pslf public service loan forgiveness student loan analysis and planning for physicians and doctors

The Answer To Your Student Loan Problem

Do you have a student loan problem? Travis Hornsby, the founder of StudentLoanPlanner.com, tells us all about student loan debt and offers critical advice on how to manage it. With the average debt of graduating med students surpassing $180k, it is becoming more important than ever to have a solid game plan, and Travis is here to help. He became an expert and dedicated his entire career to helping people with their loans after he went through the very same struggles with his fiancé. Check out this awesome podcast to learn how you can turn your student loan struggles into opportunities.

Those with a student loan problem need optimal solutions for paying down their student loan debt.

Every situation is unique and depends on your life goals, but no matter what, he assures us that you do not need to be ashamed of your debt. Instead, you should embrace it with confidence. After all, it represents an investment you made in your training to gain the knowledge and skills to become a medical professional.

What you will learn in this episode:

  • Public Student Loan Forgiveness and who qualifies
  • What will disqualify you from PSLF
  • Different types of income based programs
  • Which programs everyone should avoid
  • Strategies on how to hedge against the unforeseen issues with PSLF
  • How it’s possible to become financially independent by age 40
  • Why it’s necessary to have a professional handle your student debt
  • Who should refinance or go for PSLF
  • Plus some tips on how to deal with federal student loan financing

Don’t Forget to Add to Your Toolbox, Get Involved and Help. Here’s how:

If you enjoyed this episode, I’m sure you would enjoy reading this: These Top 5 Student Loan Mistakes Are Made in Residency

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Full Transcript: The Answer to Your Student Loan Problem

Ryan

Do you have hundreds of thousands of dollars in student loan debt and are hoping that you’re in the correct repayment program? If you’re going for Public Student Loan Forgiveness, do you have any strategies on how to hedge against any of the unforeseen issues that come with Public Student Loan Forgiveness? Today, we’re going to talk with student loan expert Travis Hornsby on all of these issues and more.

This is the answer to your student loan problem

Understand your student debt and everything that goes into them.

Ryan

Hello and welcome to the Financial Residency Podcast. I’m your host, Ryan Inman. Today, we’re going to be talking with Travis Hornsby, founder of studentloanplanner.com. Travis has dedicated his entire career to helping those that have student loans create the optimal repayment strategies. Travis is extremely knowledgeable in the subject of student debt, and I get super excited to talk to people who are experts that truly understand student debt and everything that goes into them. We talked everything from Public Student Loan Forgiveness and who qualifies, and what would actually disqualify you from Public Student Loan Forgiveness. We talked about strategies of hedging against the unforeseen issues of Public Student Loan Forgiveness. We even talked about who should go for Public Student Loan Forgiveness, and who should refinance, and what refinance looks like in the process; a little bit on the process of refinancing.

On a personal note, my wife Taylor, as you guys know is a pediatric pulmonologist. As she was going through training, we were on IBR. When we made the decision to leave the Public Student Loan Forgiveness space and to refinance our debt, it was a big decision. It was something that we didn’t take lightly. That we put down the numbers and really wanted to understand what we’re doing with our debt, and if we want to try to go for Public Student Loan Forgiveness or not. We knew that she could qualify in terms of employment because she wanted to work at the university and all that kind of stuff 501(c)(3), but when we looked at the strategy that we wanted to take and trying to maximize our tax-deferred accounts, and the savings, and the way that we actually wanted to live, we realized that it wasn’t for us and we ended up refinancing.

There are pros and cons of Public Student Loan Forgiveness plans, but it doesn’t mean it’s your only option.

While this might not be for everyone, inside of this episode we do primarily talk a lot about Public Student Loan Forgiveness and the pros and cons of that, and what the administration is looking at doing, but that doesn’t mean it’s the only option. It’s one of these things that personal finance is personal, and this conversation with Travis was really meant to aid and assist people who wanted to stay in the federal program, and to understand what all the repayment options are, and all the stuff kind of coming down the pipeline.

Also before today’s show, I want to make sure to announce this important disclaimer. I am a family financial planner and a fiduciary for my clients, but let’s be honest, I don’t know you or anything about you. This show is for educational purposes only, and shouldn’t be taken as legal or financial advice. Please consult your attorney, CPA, or your family financial planner before you take any action or make any important financial decisions. Before we jump in the episode …

Ryan

Here is this week’s Digestible Tip.

