Thanks for joining me on another episode of Investing Rx! In this video, we'll discuss student loans and a step by step guide to paying them off!
1) Let’s start with the first step - and this happens before you even finish medical school. This step is FILING YOUR TAXES. Most of us make $0 while in school, and sometimes you cant even file taxes without income. But if you can, then DO YOUR TAXES.
The IRS has tools for free filing if you make less than $69,000 a year.
www.irs.gov/filing/free-file-...
2) Step two - applying for a income based repayment plan (aka income driven repayment plan). If I tried to tackle a 400k loan at 6.5% interest, while making a resident salary- that’s gonna be tough. The monthly payments would be more than my salary. You can look at how much your payments would be here:
studentloanhero.com/calculato...
But you can apply for a income-based repayment plan that caps your monthly payments. These plans include IBR, ICR, PAYE and REPAYE.
3) I want to focus on REPAYE and PSLF (public service loan forgiveness).
For PSLF, if you work at a public institution or a non-profit for 10 years and make 10 years of payments, then the rest of your loan is forgiven.
4) Every year, you have to do your taxes and reapply (recertify). Your monthly payments are then readjusted
5) So you keep on chugging along during residency, each year filing taxes and recertifying until you finish training. Now you have to make a tough decision. That decision is do you refinance or not. The main benefits of refinancing is usually a lower interest rate - the main downside is you cant do IDR or PSLF!
6) The final step is living within your means and paying off those pesky loans! No secret sauce or magic here - just good budgeting and determination.
If you wish to pursue PSLF, know that there are many pitfalls which can invalidate your request. Here are some common ones that the government sees:
blog.ed.gov/2018/06/8-common-...
5 май 2020
