Starting new Job in July please advise: how to be a better boglehead.

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jayk238
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Joined: Tue Jan 31, 2017 1:02 pm

Starting new Job in July please advise: how to be a better boglehead.

Post by jayk238 » Sat Jun 02, 2018 9:54 am

Im starting a new job in July. My starting salary is 255k. Wife is not working but has debts too. We plan to have a kid (no kids now) and i dont think she will ever work again even if we dont have a kid. Age 32 Goal is to retire in 22 years.

I'm very familiar with Whitecoatinvestor and have read all of his material end to end but still feel confused about my choices (he doesnt really provide detailed advise for those interested in early retirement- though I have read those posts too)

I posed this a while back when I wasnt interested in having a kid and wasnt keen on following the Bogle way completely but here is our revised plan:

Debts and obligations:
Student debt:
Total student debts are 300 (160 of mine 6.8 140 of hers 3.8 both federal).
will be paying between 20-34 k in interest for student debt
will be part of PSLF for me but she wont be eligible- she will be on the 25 year loan forgiveness though

Housing: rent for 2 years at 1500k/mo in a LCOL city/state near job

Other debt: 1 car to be purchased (likely subaru outback 3.6 touring edition) - no other car
Child: Will be saving about 20k for IVF due to difficulties

Personal spending: around 32k with an additional 8 k for vacation

Cash flow:
starting salary in july is 255k.
By the end of this June I will have about 12.5k in the bank which will help with housing and moving expenses- we are moving out of state and my first pay check with new job wont start till August 1st :(
I anticipate a savings rate between 70-80k by the end of the work year (next July)

My questions are the following, assume we do have a kid- and this is a big if but still- also keep in mind retirement goal is in 22 years
1. Should I use my savings (70-80k) at the end of the year to pay down student debt now or should i save it for an emergency/home fund when we do buy?
2. Should I pay the interest in full now (approx 34k which is for both of us) or should I pay the minimum now (20k for both of us) and then pay off the rest later in full- to be honest I am sincerely hoping that after 2 years I will make a lot more money with a larger patient panel say 300k+ and then use the savings during that year to pay for all of my tuition expenses in full- so Im hoping that if I pay the minimum interest now I will be ok
3. Should I aim to use the PSLF and never pay off the loans until after 10 years to save a windfall (approx bw 80-200k savings if I use PSLF instead of paying it off now- depending on how much interest is accrued, rate of return if invested and other assumptions)
4. What kind of home can I safely buy in 2 years time with a stable job making same as now (255+inflation) with the goal of retiring in 20 years?
Thanks
Last edited by jayk238 on Sat Jun 02, 2018 12:29 pm, edited 3 times in total.

TheAncientOne
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Re: Starting new Job in July. Please advise to be a better boglehead

Post by TheAncientOne » Sat Jun 02, 2018 10:05 am

If you're not there already, you need to hang out at whitecoatinvestor.com. Given your high income, LCOL location, and low housing costs for now, I don't understand why you'd be fooling around with PSLF. You didn't mention what interest rate you're paying but the very first step is to refinance at a lower rate if that's possible. As long as you're maxxing out on your 401k, I'd take some of those savings and get a start on paying down those student loans right now.

jayk238
Posts: 445
Joined: Tue Jan 31, 2017 1:02 pm

Re: Starting new Job in July. Please advise to be a better boglehead

Post by jayk238 » Sat Jun 02, 2018 10:06 am

TheAncientOne wrote:
Sat Jun 02, 2018 10:05 am
If you're not there already, you need to hang out at whitecoatinvestor.com. Given your high income, LCOL location, and low housing costs for now, I don't understand why you'd be fooling around with PSLF. You didn't mention what interest rate you're paying but the very first step is to refinance at a lower rate if that's possible. As long as you're maxxing out on your 401k, I'd take some of those savings and get a start on paying down those student loans right now.
Thanks! I've read whtiecoat investor a lot- I will update my post accordingly to reflect that. My current interest is 6.8 and hers is 3.8 I will update that too

megabad
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by megabad » Sat Jun 02, 2018 6:58 pm

jayk238 wrote:
Sat Jun 02, 2018 10:06 am
TheAncientOne wrote:
Sat Jun 02, 2018 10:05 am
... I don't understand why you'd be fooling around with PSLF. You didn't mention what interest rate you're paying but the very first step is to refinance at a lower rate if that's possible. As long as you're maxxing out on your 401k, I'd take some of those savings and get a start on paying down those student loans right now.
Thanks! I've read whtiecoat investor a lot- I will update my post accordingly to reflect that. My current interest is 6.8 and hers is 3.8 I will update that too
I mostly agree with this in the case of MDs, but you need to be 100% you will devote your savings to the loans. Just be aware you will most of your federal payment options. Otherwise full steam ahead. Not sure of your specialty but with a reasonable bump toward 300k I can't see the loans taking more than 3 years or so. I would finish paying off the loans than roll right into savings down payment money for the house. Please make sure you support your wife (emotionally). I know work schedules can be rough for spouses especially when trying (and being) pregnant.

jayk238
Posts: 445
Joined: Tue Jan 31, 2017 1:02 pm

Re: Starting new Job in July please advise: how to be a better boglehead.