Ryan

If you’re done with training and you’re actually out earning a real salary, and your loans are still on the federal program whether it’s IBR, REPAYE, PAY, it doesn’t matter which repayment option it is. If your loans are still on the federal program, and if you’ve heard a refinance out, and then refinanced payment would be higher, my tip to you is just save the difference between the two; almost to live like you’ve refinanced even though you’re in the federal program. To put some number to it, if you were to refinance your debt and your payment was to be 3,000 a month, but being in the federal program allows you to only pay 2,000 a month, my tip is to save that extra thousand a month whether it’s your IRAs, or 401ks, or 403bs. If you max all those out, save it in a taxable account and invest that money per your risk tolerance. Travis, welcome to the podcast and I appreciate you being on.

Travis

Good to be here.

Ryan

If you could, let our listeners know just a little bit about you and your situation.

Student loan debt from medical school is extremely expensive.

Travis

Yeah, for sure. I used to be a bond trader for the Vanguard funds actually. I was trading millions of dollars and talking to Wall Street people every day, it was real exciting. Then, I met my now fiancé. We started dating and she told me that she had a student loan problem. I said, “What does that mean?” She’s like, “You know, I have some med school debt.” I said, “How much?” She’s like, “It’s six figures.” I thought, “Oh my gosh,” because I was really lucky, went to state school, just graduated, went straight into the business world and had no clue that med school is so expensive.

Ryan

Surprise, surprise.

Travis

Yeah. I’m looking here at this med school stuff and I’m like, “I’m finance person, I can figure this out.” I went in and I started trying to understand. “Okay, maybe we refinance it, or what’s the best thing to do.” Now, I found out that there’s this Public Service Loan Forgiveness Program. I’m thinking, “Okay, I know that she’s in fellowship and she’s at this 501(c)(3) hospital, and she’s probably going to be taking a job at an academic hospital as a professor. Clearly, this is the right thing to do. I researched in a bunch, this is like a couple of years ago.

I had her send in all the documents to FedLoan Servicing that they said to send in. Then, we got this piece of mail back, and it was so ridiculous. It was so hard to figure this out. I had to build this spreadsheet because I had a lot of Excel skills as a bond trader. I just modeled kind of like all the different options that she had from refinancing, to going for loan forgiveness, to doing something completely different; just helped her come up with a plan. Then she suggested one day, “You know what? Our friend, she’s in a lot of student debt. She’s a veterinarian, and she’s not even a doctor, but you should help her too.”

She was the first client that I actually charged to make a plan for. About a year later, I’ve got over 430 clients, about 120 million in student loans that I personally made a plan for. It’s kind of crazy. That’s basically the story of a Student Loan Planner, is I just shared this calculator online and it just kind of grew like gangbusters. People I guess have a lot of student debt and have a lot of questions about it.

Ryan

Absolutely. That’s amazing. How many clients do you have now in about a year?

Tackling student debt is only one piece of the financial planning puzzle.

Travis

About 430.

Ryan

I mean, that’s remarkable. I know from firsthand just working through clients at Physician Wealth that student loans are extremely complex and complicated. They can definitely benefit from someone like you that is a pretty affordable route to just tackle student debt, which is one piece of the financial planning puzzle. That’s pretty neat. You said you’re engaged to a physician, and what are you guys plans for tackling it? What ended up working with your Excel sheets?

Travis

This is kind of where I learned how ridiculous the FedLoan Servicing people are and just how ridiculous the whole process is really, because she’d been in a 501(c)(3) hospital at the time that I met her for about six or seven years in training. She had been an OB-GYN resident for four years, and then she went to a urogynecology fellowship and she was in her third year of that when I met her. We were expecting that we would get this form back and it would say, “Okay, you’ve been making income-based payments for seven years. Now, you’ve got three years left to go. We can cap out the payments in just three more years left, and then we’ll have a bunch of loans forgiven and we’ll throw a party. It will be great.”

Then they sent this Pay It Forward back, and they lost a bunch of our forms. They claimed that we had three years’ worth of credit on one pair of loans and only like one month of credit on another pair of loans. I was just like, “There’s no way that this is right.” I felt like they have lost some paperwork with transferring over from Great Lakes. I just thought it was just a mess.

