirement account
- $28k loan on vehicle project at 2.49%, paying $668 monthly, expected to sell for min $55k after about 60 hours more work

Earner #2
- F/29 salary of $65,000
- Just graduated physical therapy school in May, loan payments start this month (December)
- Paying 27.4% 25.85% in taxes
- $125 to 401k (just enough to max employer match)
- $230k in student loans with breakdown below

FEDERAL (All Fixed Rate)
- $4,577.02 @ 6.8%
- $4,457.84 @ 6.8%
- $14,122.92 @ 6.75%
- $1,066.60 @ 6.75%
- $21,974.33 @ 6%
- $24,233.58 @ 5.84%
- $22,807.01 @ 5.31%
- $3,278.23 @ 4.5%
- $3,118.96 @ 3.4%

PRIVATE (Sallie Mae)
- $37,565.72 @ 9.625%
- $17,252.99 @ 8.875%
- $17,722.16 @ 8.375%
- $60,743.91 @ 8.125%

One sec feeling like I might throw up after typing that... Our budgets have been independent with me (Earner 1) paying for most everyday things. Here's how each of our budgets stands currently:

Earner 1 (Myself) | Take Home Income $4,321
- Rent: $650
- Utilities: $120
- Groceries: $400
- Dining out: $100
- Auto/Rent Insurance: $268.19 (Both of us)
- Cell: $76
- Car: $668.64 (Investment, built van into RV, almost done and should sell for $20k profit)
- Fuel: $100
- Gym: $162.80 (Both of us)
- Other: $300
- Roth: $500
- Total: $3,345.63 (Remaining $967 has gone towards van project and catching up on Roth contributions)

Earner 2 (Partner) | Take Home Income $3,430
- Orthopedic Residency: $300 (this is extra continuing ed for 24 months, guarantees pay increase at end)
- Rent: $300
- Groceries: $200
- Car: $239 (3 year lease, one year into it)
- Fuel: $50
- IRS tax owing from 2017: $100 ($1,500 left)
- Cell paid by parents
- Flexible money: $150
- Total: $1,339 with $2,091 leftover to put towards loans

Our game plan is to buckle down on the food budget and to finish the van project that is costing almost $700 a month to own. With me cosigning, LendKey has offered to refinance the private loan at 6.29% fixed for 10 years.

Here's where we're looking for in terms of advice:

- How should paying the private and federal loans be prioritized and handled given refinancing options?
- Is the LendKey refinancing option the best you would expect? How often can/should we refinance in the future in order to get a better rate?
- How would getting married impact our plan to pay aggressively? Would we be better off remaining 'single' as far as the IRS is concerned?
- Does the PSLF program make any sense for this situation, given how much of the debt is private?
- Should Earner 2 be contributing more to retirement? Less?
- Where else might we save money?

Thank you in advance for your input.
« Last Edit: December 10, 2018, 08:24:58 PM by STEMorbust »

nereo

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #1 on: December 10, 2018, 03:12:31 PM »

PRIVATE (Sallie Mae)
- $37,565.72 @ 9.625%
- $17,252.99 @ 8.875%
- $17,722.16 @ 8.375%
- $60,743.91 @ 8.125%


Yikes. 



- How should paying the private and federal loans be prioritized and handled given refinancing options?
- Is the LendKey refinancing option the best you would expect? How often can/should we refinance in the future in order to get a better rate?
- How would getting married impact our plan to pay aggressively? Would we be better off remaining 'single' as far as the IRS is concerned?
- Does the PSLF program make any sense for this situation, given how much of the debt is private?
- Should Earner 2 be contributing more to retirement? Less?
- Where else might we save money?


Read, understand and follow the investment order as it applies to you.

Those private student loans are a giant hair-on-fire debt emergency that you need to address now.  Target the one with the highest interest rate ( $37,565.72 @ 9.625%) first, throwing every single thing you can at it.  Once its gone target the next one.  Repeat. Thankfully with your income you stand a chance of eliminating some or most of that debt within a few years.

Typically you only refinance when the rates + refinancing costs make sense to you.  Check out SoFi as well as your local lenders.  One disadvantage you'll have with refinancing is that it will bundle all your loans together, so you won't be able to pay off one loan at a time.  I would ONLY refinance the private loans.

in general you will be better off MFJ.  How are you calculating earner #2 paying 27.4% in taxes with a salary of $65k and that much student loan debt. To be certain though you ought to run your numbers through a tax prep program to see which works better for in your situation.


Marriage - I'd make sure you are both on the same page about paying off debts, saving, etc. 

It makes no sense for earner #2 to contribute any more to retirement beyond what will get the 401(k) match so long as s/he has private student loans with interest rates above 9%. He/she is paying more to service that debt than the markets are likely to return longterm. It also sets up a massive cash-flow problem.

Beyond that there's some low-handing fruit you should address.  Your food budget is extremely high for two people so deep in debt.  Auto-related expenses are similarily high.  This van project 'investment' needs to bear fruit soon, as you can't afford to be shelling out $700/mo in the hopes of getting back $20k at a later date

STEMorbust

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #2 on: December 10, 2018, 03:43:14 PM »
Thanks -- agreed on refinancing the private loans. We'll get that squared away tonight once we figure out the best rate. It looks like it will be around 5.5% fixed.

You're right re: my tax calculations. Her paycheck breakdown to get the tax rate:

Income: $2,500
Fed Tax: 292.45
SS Tax: 152.90
Medicare: 35.76
State Tax: 162.92
State Transit Tax: 2.34
Net Taxes: 646.37

Rate is then 25.8%

ysette9

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #3 on: December 10, 2018, 03:46:36 PM »
Holy student loans, Batman. Why so much? Is earner #2 expected to bring in more as that career progresses?

I second the comments on looking to refinance the private loans and then throw EVERYTHING that isn’t nailed down at those high-interest suckers. Put everything else on hold until you’ve murdered those things. No fancy weddings or new cars or mortgages. Minimum into 401(k) to get employer matches, for both of you once married as you will be a team.

Good luck. Let us know how it goes.

Boofinator

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #4 on: December 10, 2018, 03:50:42 PM »
Nereo has good advice, though I'm going to diverge from him on retirement account contributions. When the private loans are refinanced, long term expected returns from the stock market are much higher than the interest rates, plus you would be purchasing those stocks 'on sale', discounted by your combined federal and state income tax rates. So I would max all tax-deferred accounts (401k) and invest in low-cost index fund options (assuming it actually fits into the budget after loan payments start). As far as an IRA, you probably couldn't deduct tIRA at your tax bracket, and Roth IRA has its drawbacks, so might want to skip that bucket for now to pay off the loans and get out of debt.

This advice is really post-marriage advice, since it doesn't appear that your fiancťe has any room to squeeze more 401k investments into her budget at the moment.

