This essay is from a winner of the 2019 Student Loan Planner Scholarship.
Nine years ago, I was sitting in one of the most non-ergonomic, attached-to-a-desk-bucket chairs for the last time taking an “exit course” for soon-to-be graduates on student loan repayment.
I laughed at the irony of this, being a Doctoral student in Physical Therapy, thinking about all the back and hip pain this chair caused me over the past 3 years. But that’s neither here nor there, because the real, enduring, limitless pain came from what I would read in the exit course that day.
Fast forward about 16 months later; I was working a job I really enjoyed, making a decent salary for a new grad, paying only $400 a month toward my student loans and thanking the student loan Gods for IBR. Now fast forward that same 16 months later + 1 little day…
What!? What… what…WHAT!?
I was paying $400 of my hard-earned money every month toward my student loan, even a couple dollars more every month than I was told I needed to ($392), because fiscally responsible and prepared me was going to get ahead [HA!] and somehow my loan balance INCREASED and I was now in more debt than I started. But how!?
A $250,000 Tax Bill
When I took that exit course on student loan repayment, the extent that IBR was described was essentially: you’ll only pay what your salary dictates is “fair” and any balance left over after 20 years will be forgiven.
Enter in: a horribly displaced sense of confidence when it came to managing my student loans.
So, after my near coronary, I did a little further research on the IBR program and talked with some loan counselors; I learned that my minimum payment didn’t even start to cover my accruing interest and furthermore, that after 20 years when the balance was “forgiven” I’d owe taxes on the balance.
Somehow, I wasn’t smart enough to consider this when I enrolled in IBR and assumed that the nearly $600 reduction in my minimum monthly payment amount was just out of the goodness of these lenders’ hearts.
Little did I realize I’d be repaying them a zillion-fold when it all came to fruition. I again went into BIG TIME panic mode, and despite not being fiscally conscious enough to realize all of this nearly two years earlier, I did have the math skills to run an amortization schedule on my loan in its current state… come 2030, I’d only owe $250,000 in taxes.
No biggie, right? I’m pretty sure I actually died a little inside.
I called my lender back and asked how they expected anyone with a salary like mine to be able to make this work. I literally told her we’ll ALL be tax evaders and the world will have no PTs, because we will all be in jail!
Her response…“Honestly, we don’t know. It’s a new program and no one has gotten to the point where their loans have been forgiven. Hopefully, there will be a change in policy before that happens”.
The following month, I buried my head in my hands after I pushed SUBMIT PAYMENT to increase my monthly direct debit to my loan to $1,000, I couldn’t afford it, but I didn’t know what else to do.
Taking Advantage of EDRP and PSLF
Fast forward, again, to today. I am 5 years, happily employed at the VA Hospital. After feeling defeated, and scared for my financial future for nearly 4 years, I am FINALLY in a place where I feel *somewhat* confident in my repayment plan. Because let’s be real, my previous plan was scrape by in all other areas, hoping the tears falling on my loan statements might work some kind of Disney magic, forego retirement planning, and pray it worked out. NOT GOOD.
A huge factor in making the transition to federal employment was the multiple benefits they could offer regarding student loan management.
Unfortunately, after learning about The Student Loan Planner and reading back on TONS of the articles, I’m not sure that I’ve optimized these benefits, but I’m nearly 5 years in, and well, here we are; way better off, and at least with a plan that includes more than crying and praying.
The VA has two major loan reimbursement/repayment options: EDRP and PSLF; I am currently utilizing both of them, and this is where I feel, after reading some of the Student Loan Planner articles, that I potentially could have saved myself some money.
HOWEVER, I also feel that each person’s financial situation differs, and what could be a solid move for one borrower, could be horrible for another. It likely comes down to loan balance, intended payoff timeline, the extent of reimbursement benefits, etc.
I’m starting my 5th year of a 5-year reimbursement program, so at this point, I’m kind of stuck with my decisions. BUT MAN OH MAN do I wish I had a resource like the Student Loan Planner 9 years ago.
I spent years seeking out help from anyone who knew anything about student loans, and shoot, loans in general, but no one seemed to understand all the repayment options; even more so once my VA benefits were added into the mix. And by no one, I mean NO ONE.
I have always been passionate about my work as a PT–I was one of the lucky few of my colleagues that knew exactly what I wanted to go to school for because I always knew what I wanted to do. The ratio of the cost of education to my salary wasn’t something I EVER thought of. I used to think I was so money minded. CLEARLY, though, I wasn’t!
I still wonder how I never thought about those things. In hindsight, it’s probably a good thing, because I don’t know that I still would have chosen this career path if I knew what my first couple of years paying on student loans would look like.
Again, lots of tears, prayers and unfortunate budget decisions. With the current cost of education, the ever-plummeting insurance reimbursement rates and the notion that in most areas PTs are a dime a dozen, I wouldn’t say, it’s a lucrative decision to get a Doctorate in Physical Therapy right now.
I hate to be dramatic, and I’m also still hesitant to put all my pretty little Easter eggs in one basket (this is where I potentially still need help, ahem, Student Loan Planner); but PSLF was my prayers answered, my light at the end of a very dark tunnel, my saving grace!
I am now a happier person and practitioner, feeling *mostly* relieved from the weight of my student loans.
PSLF, YOU COMPLETE ME.
Tax-Free Forgiveness with PSLF
For those of you that don’t know, PSLF is Public Service Loan Forgiveness. It essentially allows you to receive TAX-FREE forgiveness of the remaining balance of your loans after you’ve made 10 years’ worth of monthly payments while working for a “public service” employer.
It’s not quite that simple, but almost! There’s a lot of negative talk in the news, but I am by the book with my payments and yearly ‘recertifications’ and feel pretty confident in it!
My assumption is that if you’re on the Student Loan Planner website reading this, and you haven’t had to start paying on student loans yet and even better yet, haven’t even started accumulating debt for your degree (go you!); you are MUCH smarter than I was at your stage of the game. Shoot, you’re probably much smarter than I am now.
I think you’ll find far more beneficial information perusing the articles on this site than I could provide regarding student loan repayment strategy, as my advice only comes in employing the common sense I was apparently lacking;
but, DO. YOUR. RESEARCH.
Do not blindly rack up hundreds of thousands of dollars in student debt thinking it’ll just work itself out. Because no one cares your debt was to better yourself and in turn better thousands of other lives.
When it comes to lenders, you might as well have spent it on sweaters for your cat (no offense meant by this if you like to dress up your cat–now that I have my finances under control, I was able to afford a rain jacket for my water-fearing pitbull, and we’re both obsessed).
There are A LOT of resources out there, it’s just about being persistent and inquisitive enough to find them. So boot up that google engine and get to searching!
Thank you to Student Loan Planner for the opportunity at a scholarship, and thank you for compiling all that valuable information into one place—even adding in a ton of helpful information of your own. I’ve been a frequent reader of the articles and look forward to my emails every week.
CHEERS to not relying on tears and prayers, CHEERS to feeling a moderate amount of financial freedom, and CHEERS to a slightly-more-than-moderate amount of student loan repayment plan confidence!