Post by jayk238 » Sat Jun 02, 2018 10:00 pm

megabad wrote:
Sat Jun 02, 2018 6:58 pm
jayk238 wrote:
Sat Jun 02, 2018 10:06 am
TheAncientOne wrote:
Sat Jun 02, 2018 10:05 am
... I don't understand why you'd be fooling around with PSLF. You didn't mention what interest rate you're paying but the very first step is to refinance at a lower rate if that's possible. As long as you're maxxing out on your 401k, I'd take some of those savings and get a start on paying down those student loans right now.
Thanks! I've read whtiecoat investor a lot- I will update my post accordingly to reflect that. My current interest is 6.8 and hers is 3.8 I will update that too
I mostly agree with this in the case of MDs, but you need to be 100% you will devote your savings to the loans. Just be aware you will most of your federal payment options. Otherwise full steam ahead. Not sure of your specialty but with a reasonable bump toward 300k I can't see the loans taking more than 3 years or so. I would finish paying off the loans than roll right into savings down payment money for the house. Please make sure you support your wife (emotionally). I know work schedules can be rough for spouses especially when trying (and being) pregnant.
Thanks for the advice! Appreciated.
Would you recommend I can invest the money or hold it in a bank?

PFInterest
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by PFInterest » Sun Jun 03, 2018 7:04 am

jayk238 wrote:
Sat Jun 02, 2018 9:54 am
Im starting a new job in July. My starting salary is 255k. Wife is not working but has debts too. We plan to have a kid (no kids now) and i dont think she will ever work again even if we dont have a kid. Age 32 Goal is to retire in 22 years.

I'm very familiar with Whitecoatinvestor and have read all of his material end to end but still feel confused about my choices (he doesnt really provide detailed advise for those interested in early retirement- though I have read those posts too)

I posed this a while back when I wasnt interested in having a kid and wasnt keen on following the Bogle way completely but here is our revised plan:

Debts and obligations:
Student debt:
Total student debts are 300 (160 of mine 6.8 140 of hers 3.8 both federal).
will be paying between 20-34 k in interest for student debt
will be part of PSLF for me but she wont be eligible- she will be on the 25 year loan forgiveness though

Housing: rent for 2 years at 1500k/mo in a LCOL city/state near job

Other debt: 1 car to be purchased (likely subaru outback 3.6 touring edition) - no other car
Child: Will be saving about 20k for IVF due to difficulties

Personal spending: around 32k with an additional 8 k for vacation

Cash flow:
starting salary in july is 255k.
By the end of this June I will have about 12.5k in the bank which will help with housing and moving expenses- we are moving out of state and my first pay check with new job wont start till August 1st :(
I anticipate a savings rate between 70-80k by the end of the work year (next July)

My questions are the following, assume we do have a kid- and this is a big if but still- also keep in mind retirement goal is in 22 years
1. Should I use my savings (70-80k) at the end of the year to pay down student debt now or should i save it for an emergency/home fund when we do buy?
2. Should I pay the interest in full now (approx 34k which is for both of us) or should I pay the minimum now (20k for both of us) and then pay off the rest later in full- to be honest I am sincerely hoping that after 2 years I will make a lot more money with a larger patient panel say 300k+ and then use the savings during that year to pay for all of my tuition expenses in full- so Im hoping that if I pay the minimum interest now I will be ok
3. Should I aim to use the PSLF and never pay off the loans until after 10 years to save a windfall (approx bw 80-200k savings if I use PSLF instead of paying it off now- depending on how much interest is accrued, rate of return if invested and other assumptions)
4. What kind of home can I safely buy in 2 years time with a stable job making same as now (255+inflation) with the goal of retiring in 20 years?
Thanks
just out of curiosity...your wife is highly educated (has student loans) but even if there are no kids she is content to never work again in her 30s?

jayk238
Posts: 445
Joined: Tue Jan 31, 2017 1:02 pm

Re: Starting new Job in July please advise: how to be a better boglehead.