I also want to echo this:

Marriage - I'd make sure you are both on the same page about paying off debts, saving, etc. 

STEMorbust

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #5 on: December 10, 2018, 03:55:52 PM »
Holy student loans, Batman. Why so much? Is earner #2 expected to bring in more as that career progresses?

I second the comments on looking to refinance the private loans and then throw EVERYTHING that isnít nailed down at those high-interest suckers. Put everything else on hold until youíve murdered those things. No fancy weddings or new cars or mortgages. Minimum into 401(k) to get employer matches, for both of you once married as you will be a team.

Good luck. Let us know how it goes.

Right? Physical Therapy is an odd field and not one that I would recommend to anyone who's self-funded. The field transitioned from Bachelors to requiring a Doctorate but the industry hasn't caught up in terms of pay. She was encouraged to follow her dream and didn't really understand the consequences until it was said and done. I think that for many of us in our late 20s, student loan debt was and is a given. It wasn't until I started reading MMM, Simple Path to Wealth, etc that I understood either... I guess I was fortunate to have grades that prohibited an advanced degree.

What about paying back the federal? Assuming we get the paperwork done ASAP to refinance private at 5.5%, the bulk of the federal loans will then be the highest rates. Should they still be backseat since there might be some hope of forgiveness?

therethere

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #6 on: December 10, 2018, 03:58:45 PM »
Refinance those student loans like yesterday. Check all the vendors and aggregate sites. LendKey, Sofi, Earnest, Credible. You should be able to get a lower rate if you agree to shorter terms. Play around with changing the amounts too so that you get the biggest benefit on reducing those private student loans. If you get rates 5.5% or lower, you may want to prioritize tax-advantaged 401k's. But I don't think you're there yet until you can get the rates down. Oh, and don't just refinance once and forget about it. Check on refinance rates 1-2x a year with your updated account balances, salary, and assets. The rates will continue to go down and you can get continue to collect referral/signup bonuses.

Good news. DH and I started with 240k in student loan debt and about the same private balances >8%. You'll get out from it sometime.... It took us about 10 years of dutifully paying all our extra cash. But, it can be done and you'll be better for it.

ysette9

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #7 on: December 10, 2018, 04:05:26 PM »
Holy student loans, Batman. Why so much? Is earner #2 expected to bring in more as that career progresses?

I second the comments on looking to refinance the private loans and then throw EVERYTHING that isn’t nailed down at those high-interest suckers. Put everything else on hold until you’ve murdered those things. No fancy weddings or new cars or mortgages. Minimum into 401(k) to get employer matches, for both of you once married as you will be a team.

Good luck. Let us know how it goes.

Right? Physical Therapy is an odd field and not one that I would recommend to anyone who's self-funded. The field transitioned from Bachelors to requiring a Doctorate but the industry hasn't caught up in terms of pay. She was encouraged to follow her dream and didn't really understand the consequences until it was said and done. I think that for many of us in our late 20s, student loan debt was and is a given. It wasn't until I started reading MMM, Simple Path to Wealth, etc that I understood either... I guess I was fortunate to have grades that prohibited an advanced degree.

What about paying back the federal? Assuming we get the paperwork done ASAP to refinance private at 5.5%, the bulk of the federal loans will then be the highest rates. Should they still be backseat since there might be some hope of forgiveness?
I know pretty much nothing about student loan forgiveness so I can’t advise you. I know The White Coat Investor talks about it a lot along with student loan refinancing. It may be worth checking out that section of his website for educating yourself. Personally I wouldn’t go into loan forgiveness without really really understanding what it takes to qualify. TWCI also recommends setting aside the amount that you hope to have forgiven in an investment account so that if you get unlucky and don’t get forgiveness, you can pay the loans off in one swoop. If you do get lucky and get forgiveness, then you have money invested which is a gear thing. Don’t forget to look into whether the forgiven amount is considered a taxable event because you may have a big tax bill st the end which may sway you towards refinance and just killing them yourself as quickly as possible.

STEMorbust

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #8 on: December 10, 2018, 04:52:23 PM »
Refinance those student loans like yesterday. Check all the vendors and aggregate sites. LendKey, Sofi, Earnest, Credible. You should be able to get a lower rate if you agree to shorter terms. Play around with changing the amounts too so that you get the biggest benefit on reducing those private student loans. If you get rates 5.5% or lower, you may want to prioritize tax-advantaged 401k's. But I don't think you're there yet until you can get the rates down. Oh, and don't just refinance once and forget about it. Check on refinance rates 1-2x a year with your updated account balances, salary, and assets. The rates will continue to go down and you can get continue to collect referral/signup bonuses.

Good news. DH and I started with 240k in student loan debt and about the same private balances >8%. You'll get out from it sometime.... It took us about 10 years of dutifully paying all our extra cash. But, it can be done and you'll be better for it.

Thank you. I wasn't aware that refinancing that often was possible. We'll certainly do so. I'm optimistic about hitting the 5.5% on the private refinance, but how do you think that would impact our priorities in paying off the federal (which average ~6%)?

Looking forward to hitting the point where we can look back on it all. Congrats on making it out of the tunnel.

Peachtea

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #9 on: December 10, 2018, 07:47:50 PM »
1) Youíre missing 35K in loans somewhere. You only listed about 195k worth of your partnerís SL but you say she has 230K.

2) Are you crazy? DO NOT CO-SIGN HER SL. In most (if not all?) states, individual debts going into a marriage stay individual when leaving a marriage. Only debts incurred during a marriage are joint or divided up somehow (depending on laws of your state). If you co-sign those loans and something happens with your relationship, you will be legally responsible regardless. Youíre not even married yet! Iím the person in my marriage with 200K+ in SL and no way would I ever have asked my husband to co-sign, even to get a lower interest rate. Iím all for joining finances, using the marital money pot to kill SL debt etc., but you do that while your partners/ married. So go ahead and choose to throw thousands each month at her SLs during your relationship and marriage. But co-signing means in the future you no longer get to choose whether youíre financially liable for those debts. Refinance if she can get a lower interest on private loans without out as a co-signer.

3) Does she work at a non-profit hospital? If so, then she most likely qualifies for PSLF. I would double check that its a 501(c)(3) vs some other kind of non-profit to make sure its PSLF eligible.  PSLF there are no tax consequences to the amount forgiven in the end. If sheís PSLF eligible, go through her federal SL and make sure every single one is eligible for forgiveness. Only Direct or Direct consolidated loans are eligible. Any that are not (like Perkins loans) should be consolidated ASAP, b/c payments made pre-consolidation do not count towards the 10 years of forgiveness. This gives you the option to choose whether to do forgiveness later. You donít have to decide now, you just need to make sure youíre set up for forgiveness on gov loans while paying off the private loans. This means after consolidation she should apply for an income based payment plan. Only payments made on an income based payment plan count towards forgiveness. You want the PAYE plan specifically.