Ryan

It is. It is a mess.

Travis

It was just not. I ran analysis again and I realized, so apparently she had consolidated her loans at the very end of residency, which is generally speaking a big mistake. She lost all that credit during residency and then she had used forbearance during fellowship maybe for six months or something like that.

Ryan

Oh, wow.

Travis

She’s living in a big city in the northeast, so she’s trying to enjoy life.

Ryan

Absolutely, not knowing that, that actually follow through in meds.

Travis

Yeah, exactly. Basically, I ran the numbers and just realized like for us, because she was going to be an attending and we were going to hit the cap, basically immediately that to do PSLF and get charged all the 6.8% interest versus just doing a refi with a two-something percent variable interest rate with a five-year, with a private lender just paying it off, found that that was generally the better thing to do. I mean, better thing to do probably from a time perspective because just kind of looking at the process and just the crazy pain that it causes to go through FedLoan Servicing’s process, we were thinking … The difference ended up being like 10 grand for us between refinancing it and just doing PSLF. We were looking at that and just thinking, “Yeah, we can maybe save some money, but man, that’s going to be a pain in the ass.”

The answer to our student loan problem is given to us by Travis Hornsby

If you plan on a forgiveness benefit, you should plan on committing a number of years with eligible employers.

Ryan

For you guys in this financial situation, it made sense to actually refinance and pay it off aggressively versus try to stick in through PSLF and suffer out through several more years of payment.

Travis

There was another thing to that too. Our thought process was we were assuming to be in seven years in medicine at a 501(c)(3) more to get credit on even just part of the loans. The other part theoretically, she’d have to do 10 years. Our thoughts was maybe we don’t want to be with a 501(c)(3) hospital for the next seven years. We’ve got a lot of dreams, goals. She would love to do some medical mission work in Africa doing surgeries there. Maybe, we might like to take some time off and travel. Who knows what our future holds. Thought process there is just if you’re going to plan on a forgiveness benefit, like you better be doing, or I’m sure that you’re committed to staying there for the number of years that it’s going to take to get it. Otherwise, you’re going to feel trapped. Also, her balance was a lot less than most physicians. She had about 124,000, which a lot of people [crosstalk 00:10:50] saying and think, “Oh my gosh. She’s so privileged.”

Ryan

I know.

Travis

Because I’ve seen balances all the time that way higher than that. Certainly, if she had had a balance that’s much higher, I think we would have probably just suck it up and try to go for it. We’re about halfway through it. We paid about half of it so far, really stoked about that. She’s down to take kind of the longer road to paying it off. Even though it’s only like a 2% something and in theory we should get more money investing, I just hate the idea of debt that’s not backed with any assets. I’m like, “Yeah, let’s just throw everything at it because I just want…”

Student loans can be the one thing holding you back from pursuing what you really want in life.

Ryan

Yeah, that’s the finance guy in you.

Travis

I mean, a lot of advisers would theoretically tell you, “Hey, it’s actually smart to invest in index funds in S&P 500 and then take your time paying down two-something percent variable interest rate debt because of the way the math works.” I think that’s true, but from a behavioral standpoint like so much of everything in the world is emotion and behavioral finance, and I just think that once that debt’s gone, we’re going to have enough; whether she’s working part time, or I am, or whatever to just live. That’s kind of a big thing. It’s just, “Hey tomorrow, if something happened, and she was doing medicine like could we be good?”

To me, that student loans is the thing that’s standing the way of about being the case. That’s been our thought process. It’s just to kind of get rid of it as fast as we can. I joked with her that we should throw her a net worth zero party so we’re going to invite some people over and get excited about it, because I think she just crossed like the zero net worth threshold because she’s got some retirement and stuff like that too.

Ryan

Absolutely. That’s a huge milestone. I mean it sounds silly to everyone else that’s not in medicine or hasn’t taken on several hundred thousand in debt. That’s a big milestone and should be celebrated. The wins should be celebrated.

Travis

Oh, yeah. I think you got to do something that makes you excited about dealing with your debt. For the PSLF folks out there, you’re going to want to pay as little possible, so that’s kind of counterintuitive. You want to maximize retirement accounts. You want to put money into health savings accounts, do things to minimize your income. Maybe you throw a party when you put the max in your 401k; like every time you max out your 401k and 403b, you have people over. You get excited and bring the champagne and stuff like that. If you’re trying to pay down the debt because you’ve refinanced and you’re trying to pay down aggressively, then maybe just do something where every thousand bucks you pay off, you do something fun or come up with some sort of threshold.