Post by jayk238 » Sun Jun 03, 2018 7:30 am

PFInterest wrote:
Sun Jun 03, 2018 7:04 am
jayk238 wrote:
Sat Jun 02, 2018 9:54 am
Im starting a new job in July. My starting salary is 255k. Wife is not working but has debts too. We plan to have a kid (no kids now) and i dont think she will ever work again even if we dont have a kid. Age 32 Goal is to retire in 22 years.

I'm very familiar with Whitecoatinvestor and have read all of his material end to end but still feel confused about my choices (he doesnt really provide detailed advise for those interested in early retirement- though I have read those posts too)

I posed this a while back when I wasnt interested in having a kid and wasnt keen on following the Bogle way completely but here is our revised plan:

Debts and obligations:
Student debt:
Total student debts are 300 (160 of mine 6.8 140 of hers 3.8 both federal).
will be paying between 20-34 k in interest for student debt
will be part of PSLF for me but she wont be eligible- she will be on the 25 year loan forgiveness though

Housing: rent for 2 years at 1500k/mo in a LCOL city/state near job

Other debt: 1 car to be purchased (likely subaru outback 3.6 touring edition) - no other car
Child: Will be saving about 20k for IVF due to difficulties

Personal spending: around 32k with an additional 8 k for vacation

Cash flow:
starting salary in july is 255k.
By the end of this June I will have about 12.5k in the bank which will help with housing and moving expenses- we are moving out of state and my first pay check with new job wont start till August 1st :(
I anticipate a savings rate between 70-80k by the end of the work year (next July)

My questions are the following, assume we do have a kid- and this is a big if but still- also keep in mind retirement goal is in 22 years
1. Should I use my savings (70-80k) at the end of the year to pay down student debt now or should i save it for an emergency/home fund when we do buy?
2. Should I pay the interest in full now (approx 34k which is for both of us) or should I pay the minimum now (20k for both of us) and then pay off the rest later in full- to be honest I am sincerely hoping that after 2 years I will make a lot more money with a larger patient panel say 300k+ and then use the savings during that year to pay for all of my tuition expenses in full- so Im hoping that if I pay the minimum interest now I will be ok
3. Should I aim to use the PSLF and never pay off the loans until after 10 years to save a windfall (approx bw 80-200k savings if I use PSLF instead of paying it off now- depending on how much interest is accrued, rate of return if invested and other assumptions)
4. What kind of home can I safely buy in 2 years time with a stable job making same as now (255+inflation) with the goal of retiring in 20 years?
Thanks
just out of curiosity...your wife is highly educated (has student loans) but even if there are no kids she is content to never work again in her 30s?
Yep!

megabad
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Joined: Fri Jun 01, 2018 4:00 pm

Re: Starting new Job in July please advise: how to be a better boglehead.

Post by megabad » Sun Jun 03, 2018 5:58 pm

jayk238 wrote:
Sat Jun 02, 2018 10:00 pm
Would you recommend I can invest the money or hold it in a bank?
Depends on your timeline and risk tolerance. I would focus on paying off the loans first, and figuring out the new area to which you are moving. If you start saving for a down payment and find yourself thinking "I have to buy a house in x years" then I would recommend either a money market fund, cd, or high yield savings. If you find yourself (and your wife) a little more lax with the timeline ("maybe I will buy a house sometime in the next 10 or 15 years") then I might throw some of it in a broad index fund.

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neurosphere
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by neurosphere » Mon Jun 04, 2018 8:01 am

jayk238 wrote:
Sat Jun 02, 2018 9:54 am
3. Should I aim to use the PSLF and never pay off the loans until after 10 years to save a windfall (approx bw 80-200k savings if I use PSLF instead of paying it off now- depending on how much interest is accrued, rate of return if invested and other assumptions)
Have you made any qualifying PSLF payments yet? What did you do during training? I'm not seeing how you came up with your numbers regarding a potential forgiveness windfall.

Because if you have already made some qualifying payments, your forgiveness will come prior to 10 years from now. If NOT your loan balance is low enough and your income high enough, that you won't qualify for any forgiveness in 10 years. With no prior payments, you would need to get your AGI below about $220,000, and not have any significant raises soon, in order to eek out a few dollars of forgiveness.

I'm assuming your stated $160,000 loan balance which is eligible for PSLF was WITH any accumulated interest? If not, and you actually have significant interest which has accumulated, then you may potentially benefit from PSLF. But if the $160k number doesn't include the interest, then the payoff amount is higher than $160k of course.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

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neurosphere
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Re: Starting new Job in July. Please advise to be a better boglehead

Post by neurosphere » Mon Jun 04, 2018 8:09 am

TheAncientOne wrote:
Sat Jun 02, 2018 10:05 am
Given your high income, LCOL location, and low housing costs for now, I don't understand why you'd be fooling around with PSLF.
Why do you say that? If one has a reasonable chance of staying in an eligible job for 10 years, PSLF is a something which should certainly be pursued. To not do so would be similar to not taking advantage of an employer 401k match, for example. That's assuming of course that one's loan balances and income/family progression makes PSLF likely. The upsides are enormous, the downsides (in most cases) are trivial.

