Author Topic: 225k in student loans for physical therapist. Help with options!  (Read 9827 times)

pmadventure

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Any help would be greatly appreciated! I am making roughly 75,000 per year in a job that does not qualify for the Public Service Loan Forgiveness Program. I am thinking about switching to working for a Not For Profit hospital in order to qualify for this and have the loans forgiven in ten years. Has anyone done this? Currently, I am in the Income Based Repayment plan and am potentially looking toward the REPAYE or PAYE plan.

I am getting the run around for all of this from my servicers. 

mozar

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #1 on: March 04, 2016, 07:49:20 PM »
I bet you could pay it off in 5 years, if you keep your expenses below 25k.

Murse

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #2 on: March 04, 2016, 08:26:41 PM »
I thought PT's made closer to 100k/year?

Villanelle

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #3 on: March 04, 2016, 08:32:45 PM »
What does the not-for-profit salary and compensation look like compared to your current $75k job?

KittyFooFoo

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #4 on: March 04, 2016, 08:44:04 PM »
I bet you could pay it off in 5 years, if you keep your expenses below 25k.

What are taxes and interest?

pmadventure

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #5 on: March 05, 2016, 06:29:46 AM »
I bet you could pay it off in 5 years, if you keep your expenses below 25k.

That would be nice, but the plan we are looking at would forgive them after 10 years and our payments would be based off of 10% of our discretionary income. I am thinking that is our best bet on paying the least amount of money.

pmadventure

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #6 on: March 05, 2016, 06:32:02 AM »
I thought PT's made closer to 100k/year?

Not quite, and the plan we are looking at would bring the income down even further, but give the option of making money on the side to get back up to the 75,000 we were originally working with.

pmadventure

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #7 on: March 05, 2016, 06:33:53 AM »
What does the not-for-profit salary and compensation look like compared to your current $75k job?

The salary would be close to 50,000, but just has to be full time (30 hours per week would qualify). The benefits would be better and vacation would be better.

pmadventure

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #8 on: March 05, 2016, 06:37:50 AM »
I bet you could pay it off in 5 years, if you keep your expenses below 25k.

What are taxes and interest?

The student loans are as follows:

Rate   Interest Outstanding   Principal   Total
5.75%    $64.59     $2,151.17     $2,215.76
6.55%    $170.17     $1,561.77     $1,731.94
8.25%    $39.93     $9,189.97     $9,229.90
6.55%    $285.10     $8,509.10     $8,794.20
6.55%    $1,794.84     $14,463.35     $16,258.19
6.55%    $282.93     $8,509.10     $8,792.03
6.55%    $1,699.20     $13,810.07     $15,509.27
6.55%    $282.93     $8,509.10     $8,792.03
6.55%    $1,598.48     $12,991.41     $14,589.89
7.65%    $6,914.18     $40,867.32     $47,781.50
7.65%    $7,697.40     $45,496.27     $53,193.67
4.25%    $20.47     $6,773.95     $6,794.42
6.55%    $29.93     $4,478.16     $4,508.09
6.55%    $1,003.42     $6,915.70     $7,919.12
5.80%    $33.47     $5,536.96     $5,570.43
4.50%    $663.24     $12,331.49     $12,994.73

Murse

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #9 on: March 05, 2016, 12:31:23 PM »
With these being student loans you have no choice but to pay them. The question becomes what are your options. With my personal goals (FI ASAP) I would choose paying the loans myself and would likely look into consolidating. I would now want to risk doing PAYE for 15 years then some politician changing their mind on the forgiveness part.

Actually forget that, I would look for a new job that does qualify for a better forgiveness program. I don't have much in the way of student loan debt so I havnt looked deep into it myself but here's this-https://radicalpersonalfinance.com/214-radical-strategies-for-dealing-with-student-loans-interview-with-jay-fleischman-attorney-and-host-of-the-student-loan-show/

Episode 258 has this guest as well. Good luck.

mozar

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #10 on: March 05, 2016, 12:50:22 PM »
Quote
That would be nice, but the plan we are looking at would forgive them after 10 years and our payments would be based off of 10% of our discretionary income. I am thinking that is our best bet on paying the least amount of money.

I'm not saying this for moral reasons, because I don't care if people pay off their debts. But the programs available for you are not so that you can pay the least amount of money, it's for people who have a low income and can't pay. 75k is a really good salary.