4) Go on PAYE income based plan fo gov loans while paying off the private loans. This will keep minimum payments low, so you can pay off the private loans faster. After you pay off private loans, then look at the gov loans and how many years left she has for PSLF. Decide whether it makes more sense to pay it off sooner rather than later, you can do the math on this when you get to that point. I advocate for paying off the private loans asap even if you get a 5.5-7% interest rate, b/c unlike every other loan you cannot discharge SLs. Private loans also do not have the same protections as gov loans in periods of unemployment, disability, or etc. Note this is not in keeping with the investment order someone linked.

5) Yes, it absolutely makes sense for you to consider filing MFS. People drastically over estimate the tax benefit of MFJ and do not realize how much you can save in SL payments when doing PSLF. Do the maths each year - either by hand or using a tax calculator to project the tax difference and the student loans.ed.gov payment estimator to see the difference in student loan payments MFS or MFJ. If you were married for the full year at your income levels and current retirement contributions, my rough maths says youíd pay about $800 more MFS but save $5800 on SL payments (a year). (But definitely do your own maths.) Keep in mind that SL payments are based on the prior tax year. So if your partner consolidates fed loans and starts making payments in say March (it takes several months to consolidate and get income based payment plan approved), her payments will be based on 2018 tax filings. Now if you end up deciding to pay off fed loans after private, youíre not really saving money MFS more just deferring the payments and interest in the meanwhile. But its a huge savings if you do PSLF, and having $250 vs $750 gov payments now, gives you much more to throw at private loans. If you file MFS you cannot contribute to Roth IRA (Roth 401K is fine) and you do not get tax deductions for tIRA. Not a big deal if you just contribute to your 401k instead, especially if youíre not going to max all your retirement vehicles while trying to pay down the SL debt quickly anyways. Also note that MFS is why you want the PAYE repayment plan and not REPAYE. PAYE will use only the borrowerís AGI if filing MFS; REPAYE uses the couples joint AGI regardless of MFS or MFJ.

6) While paying private loans, I kept my 401K at match, plus 1% with every raise as a psychological boost. (1% for me; rest to evil Sallie Mae.) DH was at 15%. I consider 15% the put your oxygen mask on first bit.

SimpleCycle

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #10 on: December 10, 2018, 08:25:06 PM »
She has $84.4k in federal student loans.  Thatís about 40% of her total balance and definitely worth looking into the PAYE/PSLF combo Peachtea mentions.

Do not co-sign her loan refinance, even for a better interest rate.  Try Earnest, which has decent rates without requiring a co-signer.

If she does pursue PSLF, youíll need to do MFS to keep her payments down.

Private loans are a much bigger risk than federal loans, because they donít have the same deferment and forebearance options.  Iíd pay down a private loan over any of those federal loans, even at 5.5%.

Iíll be honest, youíre starting very far in the hole and sound like outrageous optimism has tipped over into discounting reality.  Your annual expenses are $50k, you have 5x annual expenses in debt, you want a house, kids, AND FIRE.  You can have all those things, but itíll take some restructuring of your life and priorities, not just tinkering around the edges.  Your partner has a leased clown car and is on her parentsí cell plan for goodness sake.  Itís time to grow up and face the reality of the situation.

therethere

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #11 on: December 11, 2018, 08:56:43 AM »
Oh yes, absolutely do not cosign any loans. One of the primary non-monetary reasons I refinanced my private student loans was so that my parents were no longer cosigners. I did not like the possibility of my parents being on the hook for my loans (should I not be able to pay or worse died) when they should  be looking forward to/enjoying retirement. I would have refinanced at the same rate just to get them off as cosigners.

For you wife, on the surface it seems like you would want to cosign. But god forbid anything happen to her, you'd have to pay all the loans back. Not worth the risk in my opinion.

STEMorbust

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #12 on: December 11, 2018, 11:33:28 AM »
2) Are you crazy? DO NOT CO-SIGN HER SL.

She has $84.4k in federal student loans.  Thatís about 40% of her total balance and definitely worth looking into the PAYE/PSLF combo Peachtea mentions.

Do not co-sign her loan refinance, even for a better interest rate.  Try Earnest, which has decent rates without requiring a co-signer.

Oh yes, absolutely do not cosign any loans. One of the primary non-monetary reasons I refinanced my private student loans was so that my parents were no longer cosigners. I did not like the possibility of my parents being on the hook for my loans (should I not be able to pay or worse died) when they should  be looking forward to/enjoying retirement. I would have refinanced at the same rate just to get them off as cosigners.

Thank you all for the replies. Re: cosigning -- my impression is that some providers allow for release of the cosigner after one year of on-time payments. I'm totally on board with the fact that signing on indefinitely is way too risky. She wouldn't want that on my plate. We have a pretty solid offer from Earnest at 5.38% WITHOUT a cosigner. The only downside is that they won't take Sallie Mae loans until the first of the year... I think the math makes sense to wait until then rather than go with another provider immediately that is offering 6.3%.

We put together a target monthly budget of $2,400 which I believe we can hit once the expensive vehicle is built and sold. Thank you all for the advice thus far!

STEMorbust

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #13 on: December 11, 2018, 11:37:08 AM »
As far as PSLF goes... Still on the fence. Her immediate plan is to look at jobs in the tech and consulting spaces that want health care workers with "clinical backgrounds". Our thought is that the potential income in one of those fields would outweigh the benefit of PSLF. In the meantime, though, it may be worth switching to a position that is eligible. She's currently at a private clinic.

A good read on the issue with the physical therapy field: https://www.webpt.com/blog/post/founder-letter-bubble-trouble-why-mounting-student-debt-is-pts-greatest-financial-threat

SimpleCycle

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #14 on: December 11, 2018, 12:11:03 PM »
As far as PSLF goes... Still on the fence. Her immediate plan is to look at jobs in the tech and consulting spaces that want health care workers with "clinical backgrounds". Our thought is that the potential income in one of those fields would outweigh the benefit of PSLF. In the meantime, though, it may be worth switching to a position that is eligible. She's currently at a private clinic.

A good read on the issue with the physical therapy field: https://www.webpt.com/blog/post/founder-letter-bubble-trouble-why-mounting-student-debt-is-pts-greatest-financial-threat

You are very smart to look at the opportunity cost of PSLF along with the benefits.  I started down the path toward PSLF but ultimately decided that the amount of forgiveness I'd get (in my case it would have been around $10k) was not worth being tied to the public sector for ten years.  Obviously the tradeoff becomes less clearcut at higher debt levels.

charis

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #15 on: December 11, 2018, 02:40:31 PM »
She has $84.4k in federal student loans.  Thatís about 40% of her total balance and definitely worth looking into the PAYE/PSLF combo Peachtea mentions.