Enjoy the wins, every one of them.

Ryan

Absolutely. Share the wins, enjoy them. There’s so much uncertainly and complexity around student loans, and most advisers don’t really understand that they take the Dave Ramsey approach. They say, “Pay off the highest interest rate first and go down. You shouldn’t have debt and all that kind of stuff.” It’s one of the reasons why I was really excited to have you on the show today is to have another student loan expert kind of share his situation. It’s unique that you’re actually going through it, living through it with your fiance similar to how I am with my wife. She had about $130,000 in debt that she had taken out. We ended up refinancing because our plan was to stick with PSLF, work for 501(c)(3). Then, about five years into the program, decided that it wasn’t going to be the perfect fit for us when we wanted to move and do things. We refinanced it in a not typical way, but when we did that, her balance had ballooned to about 180,000.

Travis

Wow!

Ryan

I know that many physicians out there aren’t lucky enough to marry someone who’s a CFA or a financial planner. This is one of the reasons why I’m so excited. One of the things that you’ve mentioned a few times is that this Public Student Loan Forgiveness or PSLF, and you’ve mentioned a little bit about some of the payment options. If you could just dial it back for a minute and let the listener understand what programs are available in the income-based income contingent direct loan program, and what exactly PSLF is just so we can go through and have a little bit of a foundation before we take the next step into the conversation.

Travis

In 2006, the government decided, “Okay, we’re going to pass this law that’s going to give anybody in a 501(c)(3) or a government employee loan forgiveness after they pay based on their income for 10 years.” When they did that, they didn’t set any caps. They didn’t define it very well. It was supposed to be a bunch of 30, 40, $50,000 borrower that might work at a charity instead of taking a job as entry-level corporate employee kind of thing. They designed it in such a way that it was really broad-based and very wide-ranging. Because of the definition with 501(c)(3)s, most physicians are going to be 501(c)(3) employees during training.

That basically means that every physician, or almost every physician in the world, there’s a couple like for-profit residencies. It’s going to have four, to seven, eight years of PSLF credit once they’re done with training. If you think about that, so say you have 300,000 on loans and you’re going to be a urologist, and you’re going to do maybe a fellowship or something like that, so maybe five, six years of training, you only have four years left where you would work at an academic-type hospital or 501(c)(3) hospital as an attending. You could probably get around two to 300,000 after the interest accrual forgiven. That’s a tax-free benefit.

It’s a huge benefit working for big hospital systems when folks have really large loan balances.

For folks who have really large loan balances, it’s a massive benefit to going and working at one of these hospital systems instead of going in a private practice. It’s kind of stacking the deck pretty hard against going into private practice if you’ve got a lot of loans at least for the first several years as an attending. That’s the kind of the history of the program. The program initially was just IBRs who are making 15% of your income in payments. Then in 2011, they started the Pay As You Earn Program. That’s 10% of your income. That’s obviously better than 15 if you’re trying to go for loan forgiveness because you want to pay as little as possible. In 2015, they created the REPAYE program. The REPAYE program is like PAYE except it’s 10% of your income and there’s no cap on loan repayment.

Generally speaking, if you’re a physician trying to go for PSLF, you ought to be on the REPAYE program or the PAYE program. There’s a couple weird exceptions for people who have had loans from a long time ago. Generally speaking, PAYE or REPAYE, and you kind of want to think about it in terms of, “Am I at risk at all of hitting the 10-year standard monthly payment because of my marriage situation, and because of how big my family size is, whatever?” If you are at risk of hitting that 10-year standard cap, that’s probably better to be on [inaudible 00:17:31]. If you’re going to blow through it because you’re making tons of money, say you have 200,000 in loans but you’re an attending gastroenterologist or something like that, and you’re going to blow through that, then you might want to be on [inaudible 00:17:45] because it caps you out on that 10-year standard payment amount and still gives you the opportunity to probably have six figures of loans forgiven.