What do you want your life to look like in 5 years? Those are really high interest rates, and your debt can easily double in 5-10 years.  Your logic doesn't make sense. You are willing to take a 25k pay cut so you can have your loans forgiven in ten years (if you can get a public service job). And hamper your lifetime earnings. Or you can start at 75k and work/ negotiate yourself into a higher salary, and start saving like a bad ass when your loans are done.

mozar

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #11 on: March 05, 2016, 01:25:43 PM »
I used a compound interest calculator with an average interest rate of 7% with principal of 225k to get 442k in 10 years. And you would have to pay taxes on the amount forgiven. Which is 110k (25% tax rate), plus the lost income over ten years from taking a paycut which is 250k (25kX10). So you are spending 360k to save 225k.

curlyfry

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #12 on: March 05, 2016, 01:58:55 PM »
are you in a clinic & on salary?  i have a ton of physical therapist friends & it appears that the ones who are independent contractors make 40% more than the salaried ones.

historienne

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #13 on: March 05, 2016, 02:02:17 PM »
I used a compound interest calculator with an average interest rate of 7% with principal of 225k to get 442k in 10 years. And you would have to pay taxes on the amount forgiven. Which is 110k (25% tax rate), plus the lost income over ten years from taking a paycut which is 250k (25kX10). So you are spending 360k to save 225k.

This is incorrect.  Loans forgiven through PSLF are not taxed.  This is different from other forms of federal loan forgiveness (the broader point about taking a a 25k/yr paycut obviously holds).  Plus, your payments are not going to be zero - you seem to indicate that you are married, so let's guess a minimum of 5000/year in payments that you will still be making, so another 50k over ten years.

With these being student loans you have no choice but to pay them. The question becomes what are your options. With my personal goals (FI ASAP) I would choose paying the loans myself and would likely look into consolidating. I would now want to risk doing PAYE for 15 years then some

Again, note that PAYE and PSLF are separate programs.
« Last Edit: March 05, 2016, 02:06:16 PM by historienne »

charis

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #14 on: March 05, 2016, 02:06:23 PM »
I used a compound interest calculator with an average interest rate of 7% with principal of 225k to get 442k in 10 years. And you would have to pay taxes on the amount forgiven. Which is 110k (25% tax rate), plus the lost income over ten years from taking a paycut which is 250k (25kX10). So you are spending 360k to save 225k.
This is false. I don't know why people weigh in with such authority about a specific plan without knowing the facts. I see it happen a lot.  OP, you need to do your research and apply it to your unique circumstances. Don't ask for advice here.

TheAnonOne

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #15 on: March 07, 2016, 01:08:44 PM »
So your going to...

Take a $25,000 loss every year
Possibly cripple your career

To save paying on student loans which conveniently are the 25k your losing every year *10 years = 225k

Keep working, aim for raises and promotions, pay them off yourself.

Louisville

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #16 on: March 07, 2016, 01:27:58 PM »
How. In. The. Fuck. did it cost $225k to become a PT?
That's $1800/credit hour, assuming a bachelor's degree of 120 hours.

abhe8

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #17 on: March 07, 2016, 01:35:59 PM »
No. Look for a better job that also offers repayment or qualifies for pslf. Try federal jobs. Are you near a VA?

notactiveanymore

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #18 on: March 07, 2016, 02:03:16 PM »
How. In. The. Fuck. did it cost $225k to become a PT?
That's $1800/credit hour, assuming a bachelor's degree of 120 hours.

My sister is a PT, so if op doesn't come back, you have to at least have a masters to be a PT but most programs are now doctorate programs. So I expect some of the debt is undergrad and some is from MPT or DPT program.

Louisville

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #19 on: March 08, 2016, 06:38:25 AM »
How. In. The. Fuck. did it cost $225k to become a PT?
That's $1800/credit hour, assuming a bachelor's degree of 120 hours.

My sister is a PT, so if op doesn't come back, you have to at least have a masters to be a PT but most programs are now doctorate programs. So I expect some of the debt is undergrad and some is from MPT or DPT program.
Yes, my apologies, I think I was thinking about PTA.
Still, that's an enormous debt, even for a doctorate.  I saw a DPT this very morning for my back and asked her about this. She figured her total costs of education were right under $100k. This was at a state school.

lakemom

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #20 on: March 08, 2016, 07:00:41 AM »
I bet you could pay it off in 5 years, if you keep your expenses below 25k.