Do not co-sign her loan refinance, even for a better interest rate.  Try Earnest, which has decent rates without requiring a co-signer.

If she does pursue PSLF, youíll need to do MFS to keep her payments down.

Private loans are a much bigger risk than federal loans, because they donít have the same deferment and forebearance options.  Iíd pay down a private loan over any of those federal loans, even at 5.5%.

Iíll be honest, youíre starting very far in the hole and sound like outrageous optimism has tipped over into discounting reality.  Your annual expenses are $50k, you have 5x annual expenses in debt, you want a house, kids, AND FIRE.  You can have all those things, but itíll take some restructuring of your life and priorities, not just tinkering around the edges.  Your partner has a leased clown car and is on her parentsí cell plan for goodness sake.  Itís time to grow up and face the reality of the situation.

The bolded is not necessarily true!  Using my tax software, I can run the scenario both ways can compare filing MFJ to MFS.  For many years now, MFJ has won out.  Don't make any assumptions until you run both scenarios.

STEMorbust

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #16 on: December 11, 2018, 02:46:15 PM »
The bolded is not necessarily true!  Using my tax software, I can run the scenario both ways can compare filing MFJ to MFS.  For many years now, MFJ has won out.  Don't make any assumptions until you run both scenarios.

Noted!

As far as PSLF goes... Still on the fence. Her immediate plan is to look at jobs in the tech and consulting spaces that want health care workers with "clinical backgrounds". Our thought is that the potential income in one of those fields would outweigh the benefit of PSLF. In the meantime, though, it may be worth switching to a position that is eligible. She's currently at a private clinic.

A good read on the issue with the physical therapy field: https://www.webpt.com/blog/post/founder-letter-bubble-trouble-why-mounting-student-debt-is-pts-greatest-financial-threat

You are very smart to look at the opportunity cost of PSLF along with the benefits.  I started down the path toward PSLF but ultimately decided that the amount of forgiveness I'd get (in my case it would have been around $10k) was not worth being tied to the public sector for ten years.  Obviously the tradeoff becomes less clearcut at higher debt levels.

This would be $100k so I'm leaning towards yes... I think?! So difficult to forecast earnings. In the short term, I imagine making $85k would be easily attainable in a non-PT field like tech or consulting, whereas a PSLF qualified job would likely be around $70k if and when one came around.

SimpleCycle

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #17 on: December 11, 2018, 03:57:50 PM »
She has $84.4k in federal student loans.  Thatís about 40% of her total balance and definitely worth looking into the PAYE/PSLF combo Peachtea mentions.

Do not co-sign her loan refinance, even for a better interest rate.  Try Earnest, which has decent rates without requiring a co-signer.

If she does pursue PSLF, youíll need to do MFS to keep her payments down.

Private loans are a much bigger risk than federal loans, because they donít have the same deferment and forebearance options.  Iíd pay down a private loan over any of those federal loans, even at 5.5%.

Iíll be honest, youíre starting very far in the hole and sound like outrageous optimism has tipped over into discounting reality.  Your annual expenses are $50k, you have 5x annual expenses in debt, you want a house, kids, AND FIRE.  You can have all those things, but itíll take some restructuring of your life and priorities, not just tinkering around the edges.  Your partner has a leased clown car and is on her parentsí cell plan for goodness sake.  Itís time to grow up and face the reality of the situation.

The bolded is not necessarily true!  Using my tax software, I can run the scenario both ways can compare filing MFJ to MFS.  For many years now, MFJ has won out.  Don't make any assumptions until you run both scenarios.

Do you mean for how much you owe in taxes?  Because that is not what I am talking about.

Under Public Service Loan Forgiveness, married people are allowed to do income-driven repayment options based on the borrower's income alone, but only if you file your taxes separately.  Otherwise the repayment amount is based on combined income, which results in a much higher monthly payment (and lower subsequent forgiveness) given their respective incomes.

MFJ is generally a more advantageous tax filing status for most married couples, so needing to use MFS for ten years to keep loan payments lower is a drawback of pursuing PSLF.

Peachtea

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #18 on: December 11, 2018, 05:38:06 PM »
She has $84.4k in federal student loans.  Thatís about 40% of her total balance and definitely worth looking into the PAYE/PSLF combo Peachtea mentions.

Do not co-sign her loan refinance, even for a better interest rate.  Try Earnest, which has decent rates without requiring a co-signer.

If she does pursue PSLF, youíll need to do MFS to keep her payments down.

Private loans are a much bigger risk than federal loans, because they donít have the same deferment and forebearance options.  Iíd pay down a private loan over any of those federal loans, even at 5.5%.

Iíll be honest, youíre starting very far in the hole and sound like outrageous optimism has tipped over into discounting reality.  Your annual expenses are $50k, you have 5x annual expenses in debt, you want a house, kids, AND FIRE.  You can have all those things, but itíll take some restructuring of your life and priorities, not just tinkering around the edges.  Your partner has a leased clown car and is on her parentsí cell plan for goodness sake.  Itís time to grow up and face the reality of the situation.

The bolded is not necessarily true!  Using my tax software, I can run the scenario both ways can compare filing MFJ to MFS.  For many years now, MFJ has won out.  Don't make any assumptions until you run both scenarios.

Do you mean for how much you owe in taxes?  Because that is not what I am talking about.

Under Public Service Loan Forgiveness, married people are allowed to do income-driven repayment options based on the borrower's income alone, but only if you file your taxes separately.  Otherwise the repayment amount is based on combined income, which results in a much higher monthly payment (and lower subsequent forgiveness) given their respective incomes.

MFJ is generally a more advantageous tax filing status for most married couples, so needing to use MFS for ten years to keep loan payments lower is a drawback of pursuing PSLF.

I really admire how succinctly you replied to this SimpleCylce.

Peachtea

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #19 on: December 11, 2018, 06:00:48 PM »
As far as PSLF goes... Still on the fence. Her immediate plan is to look at jobs in the tech and consulting spaces that want health care workers with "clinical backgrounds". Our thought is that the potential income in one of those fields would outweigh the benefit of PSLF. In the meantime, though, it may be worth switching to a position that is eligible. She's currently at a private clinic.

A good read on the issue with the physical therapy field: https://www.webpt.com/blog/post/founder-letter-bubble-trouble-why-mounting-student-debt-is-pts-greatest-financial-threat

You are very smart to look at the opportunity cost of PSLF along with the benefits.  I started down the path toward PSLF but ultimately decided that the amount of forgiveness I'd get (in my case it would have been around $10k) was not worth being tied to the public sector for ten years.  Obviously the tradeoff becomes less clearcut at higher debt levels.