Maverick3320
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Re: Starting new Job in July. Please advise to be a better boglehead

Post by Maverick3320 » Mon Jun 04, 2018 8:56 am

neurosphere wrote:
Mon Jun 04, 2018 8:09 am
TheAncientOne wrote:
Sat Jun 02, 2018 10:05 am
Given your high income, LCOL location, and low housing costs for now, I don't understand why you'd be fooling around with PSLF.
Why do you say that? If one has a reasonable chance of staying in an eligible job for 10 years, PSLF is a something which should certainly be pursued. To not do so would be similar to not taking advantage of an employer 401k match, for example. That's assuming of course that one's loan balances and income/family progression makes PSLF likely. The upsides are enormous, the downsides (in most cases) are trivial.
Another consideration is that OP is also looking at starting a "second career":

"Im really interested in expanding my abilities and challenging myself. I am a doctor about to finish residency. In a few years- maybe 3-4 years from now I would like to explore a path in tech but also continue practicing medicine at the same time. Maybe get a masters in engineering EE while working and focus on machine learning and big data for the hospital system. I plan to get a math degree too- I was always talented in math as a kid (skipped math grades, did well on tests, etc etc) but nothing specatcular (no one is confusing me for a math olympiad gold or bronze medalist) and I certianly would never compete for a putnam contest in college."

Not to be a naysayer, but a doc about to finish residency with a house and a kid in the near future (and a spouse with no interest in working) that is interested in starting an entire second career may not be the best candidate for PSLF.

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neurosphere
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Re: Starting new Job in July. Please advise to be a better boglehead

Post by neurosphere » Mon Jun 04, 2018 10:50 am

Maverick3320 wrote:
Mon Jun 04, 2018 8:56 am
Not to be a naysayer, but a doc about to finish residency with a house and a kid in the near future (and a spouse with no interest in working) that is interested in starting an entire second career may not be the best candidate for PSLF.
I'm confused. This would make PSLF even more valuable or important, and makes OP an even better candidate. Or do you mean that if he goes into tech he has less of a chance of working for a non-profit or other eligible employer?

But I'm still confused about how he had not already made eligible payments during training. Any grace period would have ended years ago, and if no payments, then interest has been accumulating for years.

ExitStageLeft
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by ExitStageLeft » Mon Jun 04, 2018 4:50 pm

Good luck with the IVF. We've got two beautiful children courtesy of the technology. The hormone injections will be a fun ride! :mrgreen:

jayk238
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by jayk238 » Mon Jun 04, 2018 7:00 pm

ExitStageLeft wrote:
Mon Jun 04, 2018 4:50 pm
Good luck with the IVF. We've got two beautiful children courtesy of the technology. The hormone injections will be a fun ride! :mrgreen:
Thanks. I've heard its a tough ride. Can you PM me with details?

jayk238
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by jayk238 » Mon Jun 04, 2018 7:02 pm

neurosphere wrote:
Mon Jun 04, 2018 8:01 am
jayk238 wrote:
Sat Jun 02, 2018 9:54 am
3. Should I aim to use the PSLF and never pay off the loans until after 10 years to save a windfall (approx bw 80-200k savings if I use PSLF instead of paying it off now- depending on how much interest is accrued, rate of return if invested and other assumptions)
Have you made any qualifying PSLF payments yet? What did you do during training? I'm not seeing how you came up with your numbers regarding a potential forgiveness windfall.

Because if you have already made some qualifying payments, your forgiveness will come prior to 10 years from now. If NOT your loan balance is low enough and your income high enough, that you won't qualify for any forgiveness in 10 years. With no prior payments, you would need to get your AGI below about $220,000, and not have any significant raises soon, in order to eek out a few dollars of forgiveness.

I'm assuming your stated $160,000 loan balance which is eligible for PSLF was WITH any accumulated interest? If not, and you actually have significant interest which has accumulated, then you may potentially benefit from PSLF. But if the $160k number doesn't include the interest, then the payoff amount is higher than $160k of course.
I am IM trained. I will be an outpatient internist. I have 1 year forgiven. Due to technicality I am currently appealing to get the past 2 years also forgiven. So hopefully I only have 7 years left. My 160k is with interest. My original loan was for 140k.
I have made qualifying payments but they are very low due to my low income.

