Today we’re talking about a topic that really hits home for many of the younger physicians. It’s safe to say that for many young doctors, student loans are the most important planning item when it comes to their finances. And it’s not just the student loans directly, but also some of the related questions that come along with them, things like how should I balance paying back my student loans with saving and investing for the future? How should I look at my student loan debt relative to my mortgage debt? Should I pay ahead on my loans or save more for retirement and other goals? If you have these questions, or if you’re simply wondering where to start, this episode is for you.
Outline of this episode
- A key topic for many young physicians [0:23]
- Two ways to think about the student loan planning process [1:30]
- Being intentional with how you plan to repay your student loans [2:48]
- Step one for figuring out your game plan [3:33]
- Options for private loans [4:30]
- Public Service Loan Forgiveness [7:40]
- Will PLSF still exist when the time comes to receive forgiveness? [11:42]
- How to plan if you’re skeptical about PLSF [13:38]
- Which income-driven repayment plan to choose [14:25]
- Who should pursue loan forgiveness? [15:45]
- Planning for public loans that will be paid back [17:12]
- How to look at your loans in the context of your overall financial picture [18:45]
- The financially “optimal” use of your cash flow vs peace of mind [20:02]
Being intentional with your repayment plan
In all areas of your financial life, there are trade-offs. You need to understand your options and then be intentional with how you address each area. You’d be surprised — or maybe you wouldn’t — by how many younger physicians we’ve talked to who have a big student loan burden but haven’t done anything proactive with their loans. It pains us when we see it happen because we know what all those years of letting their loans go on autopilot have cost them. Not just financially, but also in lost opportunities to save, invest, and work towards other goals. So it starts with being intentional with your loans and putting together a plan. Learn more about how to approach this when you listen to the episode.
Public vs private loans
It’s important to know if you have public or private loans, because your options and your strategy are going to be different depending on the answer. To clarify, public loans are from the government while private loans are from private financial institutions. Public loans typically have more flexibility and options. The most significant option is the potential to have them forgiven through the Public Service Loan Forgiveness (PSLF) program. Public loans also carry additional consumer protection benefits (related to things like disability or death), in certain cases they have subsidized interest rates, and they also tend to have more repayment options, including income-based repayment. So step one when putting together your game plan is to figure out whether your loans are public or private. Check out the episode for tips on what’s next.
Public Service Loan Forgiveness
There are a few different loan forgiveness programs out there, but the one most relevant for physicians is Public Service Loan Forgiveness (PSLF). This program says that if you’re employed by a nonprofit or government agency and meet all the annual requirements and file the necessary forms, after making 120 monthly payments (or 10 years’ worth of payments), you’re eligible to have your federal loans forgiven by the government. The nice thing is loan amounts forgiven through PSLF are not taxed, which is different from some of the other forgiveness programs. Tune in to the episode as we dive into the details of this particular program and much more!
Resources & People Mentioned
- Download: Guide to establishing your student loan game plan
- Download: Checklist for Public Service Loan Forgiveness