This would be $100k so I'm leaning towards yes... I think?! So difficult to forecast earnings. In the short term, I imagine making $85k would be easily attainable in a non-PT field like tech or consulting, whereas a PSLF qualified job would likely be around $70k if and when one came around.

The way I did the math was (how much I would have paid if I paid off the gov loans ASAP) - (how I would pay during ten years PSLF), divided by 10 (years of service). I added that amount to the annual salary to guesstimate the real value of a PSLF qualified job. But I also considered the difference in years - like it would have taken me 5 years to pay off gov loans (after private), but at that point I only had 7 years left of PSLF. The major downside to PSLF is the feeling of golden handcuffs grows with time b/c your SL balance grows since your not even paying all the interest.

I have a friend who does PT at the local hospital. Itís pretty much her dream job and that employer and other local non-profit hospital are probably the two highest paying employers in the area. So for her, it would make sense to do PSLF since her two best job options are PSLF qualified. So for your wife, it should probably come down to local job market. Even if the value of the PSLF qualified job is higher than private employers (once factoring $ forgiven), she has to factor in the flexibility to more easily move employers if sheís not limited to PSLF jobs. On the other hand, if most PT employers are PSLF qualified in your area then I would probably lean PSLF with the amount of loans she has.
« Last Edit: December 11, 2018, 06:02:57 PM by Peachtea »

italianant

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #20 on: December 11, 2018, 07:33:41 PM »
She has $84.4k in federal student loans.  Thatís about 40% of her total balance and definitely worth looking into the PAYE/PSLF combo Peachtea mentions.

Do not co-sign her loan refinance, even for a better interest rate.  Try Earnest, which has decent rates without requiring a co-signer.

If she does pursue PSLF, youíll need to do MFS to keep her payments down.

Private loans are a much bigger risk than federal loans, because they donít have the same deferment and forebearance options.  Iíd pay down a private loan over any of those federal loans, even at 5.5%.

Iíll be honest, youíre starting very far in the hole and sound like outrageous optimism has tipped over into discounting reality.  Your annual expenses are $50k, you have 5x annual expenses in debt, you want a house, kids, AND FIRE.  You can have all those things, but itíll take some restructuring of your life and priorities, not just tinkering around the edges.  Your partner has a leased clown car and is on her parentsí cell plan for goodness sake.  Itís time to grow up and face the reality of the situation.

The bolded is not necessarily true!  Using my tax software, I can run the scenario both ways can compare filing MFJ to MFS.  For many years now, MFJ has won out.  Don't make any assumptions until you run both scenarios.

I can second this. I'm just starting my 9th year towards the PSLF. My first 8 years we did MFJ and we were fine. We paid off my husband's student loans and I got a new job that paid more last year-- now it's better for us to do MFS.

charis

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #21 on: December 12, 2018, 09:20:17 AM »
She has $84.4k in federal student loans.  Thatís about 40% of her total balance and definitely worth looking into the PAYE/PSLF combo Peachtea mentions.

Do not co-sign her loan refinance, even for a better interest rate.  Try Earnest, which has decent rates without requiring a co-signer.

If she does pursue PSLF, youíll need to do MFS to keep her payments down.

Private loans are a much bigger risk than federal loans, because they donít have the same deferment and forebearance options.  Iíd pay down a private loan over any of those federal loans, even at 5.5%.

Iíll be honest, youíre starting very far in the hole and sound like outrageous optimism has tipped over into discounting reality.  Your annual expenses are $50k, you have 5x annual expenses in debt, you want a house, kids, AND FIRE.  You can have all those things, but itíll take some restructuring of your life and priorities, not just tinkering around the edges.  Your partner has a leased clown car and is on her parentsí cell plan for goodness sake.  Itís time to grow up and face the reality of the situation.

The bolded is not necessarily true!  Using my tax software, I can run the scenario both ways can compare filing MFJ to MFS.  For many years now, MFJ has won out.  Don't make any assumptions until you run both scenarios.

Do you mean for how much you owe in taxes?  Because that is not what I am talking about.

Under Public Service Loan Forgiveness, married people are allowed to do income-driven repayment options based on the borrower's income alone, but only if you file your taxes separately.  Otherwise the repayment amount is based on combined income, which results in a much higher monthly payment (and lower subsequent forgiveness) given their respective incomes.

MFJ is generally a more advantageous tax filing status for most married couples, so needing to use MFS for ten years to keep loan payments lower is a drawback of pursuing PSLF.

No, that is not what I meant.  I meant the math won out overall, in context of PSLF, the calculation of payments, and relevant tax burdens.  I thought it was clear from the post that I quoted that we were discussing the PSLF program, but I apologize if it was not.  It is not a given that MFS is the most advantageous filing status (although many people assume this) as indicated by my experience with the PSLF. 

I can second this. I'm just starting my 9th year towards the PSLF. My first 8 years we did MFJ and we were fine. We paid off my husband's student loans and I got a new job that paid more last year-- now it's better for us to do MFS.


STEMorbust

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #22 on: December 12, 2018, 11:13:27 AM »
Thanks all. She has come about face and is now focused on lining up a job that qualifies for PSLF. There actually doesn't seem to be a discrepancy between entry-level private PT wages and gov't wages. The VA salaries are fairly generous because someone with a DPT immediately qualifies for G-11 pay scale, at least as I understand it.

We're aiming to have the $133k in private knocked out in under three years, at which point she'll evaluate trajectory in PSLF versus moving to private. The timing makes sense because we won't have been paying more than the PAYE amount until that point anyway. Working for a PSLF job is essentially the holding position that we'll use in times of indecision.

SimpleCycle

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #23 on: December 12, 2018, 01:29:22 PM »
She has $84.4k in federal student loans.  Thatís about 40% of her total balance and definitely worth looking into the PAYE/PSLF combo Peachtea mentions.

Do not co-sign her loan refinance, even for a better interest rate.  Try Earnest, which has decent rates without requiring a co-signer.

If she does pursue PSLF, youíll need to do MFS to keep her payments down.

Private loans are a much bigger risk than federal loans, because they donít have the same deferment and forebearance options.  Iíd pay down a private loan over any of those federal loans, even at 5.5%.

Iíll be honest, youíre starting very far in the hole and sound like outrageous optimism has tipped over into discounting reality.  Your annual expenses are $50k, you have 5x annual expenses in debt, you want a house, kids, AND FIRE.  You can have all those things, but itíll take some restructuring of your life and priorities, not just tinkering around the edges.  Your partner has a leased clown car and is on her parentsí cell plan for goodness sake.  Itís time to grow up and face the reality of the situation.

The bolded is not necessarily true!  Using my tax software, I can run the scenario both ways can compare filing MFJ to MFS.  For many years now, MFJ has won out.  Don't make any assumptions until you run both scenarios.

Do you mean for how much you owe in taxes?  Because that is not what I am talking about.