Wait- are you saying that PSLF is income based and there are cutoffs?! :annoyed

jayk238
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by jayk238 » Mon Jun 04, 2018 7:05 pm

megabad wrote:
Sun Jun 03, 2018 5:58 pm
jayk238 wrote:
Sat Jun 02, 2018 10:00 pm
Would you recommend I can invest the money or hold it in a bank?
Depends on your timeline and risk tolerance. I would focus on paying off the loans first, and figuring out the new area to which you are moving. If you start saving for a down payment and find yourself thinking "I have to buy a house in x years" then I would recommend either a money market fund, cd, or high yield savings. If you find yourself (and your wife) a little more lax with the timeline ("maybe I will buy a house sometime in the next 10 or 15 years") then I might throw some of it in a broad index fund.
Would a middle ground be ok? Suppose I do 60-70% bonds and 40-30% equities and want to buy a home in 2 years?

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neurosphere
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by neurosphere » Mon Jun 04, 2018 7:38 pm

jayk238 wrote:
Mon Jun 04, 2018 7:02 pm
I have 1 year forgiven. Due to technicality I am currently appealing to get the past 2 years also forgiven. So hopefully I only have 7 years left. My 160k is with interest. My original loan was for 140k.
I have made qualifying payments but they are very low due to my low income.

Wait- are you saying that PSLF is income based and there are cutoffs?! :annoyed
There is a problem with terminology here. You don't get any years "forgiven" as you go. You simply accumulate months of eligible payments. After 120 eligible payments THEN you can get forgiveness.

There is no "appeal" of past forgiveness. Did you submit an employer verification form and were told that your employer was not eligible? For residencies, there is rarely a grey area. Your employer is either a non-profit, or it's not. And you either were on a qualifying payment plan, or you were not.

To answer your questions, OF COURSE PLSF is income based. There is not a "cutoff" exactly, but the higher your income each year, the higher the payments. And if your payments are high enough, your loans will be paid off prior to 10 years, so there is nothing left to forgive.

Do you know how to check your student loan data file? This data file will show your "banked" months of PSLF to day. If you have 1 year already, and it seems you may get 2 more after your "appeal", then you only have 7 years left to obtain forgiveness. Where did you do your training? What payment plan have you been on? What payment plan are you currently on?

Understanding every detail of PSLF may earn you up to $100,000. I can't think of any better use of your time, on a dollar per hour basis, than to completely understand the ins and out of PSLF.

jayk238
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by jayk238 » Mon Jun 04, 2018 8:51 pm

neurosphere wrote:
Mon Jun 04, 2018 7:38 pm
jayk238 wrote:
Mon Jun 04, 2018 7:02 pm
I have 1 year forgiven. Due to technicality I am currently appealing to get the past 2 years also forgiven. So hopefully I only have 7 years left. My 160k is with interest. My original loan was for 140k.
I have made qualifying payments but they are very low due to my low income.

Wait- are you saying that PSLF is income based and there are cutoffs?! :annoyed
There is a problem with terminology here. You don't get any years "forgiven" as you go. You simply accumulate months of eligible payments. After 120 eligible payments THEN you can get forgiveness.

There is no "appeal" of past forgiveness. Did you submit an employer verification form and were told that your employer was not eligible? For residencies, there is rarely a grey area. Your employer is either a non-profit, or it's not. And you either were on a qualifying payment plan, or you were not.

To answer your questions, OF COURSE PLSF is income based. There is not a "cutoff" exactly, but the higher your income each year, the higher the payments. And if your payments are high enough, your loans will be paid off prior to 10 years, so there is nothing left to forgive.

Do you know how to check your student loan data file? This data file will show your "banked" months of PSLF to day. If you have 1 year already, and it seems you may get 2 more after your "appeal", then you only have 7 years left to obtain forgiveness. Where did you do your training? What payment plan have you been on? What payment plan are you currently on?

Understanding every detail of PSLF may earn you up to $100,000. I can't think of any better use of your time, on a dollar per hour basis, than to completely understand the ins and out of PSLF.
I feel that I have a pretty good grasp. I guess its not forgiveness. Rather its appealing a technicality. I ended up paying the right amount for the first 2 years but forgot to do the employment verification on time-i submitted it though. They did say theyd review and give it to me.

Also I know that if I make enough i wont need the pslf to pay off in 10 years - i just wasnt sure if there was a hard cap. For my debt load the ‘cutoff’ is around 400k
My training is at a nonprofit as determined by the irs-which I checked to confirm online. So is my future employer. Im currently ibr - but starting in july will be on revised paye.