That would be nice, but the plan we are looking at would forgive them after 10 years and our payments would be based off of 10% of our discretionary income. I am thinking that is our best bet on paying the least amount of money.

You took the loans out YOU should be the one paying them back.  I (as a taxpayer) really don't feel its MY obligation to pay back YOUR loans.  We paid our own off because back in the day the gov't didn't swoop in and save poor planners. 

vivophoenix

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #21 on: March 08, 2016, 07:22:43 AM »
you should look at refinancing for more  attractive rates as another option. i havent run any numbers, but if you dont want to change jobs maybe you could look into meet earnest.

JustGettingStarted1980

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #22 on: March 08, 2016, 07:52:43 AM »
White Coat Investor has a new flow chart that may apply to you. I thought is was interesting and helpful.

http://whitecoatinvestor.com/what-should-i-do-with-my-student-loans/

Guesl982374

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #23 on: March 08, 2016, 07:52:51 AM »
There's no such thing as a free lunch. Instead of thinking like a victim and hoping someone else pays for your schooling, work hard, focus on increasing your income, minimize expenses and pay it off. You'll create a huge sense of accomplishment and you'll set yourself up to succeed at anything you put your mind to in the future.

mozar

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #24 on: March 08, 2016, 04:16:44 PM »
Consolidation with sofi might be an option. Ignore those high and mighty moral absolutists.

Fuzz

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #25 on: March 08, 2016, 05:10:28 PM »
Look at what ReadySetMillionaire has to say about student loans. Read other threads.

SMCx3

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #26 on: March 08, 2016, 05:13:32 PM »
How much other debt are you carrying?

CC, cars, house?

notactiveanymore

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #27 on: March 09, 2016, 09:06:08 AM »
OP, The PSLF program would be your best option in my opinion. You are not liable for taxes on the forgiven debt and 10 years is significantly better than 20 or 25. I think you might be surprised that you wouldn't take as much of a hit in your income as you stated previously. Are you in acute or out-patient care?

I would just make sure you do your research on facilities eligible for PSLF. I work for a non-profit, but we're not a 501c3, so we wouldn't qualify. However, our local university hospital employees ARE eligible. My sister is an acute pediatric PT at that hospital making in the 70s in a LCOL area. So like I said, you might not be taking a pay cut.

You also need to make sure that your loans are eligible for PSLF. FFEL and Perkins loans are not eligible and neither are any private loans of course. So you'd probably want to get on an IBR plan and then pay those exact amounts and stay in an eligible job for at least 120 payments.

Finally, you used "we" in some of your responses. I didn't have any student loans when I got married, but my husband had 53,800. He was no longer eligible for IBR when we got married because the standard 10-year repayment amount was less than 15% of our income. If your "we" use means you're married or looking to be, don't forget to figure in your joint AGI when comparing payoff plans.

One more finally... The only bad thing about PSFL is if you change your mind. If you want to go part time when you have children or change back to a private facility, then you're just going to be paying the loans for decades. You also need to make sure that the money you're saving doesn't just get spent in lifestyle inflation. You definitely don't want to get 5 years into this, change your mind about public employment, and have no increased retirement or savings to show for all your depressed loan payment savings.

AZDude

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #28 on: March 09, 2016, 10:05:03 AM »
I'm not sure how the loan forgiveness works for PTs, but I know it often is not a 100% forgiven situation. It would be a percentage is forgiven or the amount is capped. You should probably look into that before taking a 33% pay cut while owing $225K worth of debt.


notactiveanymore

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #29 on: March 09, 2016, 10:09:39 AM »
I'm not sure how the loan forgiveness works for PTs, but I know it often is not a 100% forgiven situation. It would be a percentage is forgiven or the amount is capped. You should probably look into that before taking a 33% pay cut while owing $225K worth of debt.

If you're working the PSLF plan, 100% of the remaining balance is forgiven after 120 qualifying payments. There are no tiers of employment.

From the govt:
Quote
The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

Here is the fact sheet for more information:https://studentaid.ed.gov/sa/sites/default/files/public-service-loan-forgiveness.pdf

AZDude

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #30 on: March 09, 2016, 10:29:14 AM »
OK, then strictly running the numbers:

10 years, $25K less per year, $250,000. Even more, at a modest 6% growth on average, the extra $25K would net you about $340,000 if invested. That is $590,000 you are losing over ten years if you take the lesser paying job. If you do everything else the same, but take the extra $25K from your paycheck and invest it, you easily pay off the loan plus have a nice stache in savings.