I see all the time, advisers who are less informed about student loans and things like that just doing the Dave Ramsey, Suze Orman; start throwing money at your debt, get out of debt as fast as you can. That’s a great advice from a general perspective, but it’s very uninformed when it comes to student loans because there are so many nuances and things that exist in that market where you have to know everything or else you can make a big mistake. I just helped an adviser recently who was going to suggest refinancing to his two physician clients, and wanted my expertise on that to see if that was the right thing. I pointed out that he was thinking about it in the wrong way, and it was going to cost his clients 100 grand in projected loan forgiveness by doing the refinancing.

This is the answer to your student loan problem

Carefully understand your repayment options.

Ryan

Yeah, that’s typical.

Travis

You really got to understand it carefully. In terms of your options that you got PAYE and REPAYE, which is the ones you should probably use, you got IBR. Then I joke about this, but then you have ICR, which is what fly-by-night legal clinics in South Florida that try to rip people off, sign you up for. I joked about that because I’ve literally actually seen that most of the times, random places kind of were all run by paralegals with a lawyer just robo-signing stuff and saying that they help with student loans. Sometimes sign you up for the ICR program, and that’s 20% of your income. That’s a very foolish thing to sign up for.

Ryan

That’s ludicrous.

Travis

Yeah. Those are the four options.

Ryan

Perfect. Now, I want to transition a little bit over because it’s been a pretty hotspot right now with what the government, the administration is doing with how PSLF is going to continue. Will Trump repeal it? Now, we’ve got our first guys starting to go through … I believe they’re actually all attorneys that are … The first bar was that they’re set to hit the 125 qualified payments. How do you see this playing out and what are some of the changes that the administration’s already trying to make in terms of Public Student Loan Forgiveness and all that kind of good stuff?

Travis

The first this is they’re trying to shut PSLF down starting in the fall of 2018. They want to shut it down for new entrants into it. What I mean by new entrants into it, is anybody who is taking out loans for a course of training for the first time in 2018 would be ineligible for PSLF based off of it not being precedent in their promissory notes. That’s what the current proposal is. That would be something that would not affect anybody who already has student loans and who’s already out of med school. Those folks would be totally safe based off of the current proposals that I’ve seen.

What’s more unclear to me is somebody who just started med school this year, this fall of 2017, who’s just starting. The way the proposals seems like it’s written is that person gets access to all the REPAYE, PAYE, PSLF options for the duration of their course curriculum. That’s the way I read it. I tend to think the people who started med school this fall and before are also safe, but it’s harder to figure that out. We haven’t really seen anything about that yet.

If you want to think about PSLF, you have to think about it from an expected value framework.

Ryan

They really don’t even know what they’re doing either, do they?

Travis

No.

Ryan

They’re creating stuff and going, “Oops, no. Actually, that probably won’t work. Let’s try this.”

Travis

Yeah. It’s funny because PSLF repeal is also the biggest worry for my readers because I know from my blog traffic that, that’s what everybody freaks out about.

Ryan

Absolutely. Every client has a question about that too. My clients at Physician Wealth, they’re asking, “What is going on? Am I screwed with this or is this going to actually go through, or did they have any legal grounds to remove this from me?”

Travis

Yeah. Here’s what’s fascinating I think. If you want to think about PSLF, you have to think about it from an expected value framework. I’ll get a little weird and technical and just talk about the odds of a bet, right?

Ryan

Yeah.

Travis

If you had 50-50 odds and you win a dollar if you flipped heads, and you lose a dollar if you flip tails, that’s a 50-cent bet. You pay 50 cents for that bet. That’s an even bet. If you think about PSLF basically is a bet, that’s what it is. It’s something that doesn’t have 100% certainty. How do you make decisions when there isn’t 100% certainty? I’ve thought a lot about this and here’s kind of a way to think about it.

Say you’ve got a program that could prospectively result in you receiving $100,000 tax-free benefit. Let’s say that the downside is that you do not refinance when you could have, and therefore you cost yourself an additional 2% interest on $200,000 for seven years because you’re trying to make this decision when you’re coming out of residency, or you’re in final couple years of training or something like that. Worst case scenario if you run that math, the downside on the interest savings for not refinancing, maybe it’s … I don’t know, 20, 30,000 bucks. If you compare the 20, $30,000 in the cost of not refinancing and being wrong about PSLF to the $100,000 benefit if PSLF happens, then clearly if the odds of PSLF happening are 50-50, you’d be silly not to go for the PSLF route, right?