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neurosphere
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by neurosphere » Mon Jun 04, 2018 9:29 pm

jayk238 wrote:
Mon Jun 04, 2018 8:51 pm
I feel that I have a pretty good grasp. I guess it's not forgiveness. Rather its appealing a technicality. I ended up paying the right amount for the first 2 years but forgot to do the employment verification on time-i submitted it though. They did say theyd review and give it to me.

Also I know that if I make enough i won't need the pslf to pay off in 10 years - i just wasnt sure if there was a hard cap. For my debt load the ‘cutoff’ is around 400k
My training is at a nonprofit as determined by the irs-which I checked to confirm online. So is my future employer. Im currently ibr - but starting in july will be on revised paye.
Not sure what you mean by forgetting to do the employment verification. There is no deadline. You could do 10 years worth of employer verifications all at once at the end. Whenever they received the signed form from your previous employer, they will credit those months to you.

What do you mean by a cutoff of $400k? If you mean what I think you mean, the cutoff for a balance of $160k is well below $400k. I had previously calculated an AGI of about $220,000. Above this, you're not going to get any additional forgiveness.

Why did you decide to switch from IBR to REPAYE?

With a non-working spouse there are potential benefits to being on on REPAYE, as your payments will be 1/3 lower with REPAYE when compared to IBR. BUT! Do you know if you are eligible for PAYE? This is a very important question. Because if your salary ever increases beyond about $220,000 you'll lose PSLF "credit" if paying via REPAYE (because your payments will be set high enough such that you'll pay off your loans within 10 years). However, with PAYE, there is a CAP which stipulates that no matter your salary, you cannot "undo" previous forgiveness amounts. I realize that's kinda complicated. But again, this is something you need to research in detail. Because you are very much at risk of losing PSLF if you stick with REPAYE (vs. either IBR or PAYE) and your salary increases at all from this level. Depending on your deductible salary amounts (401k, HSA, FSA, etc), it may be that sticking with IBR is better than REPAYE. And remember, PAYE is ALWAYS better than IBR. So you need to figure out if you are eligible for PAYE, and then decide between REPAYE and either IBR or PAYE.

You wrote "if I make enough I won't need to the pslf to pay off in 10 years." I feel that comment also betrays a lack of understanding of repayment plans and PLSF. I'm saying that if your salary increases you will LOSE any forgiveness (whether you need it or not) you were otherwise eligible for, depending on your payment plan. Again, with a high salary, the REPAYE plan will "erase" PSLF as the months go by, sometimes to the point of zero forgiveness. While with IBR or PAYE, you will always get credit for the forgiveness amounts you have previously "banked" and can't lose that. It's an "area under the curve" thing. Payments less than the 10-year payoff amount increase your forgiveness. Payments above decrease this. With IBR or PAYE, your payments can never exceed the 10-year payoff payments. So previous payments which were "under" the line is money in your pocket which you cannot lose.

Please ask as many questions as you need to understand this completely. Otherwise all of your questions and answers you receive regarding a loan payoff strategy are meaningless.

jayk238
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by jayk238 » Wed Jun 06, 2018 5:49 am

neurosphere wrote:
Mon Jun 04, 2018 9:29 pm
jayk238 wrote:
Mon Jun 04, 2018 8:51 pm
I feel that I have a pretty good grasp. I guess it's not forgiveness. Rather its appealing a technicality. I ended up paying the right amount for the first 2 years but forgot to do the employment verification on time-i submitted it though. They did say theyd review and give it to me.

Also I know that if I make enough i won't need the pslf to pay off in 10 years - i just wasnt sure if there was a hard cap. For my debt load the ‘cutoff’ is around 400k
My training is at a nonprofit as determined by the irs-which I checked to confirm online. So is my future employer. Im currently ibr - but starting in july will be on revised paye.
Not sure what you mean by forgetting to do the employment verification. There is no deadline. You could do 10 years worth of employer verifications all at once at the end. Whenever they received the signed form from your previous employer, they will credit those months to you.

What do you mean by a cutoff of $400k? If you mean what I think you mean, the cutoff for a balance of $160k is well below $400k. I had previously calculated an AGI of about $220,000. Above this, you're not going to get any additional forgiveness.

Why did you decide to switch from IBR to REPAYE?

With a non-working spouse there are potential benefits to being on on REPAYE, as your payments will be 1/3 lower with REPAYE when compared to IBR. BUT! Do you know if you are eligible for PAYE? This is a very important question. Because if your salary ever increases beyond about $220,000 you'll lose PSLF "credit" if paying via REPAYE (because your payments will be set high enough such that you'll pay off your loans within 10 years). However, with PAYE, there is a CAP which stipulates that no matter your salary, you cannot "undo" previous forgiveness amounts. I realize that's kinda complicated. But again, this is something you need to research in detail. Because you are very much at risk of losing PSLF if you stick with REPAYE (vs. either IBR or PAYE) and your salary increases at all from this level. Depending on your deductible salary amounts (401k, HSA, FSA, etc), it may be that sticking with IBR is better than REPAYE. And remember, PAYE is ALWAYS better than IBR. So you need to figure out if you are eligible for PAYE, and then decide between REPAYE and either IBR or PAYE.