Under Public Service Loan Forgiveness, married people are allowed to do income-driven repayment options based on the borrower's income alone, but only if you file your taxes separately.  Otherwise the repayment amount is based on combined income, which results in a much higher monthly payment (and lower subsequent forgiveness) given their respective incomes.

MFJ is generally a more advantageous tax filing status for most married couples, so needing to use MFS for ten years to keep loan payments lower is a drawback of pursuing PSLF.

No, that is not what I meant.  I meant the math won out overall, in context of PSLF, the calculation of payments, and relevant tax burdens.  I thought it was clear from the post that I quoted that we were discussing the PSLF program, but I apologize if it was not.  It is not a given that MFS is the most advantageous filing status (although many people assume this) as indicated by my experience with the PSLF. 

I can second this. I'm just starting my 9th year towards the PSLF. My first 8 years we did MFJ and we were fine. We paid off my husband's student loans and I got a new job that paid more last year-- now it's better for us to do MFS.

I have never heard of tax software doing that - that's good.

Before I wrote my initial response, I had loaded the OPs partner's loans into the federal calculator and looked at both MFJ and MFS, so it wasn't an assumption (although apparently I missed a loan, but it doesn't change the result).  She is not eligible for PAYE or IBR at their current combined income if they do MFJ, and under the other PSLF eligible repayment plans she'd pay off the entire amount before reaching 120 payments.

walkwalkwalk

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #24 on: December 12, 2018, 01:49:04 PM »
Just wanted to point out that they aren't married. Lots of advice re: MFS or MFJ but kinda regardless.

charis

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #25 on: December 12, 2018, 05:46:51 PM »
She has $84.4k in federal student loans.  Thatís about 40% of her total balance and definitely worth looking into the PAYE/PSLF combo Peachtea mentions.

Do not co-sign her loan refinance, even for a better interest rate.  Try Earnest, which has decent rates without requiring a co-signer.

If she does pursue PSLF, youíll need to do MFS to keep her payments down.

Private loans are a much bigger risk than federal loans, because they donít have the same deferment and forebearance options.  Iíd pay down a private loan over any of those federal loans, even at 5.5%.

Iíll be honest, youíre starting very far in the hole and sound like outrageous optimism has tipped over into discounting reality.  Your annual expenses are $50k, you have 5x annual expenses in debt, you want a house, kids, AND FIRE.  You can have all those things, but itíll take some restructuring of your life and priorities, not just tinkering around the edges.  Your partner has a leased clown car and is on her parentsí cell plan for goodness sake.  Itís time to grow up and face the reality of the situation.

The bolded is not necessarily true!  Using my tax software, I can run the scenario both ways can compare filing MFJ to MFS.  For many years now, MFJ has won out.  Don't make any assumptions until you run both scenarios.

Do you mean for how much you owe in taxes?  Because that is not what I am talking about.

Under Public Service Loan Forgiveness, married people are allowed to do income-driven repayment options based on the borrower's income alone, but only if you file your taxes separately.  Otherwise the repayment amount is based on combined income, which results in a much higher monthly payment (and lower subsequent forgiveness) given their respective incomes.

MFJ is generally a more advantageous tax filing status for most married couples, so needing to use MFS for ten years to keep loan payments lower is a drawback of pursuing PSLF.

No, that is not what I meant.  I meant the math won out overall, in context of PSLF, the calculation of payments, and relevant tax burdens.  I thought it was clear from the post that I quoted that we were discussing the PSLF program, but I apologize if it was not.  It is not a given that MFS is the most advantageous filing status (although many people assume this) as indicated by my experience with the PSLF. 

I can second this. I'm just starting my 9th year towards the PSLF. My first 8 years we did MFJ and we were fine. We paid off my husband's student loans and I got a new job that paid more last year-- now it's better for us to do MFS.

I have never heard of tax software doing that - that's good.

Before I wrote my initial response, I had loaded the OPs partner's loans into the federal calculator and looked at both MFJ and MFS, so it wasn't an assumption (although apparently I missed a loan, but it doesn't change the result).  She is not eligible for PAYE or IBR at their current combined income if they do MFJ, and under the other PSLF eligible repayment plans she'd pay off the entire amount before reaching 120 payments.

Apparently this isnt relevant, but to the extent that it may be in the future, payment amount is certainly not the only thing to consider.  But if their AGI, estimated payments, reduced tax advantage space, and increased tax burden indicate that MFS is preferable, that's it. The math is what it is.

STEMorbust

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #26 on: December 13, 2018, 11:37:32 AM »
Just wanted to point out that they aren't married. Lots of advice re: MFS or MFJ but kinda regardless.

Indeed! Still useful info for the future, so thank you all for chiming in.

jking11

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #27 on: December 13, 2018, 12:25:16 PM »
Physical Therapist here.  I graduated with $250k, (160fed, 90private).  First job 7 years ago was $62k/yr, but lcol.  Paid off $30k in private the first year.
Moved to Chicago, and at the nonprofit hospital I work-I make easily $10k more than friends at the big box clinics like ATI/Athletico/Novacare and my benefits are way better.  So I max my HSA, 403b, fsa-basically anything to reduce my income and lower my payments for the federal loans.  I've got 4 years left on PSLF, and get the certification every year-and when I quit my PRN job a few months ago I had them recalculate my monthly payment(reduced down to $390/mo).  I'm 32 so i'm in old IBR, which is 15%, and we do MFS because my wife is a high earner Physician Assistant($120k).  The first 6 years I worked PRN like a dog and paid for our wedding, down payment on condo, private loans, etc...
I would encourage you to not give up hope, really crunch the numbers.  PSLF is awesome for our profession, and you usually make more at hospitals-and also have better hours and benefits too.  I still do outpatient and don't get stuck seeing 6 patients at once like the for profit chains.  Before the white coat investor pointed me towards reducing AGI through 403b-I paid $1100/mo for pslf IBR.  After maxing hsa and retirement-that dropped to $650/mo.  And I left my PRN job and dropped to $390/mo.  I realized I can stuff my retirement account and reduce my payments towards PSLF...so the more I worked, the more I paid in taxes AND loans.  Good luck to you both.  My friends who have crazy loans and work at the for profit clinics of the world are in TERRIBLE financial shape-especially since we live in HCOL. You can do this.  Just be smart whichever direction you go.