There has been a back and forth cap discussion.

Ryan

Mm-hmm (affirmative).

Travis

That’s 50-50 odds. I think the odds are more like 80-20 to 90-10 that PSLF happens without a cap for everybody that currently is working towards it.

Ryan

Actually, I would agree with that. You mention the caps. I know Obama tried to cap it at like 57,500 or something, along those lines. Obama tried to cap it. Do you think that that is something that this administration would do?

Travis

The short answer is no. The long answer is that if you look at the 2015 repeal proposals by both parties, Obama wanted to cap it because he viewed it basically as an upper class sort of give away. To be frank and in a lot of cases, it is a lot of folks at a higher income that are benefiting from this. That was his reasoning and his own party basically shut him down. Then for Republicans, they tried to repeal it but they grandfathered in current borrowers. That was their proposal in 2015. They did nothing with a cap because a lot of their primary constituents are high income earning people. Those people really care a lot about things that affect them and PSLF is one of them. Not wanting to antagonize probably a core element of their support in constituent state, they didn’t cap it.

There is a risk that it does get capped. I factored that in into the 10 to 20% repeal probability because I view that as kind of the same thing. The issue to think about is, if you did do that, what would be the consequences? I always like to talk to people, “Okay, you’re worried about PSLF repeal happening. For a $60,000 a year public defender, that’s a really big concern, and we need to talk about that and talk about what that would look like if that went away.”

For a physician, even a pediatrician making 130,000, there’s a whole lot you can do even if your loan balance is 300 grand. The first thing you got to do is you’re putting away a bunch in retirement. The second thing is getting a good financial planner like you to make a plan and for their goals, and for their life. Then, if that person is comfortable managing their own investments, then they need to put that money that they would have paid into the loans aggressively, and a side account where they’re building wealth there instead. If you want to be kind of conscious, maybe you do something kind of moderate like 50-50 stocks, bonds, or balanced fund. Vanguard’s got a great one, the Tax-Managed Balanced Fund in terms of money that you might need to pull out and contribute to some of the loans.

Over seven years hypothetically, let’s say you put $2,000 a month that you would have put on your student loans and with this Tax-Managed Balanced Fund instead, you’ve got 24,000 times seven, so let’s say you’ve got like plus investment earnings, say in seven years you’ve got 180 to $200,000. Say your loan balance at that time has grown from 250 to 350 or something like that, you could easily take your 200,000 in lump sum and into the loans, and now you got 150 left. Then, you can just start aggressively paying it down from there. You have basically completely hedged against your risk if it goes away.

Lots of people make decisions based on loan forgiveness.

Ryan

Yeah. I mean, it’s not ideal but at least it’s a hedge against the unforeseen with PSLF.

Travis

Yeah, and I’ll tell you certainly what will happen is if you put all your money into your loans and PSLF does happen, you’ll be kicking yourself. Another thing is a lot of people make decisions based off of loan forgiveness, I think that’s pretty … I don’t want to make this sound insulting but I think that’s silly to do that. Somebody asked me the other day, it was really interesting. It was a specialist who’s going to make about 400 grand and he had maybe about a little bit of a loan repayment assistance from the employer. The thought process was, “You know, should I be more interested in this job because of the loan forgiveness benefit?”

I explained, what’s even better is a guaranteed salary amount that just goes in your pocket that you can use for anything. The only reason to get a loan forgiveness benefit is like a retention type effort to make you feel like you can’t leave because you haven’t fully vested in your benefit. I think that there’s a lot of decisions being made out there around PSLF that I don’t think it should necessarily be the game decision type thing in terms of what kind of job you take or in terms of what kind of hospital system you work at. You got to enjoy getting up every day.

Ryan

Absolutely.

Travis

Even in three years is a long time to spend at a hospital that you don’t want to be at because you’re trying to get some loan forgiveness benefit. If being at an academic hospital really suit your personality, and you really love it, and you love the idea of teaching residence and more collegial work environment, and maybe you’re doing your fewer procedures, and you have easier expectations on you from an RVU perspective. If that’s the kind of lifestyle that appeals to you, then great, do that. By the way PSLF, take advantage of it.

There are all kinds of ways to optimize your finances either side of PSLF.