You wrote "if I make enough I won't need to the pslf to pay off in 10 years." I feel that comment also betrays a lack of understanding of repayment plans and PLSF. I'm saying that if your salary increases you will LOSE any forgiveness (whether you need it or not) you were otherwise eligible for, depending on your payment plan. Again, with a high salary, the REPAYE plan will "erase" PSLF as the months go by, sometimes to the point of zero forgiveness. While with IBR or PAYE, you will always get credit for the forgiveness amounts you have previously "banked" and can't lose that. It's an "area under the curve" thing. Payments less than the 10-year payoff amount increase your forgiveness. Payments above decrease this. With IBR or PAYE, your payments can never exceed the 10-year payoff payments. So previous payments which were "under" the line is money in your pocket which you cannot lose.

Please ask as many questions as you need to understand this completely. Otherwise all of your questions and answers you receive regarding a loan payoff strategy are meaningless.
1. My understanding based on my income is that starting this year I will NOT be eligible for IBR. Trust me, I'd rather be on IBR but repeated talks with fedloan and PSLF folks have told me I can't do IBR and instead have to do R PAYE. If I could otherwise, I would.

2. Next I am basically sayiing what you said- so if my statements sound wrong its because I'm not either saying it right or you are wrong too. I 100% get that my PSLF will be erased with time. I get that. Thats essentially what I was trying to say

3. I am not eligible for PAYE starting this year. I am also NOT eligible for IBR. My options are limited due to income and relatively low debt load

4. My only option is to convince them that since I'm paying for my wife's debt they will reduce my minimum payment each month for my own debt. This is something that fedloan has agreed to but its a matter of putting it into action by them.

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neurosphere
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by neurosphere » Wed Jun 06, 2018 6:14 am

jayk238 wrote:
Wed Jun 06, 2018 5:49 am
1. My understanding based on my income is that starting this year I will NOT be eligible for IBR. Trust me, I'd rather be on IBR but repeated talks with fedloan and PSLF folks have told me I can't do IBR and instead have to do R PAYE. If I could otherwise, I would.

2. Next I am basically sayiing what you said- so if my statements sound wrong its because I'm not either saying it right or you are wrong too. I 100% get that my PSLF will be erased with time. I get that. Thats essentially what I was trying to say

3. I am not eligible for PAYE starting this year. I am also NOT eligible for IBR. My options are limited due to income and relatively low debt load

4. My only option is to convince them that since I'm paying for my wife's debt they will reduce my minimum payment each month for my own debt. This is something that fedloan has agreed to but its a matter of putting it into action by them.
To be blunt, you can't trust anything you get over the phone from the servicer. They have been known to both intentionally and unintentionally give out bad information. I've personally experienced this over 2 dozen times, where information given on the phone was outright incorrect (or otherwise misunderstood by the listener). You need to make sure you understand the eligibility option as listed on the department of ed website.

The biggest question here is what payment pay are you currently on? All other options proceed from that answer.

But here are some basic points.
-- Ever borrowers is eligible for REPAYE
-- Once you have already been on either PAYE or IBR, you cannot be "kicked off" those plans regardless of income
-- PAYE is always better than IBR. Other than the income requirements, it's your loan history which determines whether you are eligible for PAYE. If the first federal loan you took out was after 2007, that (generally) qualifies you for PAYE. This is simplification of IBR vs PAYE eligibility (and ignores the "new PAYE" plan).
-- If you are not yet making payments, or if you are on the REPAYE plan, you can only switch to IBR or PAYE if you have "financial hardship", which is defined as whether your income is low enough and/or your loan balance high enough such that your payments under either IBR or PAYE would be less than what they would be if you selected the 10-year payment plan.
-- A correction to something I previously wrote. If you had been on a payment plan that was not eligible for PSLF (e.g. extended repayment, or graduated repayment) there IS some possibility of "retroactive" qualification for PSLF payments as of new law/guidance. Perhaps that's what you meant by "appeal"?

Anyway, you mentioned possibly 1 to 3 years of payments under an eligible payment plan. Which plan have you been on in the past, and what plan are you currently on?

Finally, your "income" as of right now is your residency income, as defined by your taxes you filed for 2017. If you sign up for a payment plan today, THAT'S your income for determining PAYE/IBR. If you wait until you start your next job, then you may not qualify.