STEMorbust

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #28 on: December 14, 2018, 11:49:36 AM »
Physical Therapist here.  I graduated with $250k, (160fed, 90private).  First job 7 years ago was $62k/yr, but lcol.  Paid off $30k in private the first year.
Moved to Chicago, and at the nonprofit hospital I work-I make easily $10k more than friends at the big box clinics like ATI/Athletico/Novacare and my benefits are way better.  So I max my HSA, 403b, fsa-basically anything to reduce my income and lower my payments for the federal loans.  I've got 4 years left on PSLF, and get the certification every year-and when I quit my PRN job a few months ago I had them recalculate my monthly payment(reduced down to $390/mo).  I'm 32 so i'm in old IBR, which is 15%, and we do MFS because my wife is a high earner Physician Assistant($120k).  The first 6 years I worked PRN like a dog and paid for our wedding, down payment on condo, private loans, etc...
I would encourage you to not give up hope, really crunch the numbers.  PSLF is awesome for our profession, and you usually make more at hospitals-and also have better hours and benefits too.  I still do outpatient and don't get stuck seeing 6 patients at once like the for profit chains.  Before the white coat investor pointed me towards reducing AGI through 403b-I paid $1100/mo for pslf IBR.  After maxing hsa and retirement-that dropped to $650/mo.  And I left my PRN job and dropped to $390/mo.  I realized I can stuff my retirement account and reduce my payments towards PSLF...so the more I worked, the more I paid in taxes AND loans.  Good luck to you both.  My friends who have crazy loans and work at the for profit clinics of the world are in TERRIBLE financial shape-especially since we live in HCOL. You can do this.  Just be smart whichever direction you go.

We've both read through your comment multiple times. Thank you for taking the time to share that. It's nice having some affirmation of where our heads are at. Nice work on following that path!

Do you have any advice on finding PSLF-eligible opportunities? We've looked at USA Jobs but I'd also like to see some kind of index of non-profit hospitals. Isn't easy to track down, even using sites like Health Grades and 501(c)(3) lookup.

abhe8

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #29 on: December 14, 2018, 12:05:23 PM »
Of you go with a VA job make sure to ask about the Education Debt Reduction Program. It's a reimbursement Pegram for the money you pay in student loan payments, so it's not taxable income.

And whatever job she takes, PTs should be able to pick up prn hours to boost her income.

jking11

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #30 on: December 14, 2018, 03:14:26 PM »

[/quote]

We've both read through your comment multiple times. Thank you for taking the time to share that. It's nice having some affirmation of where our heads are at. Nice work on following that path!

Do you have any advice on finding PSLF-eligible opportunities? We've looked at USA Jobs but I'd also like to see some kind of index of non-profit hospitals. Isn't easy to track down, even using sites like Health Grades and 501(c)(3) lookup.
[/quote]

No problem.  I feel like PTs get zero financial education so I'm always happy to help.
As far as finding PSLF opportunities, Most hospitals are non profits.  Indeed.com makes it pretty easy to just search nonprofit Physical Therapist...those keywords should include everything.  So just look for jobs like normal and exclude any private clinics.  Take a few minutes to check out the hospital's website in the about me...it usually says whether it's for profit or non profit.  School PT works too.  Remember, 501C3 automatically qualifies, but it still qualifies so long as it is nonprofit and you are there as a healthcare provider.  It's really not the same as the lawyers who didn't qualify because of the population they served.  It's important to remember that working for a staffing company at a nonprofit hospital is not the same as being a hospital employee.  The latter will count towards PSLF, not the former.  You also have to have a DIRECT consolidated loan for it to count.  Make sure to follow ALL of the rules and be extra crazy looking over the details.  There is too much money at stake to assume you are ok. 
More advice: find a place where you can do 4-10s.  A lot of hospitals allow this and are more likely than private clinics.  I work tuesday-Friday 8-630.  That leaves me sat/sun/monday to do as I please.  For 4 years I worked PRN 10 hour days at another hospital EVERY monday.  That's an extra $2k/mo.  Every bit helps.  Now I've dropped back down to just 40 hours and the occassional weekend half day at another hospital.  You can always pick up shifts to "pay for the sins" of a date night or something unexpected.
Go to the White Coat Investor's website and check out the PSLF section.  Invaluable.
If you have any PT related questions or advice feel free to ask me via message.  Happy to Help.

cheepiling

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #31 on: December 20, 2018, 06:17:00 PM »


We've both read through your comment multiple times. Thank you for taking the time to share that. It's nice having some affirmation of where our heads are at. Nice work on following that path!

Do you have any advice on finding PSLF-eligible opportunities? We've looked at USA Jobs but I'd also like to see some kind of index of non-profit hospitals. Isn't easy to track down, even using sites like Health Grades and 501(c)(3) lookup.
[/quote]

No problem.  I feel like PTs get zero financial education so I'm always happy to help.
As far as finding PSLF opportunities, Most hospitals are non profits.  Indeed.com makes it pretty easy to just search nonprofit Physical Therapist...those keywords should include everything.  So just look for jobs like normal and exclude any private clinics.  Take a few minutes to check out the hospital's website in the about me...it usually says whether it's for profit or non profit.  School PT works too.  Remember, 501C3 automatically qualifies, but it still qualifies so long as it is nonprofit and you are there as a healthcare provider.  It's really not the same as the lawyers who didn't qualify because of the population they served.  It's important to remember that working for a staffing company at a nonprofit hospital is not the same as being a hospital employee.  The latter will count towards PSLF, not the former.  You also have to have a DIRECT consolidated loan for it to count.  Make sure to follow ALL of the rules and be extra crazy looking over the details.  There is too much money at stake to assume you are ok. 
More advice: find a place where you can do 4-10s.  A lot of hospitals allow this and are more likely than private clinics.  I work tuesday-Friday 8-630.  That leaves me sat/sun/monday to do as I please.  For 4 years I worked PRN 10 hour days at another hospital EVERY monday.  That's an extra $2k/mo.  Every bit helps.  Now I've dropped back down to just 40 hours and the occassional weekend half day at another hospital.  You can always pick up shifts to "pay for the sins" of a date night or something unexpected.
Go to the White Coat Investor's website and check out the PSLF section.  Invaluable.
If you have any PT related questions or advice feel free to ask me via message.  Happy to Help.
[/quote]

Another PT here. Ditto the fact that we get basically no financial education. I'm in the same boat as STEMorbust's lady, but without the boyfriend helping me. I graduated about 2 years ago and have paid off about 20k. It's encouraging to read about people on the same boat.

STEMorbust

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #32 on: December 21, 2018, 01:18:23 PM »
Another PT here. Ditto the fact that we get basically no financial education. I'm in the same boat as STEMorbust's lady, but without the boyfriend helping me. I graduated about 2 years ago and have paid off about 20k. It's encouraging to read about people on the same boat.

The state of PT is, well, a bummer. The GF has been disheartened by her experience thus far. Hopefully others feel the same and it drives some changes in policy. We've talked about writing an open letter to the APTA regarding the state of the union with private clinics/new grads.

Have you been able to lock down a PSLF job? Or have you ever considered IHS? They're hiring for a position in northern Alaska right now that starts at $107k!

Don't have any boyfriends to offer, but if you find yourself in OR or WA you are welcome to join us for some cheap wine and board games.