Almost a no-brainer here. Do not look at the $225K number and think its impossible to pay off. You will come out ahead financially by keeping the better paying job and paying off the loan rather than taking a lesser job and having it forgiven.

Those numbers are not completely accurate because I did not take taxes, etc... into consideration, but nevertheless, the point stands.




Ynari

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #31 on: March 09, 2016, 10:49:23 PM »
OK, then strictly running the numbers:

10 years, $25K less per year, $250,000. Even more, at a modest 6% growth on average, the extra $25K would net you about $340,000 if invested. That is $590,000 you are losing over ten years if you take the lesser paying job. If you do everything else the same, but take the extra $25K from your paycheck and invest it, you easily pay off the loan plus have a nice stache in savings.

Almost a no-brainer here. Do not look at the $225K number and think its impossible to pay off. You will come out ahead financially by keeping the better paying job and paying off the loan rather than taking a lesser job and having it forgiven.

Those numbers are not completely accurate because I did not take taxes, etc... into consideration, but nevertheless, the point stands.

Running the numbers is the best option here, but I think OP's situation is a lot more nuanced than that.

OP mentioned Job 2 had better benefits, better vacation time, and requires only 30 hours per week for 50k, giving OP the option to do some side hustling and get back up to 75k. Assuming this is true and not just pie-in-the-sky fantasy, I think it actually lends itself to Job 2.

Let's look at it another, also simplistic way: If OP takes Job 2, the loans will be gone in 10 years and require payments of 10% of his annual salary, or $5,000/year. To pay off the loans in 10 years without forgiveness, OP would have to pay around $35,000 per year to the loans. Therefore, OP should value loan forgiveness as he would value an extra $30,000 in annual salary. (Note, that does not ONLY include salary compensation. Benefits should be included in the calculation; for instance, how much would you give up for an extra week of vacation? nothing? $1k? $5k?)

Caveat: I've gone off the numbers provided. OP should double check the tax/marriage/etc. implications as others have posted, as well as considering how this affects any career goals that may take longer than 10 years.

hb187

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #32 on: March 11, 2016, 09:26:14 AM »
Search these forums for "gaming repaye" to find your guide. I've got 266 in loans from law school, and I will be following that plan. Some people moralize about it, but from the perspective of maximizing your own wealth, it seems to be the way to go.

Daisyedwards800

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #33 on: March 11, 2016, 09:29:31 AM »
Are they all federal?

notactiveanymore

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #34 on: March 11, 2016, 11:29:38 AM »
I really really think you're wrong about the pay cut being a requirement with a job that qualifies for PSLF. Public hospitals pay the same amount as private hospitals. It may require you to change from outpatient or sports PT to in-patient acute PT, but you absolutely can find a job that qualifies without the pay cut you described.

The way to spend the least is to enroll in PAYE/REPAY, find a comparable salaried full-time job that qualifies for PSLF, and have your loans forgiven (with no tax bill) after 120 payments.

ReadySetMillionaire

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #35 on: March 11, 2016, 02:15:53 PM »
A couple posters on here actually recommending my posts? Pretty cool. Glad to hear I'm helping at least a couple people.

OP: Ignore a lot of the noise and misinformation in this thread about student loans.  Let me repeat--several posters in this thread are making statements that are demonstrably false. I encourage you to read all of the following threads:

http://forum.mrmoneymustache.com/ask-a-mustachian/250k-student-debt/

http://forum.mrmoneymustache.com/ask-a-mustachian/psa-to-those-with-high-student-loans-repaye-(new-repayment-plan)-starts-today/

http://forum.mrmoneymustache.com/ask-a-mustachian/gaming-repaye-and-the-student-loan-system-($148-000-debt)-to-achieve-fire-at-45/

(Copy paste those links into your browser if the links aren't working).

Then come back and ask questions and I'll be happy to answer what I can. Life's good. Cheers.

ReadySetMillionaire

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Re: 225k in student loans for physical therapist. Help with options!
« Reply #36 on: March 11, 2016, 02:21:00 PM »
You took the loans out YOU should be the one paying them back.  I (as a taxpayer) really don't feel its MY obligation to pay back YOUR loans.  We paid our own off because back in the day the gov't didn't swoop in and save poor planners.