On the flip side, if you’re the kind of person that loves doing entrepreneurial things and loves the idea of being a partner of your own practice, and making hiring and firing decisions, and buying in and having equity in something, and making probably a lot more money than you would as the employee at a hospital system, then certainly receiving 100,000 or 200,000 even of loan forgiveness over maybe a five-year period of time is not a good decision. If you think of even about 200,000 divide that by five, that’s 40,000 a year. Could you make more than $40,000 a year going private practice instead of working at a hospital system? For most physicians, the answer is probably yes. You just got to realize like PSLF, I know it’s something that really freaks people out, but it shouldn’t. You should view it as a positive thing that just exists.

Ryan

Absolutely.

Travis

Why be worried about something that could save you 100,000 bucks to set your finances up to take advantage of it. If it doesn’t happen, okay, like you just deal with it. There’s all the kinds of ways to optimize finances to put yourself in a good position for either side of it.

Ryan

This is a conversation I usually have with clients at Physician Wealth. We tackle these issues and look at the goals and see where they’d be happier. That’s something that it’s sad that a lot of physicians don’t think about. They don’t think their own happiness. They are almost, it’s that analysis by paralysis or lack of analysis. They just stick their head in the sand. They get terrified when they look at loans. They feel ashamed that they’ve taken out loans, and I try to relate it to, “You took out a loan on a business, and the business just happens to be in your brain. That it’s going to provide a very solid income base. If that business generates 250,000, you had to take 400,000 of debt out for it, that’s not bad from a business perspective.”

The behavioral side of it is always a challenge. I love that you’re not someone that’s just advising. You’re putting your money where your mouth is. That’s exactly what you’ve done with your fiance, and I think it’s quality advice. The only thing I’d add to it is not just about the money, but really what is important to you? It’s what kind of job, and hours, and what kind of work would you be doing while you’re there? Don’t make student loans be the only thing you’re worried about. It should be when you get up, are you happy to go do what you’re doing in?

This is the answer to your student loan problem

Who is at a financial advantage: a doctor or plumber?

Physicians, they don’t want to … They didn’t get into being a physician to make money and to have the biggest balance sheets. It just doesn’t work that way. It all happen over time, but it’s definitely not quick. You kind of want to roll it into one of the articles you’d said was this Doctor versus Plumber, which one was the better decision. I want you to kind of take over here in a second but a lot of it you’re talking about assuming a 50% savings rate. I love the comparison that you made and how not only doing what you’re doing but also being conscious about what you’re spending and how you’re doing it.

If you can break down that article a little bit for the listeners who haven’t read it. If you haven’t read it by the way, go to studentloanplanner.com and find the article on Doctor versus Plumber because it’s a good one. It’s eye opening.

Travis

It was a little tongue-in-cheek, and I think that there’s no way that my fiancé would agree to be a plumber after reading it.

You could come out with a bigger portfolio as a plumber than a physician.

Ryan

Absolutely.

Travis

Even if that might be the better financial decision. Now, I mean like if you look at the math behind just being a physician in the modern era, it pretty much doesn’t work out for all but the highest income private practice type people compared to what is similarly intelligent person could do in some other field. What I mean by that is if you’re smart enough to pass organic chemistry and get into med school and do all that, there’s no question in my mind you could get a job in tech, right? You could get a job in finance. You could get a job doing something else.

That job would probably pay 60, 80,000 a couple years, and depending on what kind of work you’re doing. If you compare it to a resident-type job, I mean, gosh. If you’re working 80 to 100 hours a week in finance, you’re getting paid. You kind of compare the views that physicians take, and you compare that to doing overtime, working tons of hours in other fields. If you run that, those numbers, then assume that you’re saving a bunch of money as a plumber straight off the bat. Yeah, I mean you kind of come out with having a bigger portfolio as a plumber than a physician, so you might laugh and be like, “Oh boy, you’re also digging and creeping other people’s pipes and unplugging their toilets all day.”

Ryan

Yeah, it might not be the most pleasant job but-

Travis

Well, my fiancé is a urogynecologist. She one time came home was like, “Yeah, I was basically knee-deep and you’re in a thesis all day.” I was like, “You could be a plumber and make more money.”