Spondulix

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #33 on: December 21, 2018, 04:06:06 PM »
I refinanced my federal loans with Nelnet. I donít know if they still have this program but they offered 1% reduction with 36 on-time payments and .25% reduction for using their auto-pay feature. So when youíre looking at lender options definitely look for perks like that. If your loans are subsidized and unsidized theyíll consolidate to 2 loans (not one).

I would for sure consoldiate both sets of loans (Federal and Private). I get what the person above was thinking by keeping them separate but what youíre going to gain by reducing rate (especially by 1% or more) well outweighs that.

italianant

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #34 on: December 21, 2018, 04:21:55 PM »
I refinanced my federal loans with Nelnet. I donít know if they still have this program but they offered 1% reduction with 36 on-time payments and .25% reduction for using their auto-pay feature. So when youíre looking at lender options definitely look for perks like that. If your loans are subsidized and unsidized theyíll consolidate to 2 loans (not one).

I would for sure consoldiate both sets of loans (Federal and Private). I get what the person above was thinking by keeping them separate but what youíre going to gain by reducing rate (especially by 1% or more) well outweighs that.

He can't consolidate private and public and still do the PSLF program.

"Which types of federal student loans qualify for PSLF?
A qualifying loan for PSLF is any nondefaulted loan you received under the William D. Ford Federal Direct Loan (Direct Loan) Program.

Only Direct Loans are eligible for PSLF. If you borrowed before July 1, 2010, some or all of your loans may have been made under an older federal student loan program called the Federal Family Education Loan (FFEL) Program. Read more below about actions you can take to make your FFEL Program loans eligible for PSLF.

You may have received loans under other federal student loan programs, such as the Federal Family Education Loan (FFEL) Program or the Federal Perkins Loan (Perkins Loan) Program. Loans from these programs do not qualify for PSLF, but they may become eligible if you consolidate them into a Direct Consolidation Loan. However, only qualifying payments that you make on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF. Any payments you made on the FFEL Program loans or Perkins Loans before you consolidated them donít count.

If you have both Direct Loans and other types of federal student loans that you want to consolidate to take advantage of PSLF, itís important to understand that if you consolidate your existing Direct Loans with the other loans, you will lose credit for any qualifying PSLF payments you made on your Direct Loans before they were consolidated. In this situation, you may want to leave your existing Direct Loans out of the consolidation and consolidate only your other federal student loans."

cheepiling

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #35 on: December 22, 2018, 03:39:57 AM »

The state of PT is, well, a bummer. The GF has been disheartened by her experience thus far. Hopefully others feel the same and it drives some changes in policy. We've talked about writing an open letter to the APTA regarding the state of the union with private clinics/new grads.

Have you been able to lock down a PSLF job? Or have you ever considered IHS? They're hiring for a position in northern Alaska right now that starts at $107k!

Don't have any boyfriends to offer, but if you find yourself in OR or WA you are welcome to join us for some cheap wine and board games.

It's a challenge for sure, and I'm still trying to decide if I'm going about this the right way. I got a job pretty quickly off the bat with a previous private clinic that offered a higher salary than any of the hospitals ~80k, and I decided not to do a residency. After one year of keeping my head in the sand, I spent this last year hitting the debt hard and picking up a lot of PRN time on weekends. I've paid off about 20k. I have considered doing PLSF or IHS, but haven't pulled the trigger either way. I like working privately, but it definitely means I have to work more without a definite end in sight. I feel like PLSF would be like golden handcuffs, but maybe that's what I need. With my income going up and the PRN work, I can probably pay it off within 10 years so right now I'm going forward with that.

LOL. I do have a boyfriend, just not a serious one that I'd bog down with weight of my loans. He does a good job feeding me though. I have definitely thought about moving up to Wash, for the green, and the promise of paying less taxes than California. If I find myself up there, I'll hit you up for sure. =]

cheepiling

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #36 on: December 22, 2018, 03:51:05 AM »
Also--I did refinance about 50k of my private loans through purefy.com and then ultimately with PenFed. I only did 50k because they were my highest interest loans at about 7.1% to 4.9%. I'm going to try to refinance them again next year. My federal loans are not consolidated, and I'm in the REPAYE program--10% of AGI x 25 years. But I'm paying them off per in order of highest interest rate with any of my extra payments/cash.

Aside-- Navient originally put me in income-based repayment - 15% of AGI x 25 years, but I requested they change to REPAYE to lower my monthly payments. To do this, they have to put your loans in one month of Forebearance and you pay a minimum amount. However, this capitalizes your interest, making your interest accruing loan balance higher. To avoid this, you pay a standard level payment -- I paid ~$2300 one month, and my loans were not capitalized. Again, I did this because I'm intending on paying the loans off instead of relying on PLSF. However, if you do PLSF, the capitalized interest isn't that big of a deal because hopefully it'll get forgiven anyway.

One of the reasons I'm paying them off aggressively instead of running to the next hospital, is because I don't know if I can rely on PLSF... of the 28,000 borrowers, only 96 got loan forgiveness. That's scary. In 10 years, if you don't get approved, your interest likely doubles the loan balance. Who knows what the state of the union will be in 10 years or if they'll change the program in the meantime.

https://www.studentloanborrowerassistance.org/96-out-of-28000-borrowers-approved-for-public-service-loan-forgiveness-what-does-this-mean-for-everyone-else/


Peachtea

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Re: Late 20s with $230k in Student Loans -- Help us to FIRE
« Reply #37 on: December 31, 2018, 06:32:40 PM »
The low PSLF forgiveness rates are overhyped, because news/internet articles are using the statistics to discourage people just starting with the program. The rates are dismal and appalling, but the articles should be using the statistics to advocate for more relief to the early borrowers. Most of the reasons for low statistics are due to the Dept of Ed working through the kinks of the program after it was enacted. There was not a lot of information available to early borrowers on what exactly qualified them for the program or what actions would screw up their progress, and there was a lack of oversight of student loan servicers. So people are now getting rejected for not having the right loans, not picking the right repayment plan, and servicers putting borrowers (unknowingly) in forebearance.

Itís much easier now to figure out the system. You need to pay attention to the details, be vigilant etc. But I would be more concerned about the hassle of jumping through the hoops, and yes, the golden handcuff effect, than not having your loan student loans forgiven after 10 years. PSLF is written into the promissory note of direct loans and congress has a strong preference for grandfathering when it makes changes anyways, so the odds of the program going away for existing borrowers is very, very slim. Itís perfect for anyone whose best case scenario, preferences, or career plan lend towards gov/non-profit service anyways. But otherwise the longer youíre in the program the more stuck you because your minimum payments are probably not covering interest and the balance balloons up before forgiveness. This makes a switch to the private sector 4+ years in a difficult pill to swallow.