Read this link about eligibility if you are entering PAYE or IBR for the first time: https://studentaid.ed.gov/sa/repay-loan ... ligibility But again, it doesn't matter if you are currently on PAYE or IBR.

Maverick3320
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Re: Starting new Job in July. Please advise to be a better boglehead

Post by Maverick3320 » Sat Jun 09, 2018 11:48 am

neurosphere wrote:
Mon Jun 04, 2018 10:50 am
Maverick3320 wrote:
Mon Jun 04, 2018 8:56 am
Not to be a naysayer, but a doc about to finish residency with a house and a kid in the near future (and a spouse with no interest in working) that is interested in starting an entire second career may not be the best candidate for PSLF.
I'm confused. This would make PSLF even more valuable or important, and makes OP an even better candidate. Or do you mean that if he goes into tech he has less of a chance of working for a non-profit or other eligible employer?

But I'm still confused about how he had not already made eligible payments during training. Any grace period would have ended years ago, and if no payments, then interest has been accumulating for years.
What I mean is that his professional path and his life path may drastically change in the near future; sticking with a PSLF-qualifying employer for a decade may not work out. How many PSLF employers out there (govt or non-profit) have positions for MDs that also want to a master's in EE on the side while also working in a "niche" tech/MD position?

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neurosphere
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Re: Starting new Job in July. Please advise to be a better boglehead

Post by neurosphere » Sun Jun 10, 2018 10:20 am

Maverick3320 wrote:
Sat Jun 09, 2018 11:48 am
What I mean is that his professional path and his life path may drastically change in the near future; sticking with a PSLF-qualifying employer for a decade may not work out.

That's fair. However for now his path is PSLF eligible. The upsides of PSLF are massive and potentially lifesaving, the downsides of planning for it and being wrong are annoying but manageable.

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neurosphere
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by neurosphere » Sun Jun 10, 2018 10:26 am

jayk238 wrote:
Wed Jun 06, 2018 5:49 am

1. My understanding based on my income is that starting this year I will NOT be eligible for IBR. Trust me, I'd rather be on IBR but repeated talks with fedloan and PSLF folks have told me I can't do IBR and instead have to do R PAYE. If I could otherwise, I would.
I've been asking around, and it seems your issue has happened to others. Assuming you were on IBR, you were told that once your income gets to high, you have no option but to switch to REPAYE. I understand you were told this by fed loans. But this directly contradicts every piece if information, table, and FAQ at studentaid.gov, which clearly states in multiple places that once you qualify for IBR you can stay on it forever, regardless of income. Indeed, even if your fail to certify your income, your plan STAYS IBR (and the only consequence is your payment amount goes up to the cap).

Fed Loans is telling you something which is opposite from all of the guidance from the government. I very much wish I could help people figure this out. It must be infuriating. But I cannot see ANY way that what Fed Loans has done (move you to REPAYE without you requesting it) is what's supposed to happen. :annoyed

jayk238
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Re: Starting new Job in July please advise: how to be a better boglehead.

Post by jayk238 » Sun Jun 10, 2018 5:16 pm

neurosphere wrote:
Sun Jun 10, 2018 10:26 am
jayk238 wrote:
Wed Jun 06, 2018 5:49 am

1. My understanding based on my income is that starting this year I will NOT be eligible for IBR. Trust me, I'd rather be on IBR but repeated talks with fedloan and PSLF folks have told me I can't do IBR and instead have to do R PAYE. If I could otherwise, I would.
I've been asking around, and it seems your issue has happened to others. Assuming you were on IBR, you were told that once your income gets to high, you have no option but to switch to REPAYE. I understand you were told this by fed loans. But this directly contradicts every piece if information, table, and FAQ at studentaid.gov, which clearly states in multiple places that once you qualify for IBR you can stay on it forever, regardless of income. Indeed, even if your fail to certify your income, your plan STAYS IBR (and the only consequence is your payment amount goes up to the cap).

Fed Loans is telling you something which is opposite from all of the guidance from the government. I very much wish I could help people figure this out. It must be infuriating. But I cannot see ANY way that what Fed Loans has done (move you to REPAYE without you requesting it) is what's supposed to happen. :annoyed
Even if pslf works out i think im set on paying it off asap. Mainly because flexibilty becomes an option. Either if i lose this job or want to quit and need to do locums till i get a good one (hope this doesnt happen but things happen-maybe the hospital closes or sells itslef unexpectedly etc). Also it allows me to pursue other things in life like extra degrees or other jobs. Finally its a psychological relief.
The only way ill stay on is if after 2 years i find out that instead of making 400-600 im gonna make 200-300.

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