Ryan

That’s probably how the idea started for the article, but just to touch on the article for the number standpoint just real quick is, you basically with some assumptions that are there, so that at the age of 32 there’s almost a million dollar difference in net worth favoring the plumber over a physician; and that’s expected with med school and no earnings, and then coming out and making 55,000 and working 80, 90, 100 hours a week. That’s a staggering number, a million bucks at age 32. It didn’t actually shift until age 41, regardless of Public Student Loan Forgiveness or not, that the physician’s net worth actually exceeds the plumber.

Travis

Yeah. People don’t understand the time value of money. I talked to a doctor the other day who maybe had a couple hundred thousand saved up in assets. He was in their 40s and had a little bit of home equity, a little bit of equity in their partnership but was only worth maybe, I don’t know, 400, 500 thousands something like that. They were in their mid to late 40s. I’m not a financial planner. I like to just focus on the student loan side of things, but I told him. I said, “Dude, you got to talk to somebody because your plan right now is I’m going work until I’m 70.”

Doctors do consumption smoothing.

The reason being is a lot of times doctors, they have a really high future in common, so they do consumption smoothing. They take money and spend some more money in the present to maybe enjoy life a little bit as a resident. In more real terms, my fiancé was like “Dude,” she’s like, “Well, I just got down with an 80-hour a week. I was definitely ordering take out every day. When we had time off, we’re going out like going to brunch and trying to enjoy life as much as we can. When you come home after a 24-hour shift, you know you want to go to a nice apartment to sleep because you just want to have something nice in your life.”

I think there’s just so many pressures even for really good, responsible, frugal-type people in medicine to just maybe spend a little bit more than you would otherwise. What that does, is just cost your savings rate in the beginning of your career to be really well. Then when you finally become an attending, you either are going and having a lot of your money consumed with loans as a prior practice type person, or you’re going to the not-for-profit hospital world and probably take at least having a solid amount of it taken; plus you deferred gratification for so long that you want to enjoy your life, and do some nice things, and take some nice trips, and buy a bigger house, and nicer cars, and things like that. The biggest challenge I guess, I see with people with bunch of student loans is just cash flow, figuring out what are your goals. That’s what a good financial planner should do, right?

You can be 100% completely financially independent by 40 years old.

Ryan

Absolutely.

Travis

You can speak to that but you got to count what’s important to you. I think a lot of doctors … Here’s the good news. If you’re in medicine, here’s some great news. You can be 100% completely financially independent by 40 years old like we’re talking a couple of million bucks at least, living off of 80,000 a year for the rest of your life, which is 50% more than a median household income in America. That can be you. You don’t have to be in medicine or you can make medicine optional is what I like to say at age of 40, basically regardless of your specialty.

The only question is, is are you willing to do that? Are you willing to put in that kind of effort to save, to put away the max in your retirement accounts to get a good plan on your team, get a good CPA. A lot of people, you’re a doctor, you worked hard and you buy a big house, big cars, and private schools for the kids, and you’re working until your 60s. There’s nothing wrong with that if that’s what you enjoy. If you like that, that’s great. I just want everybody to do exactly what they want to do.

For now, it’s a big deal. I know that they talk a lot about it with fiance’s friends. Her name is Christine by the way. Her friends and stuff, they’re always talking like physician burnout, physician burnout, and it’s a real thing. You just got to fight it with coming up with what’s important to you like, when I figured out what my goals were when I was initially working in corporate America, and I realized, “Hey, I want to be traveling around the world for a year.” Suddenly, all the money that I had going into savings made sense and like there was reason for it, behind it existing.

Ryan

You identified the goals and then you set forth the goals, and actually put … When you’re assigning those dollars that you made a task, the task was travel the world, and it meant something. I wasn’t just a number.

Travis

Yeah, exactly. To be honest, for me at that point like I maybe didn’t enjoy work as much as I should have. Waking up at 5:30 in the morning to take the train in to go do bond trading, like it was fun at times; but then at other times, it was challenging. I just decided, “Hey, this is something I want to do,” and then I was way happier when I had a goal in mind, when I had a specific thing like, “Hey, this is what I want to do.” It was hugely different, just with the mindset even. I could just come in and enjoy it myself because I knew exactly what I was doing, and how long it was going to take to get there.

Medicine is such a good, stable career.

I think that’s the scariest thing is when you’re looking at this PSLF stuff like people are just terrified that some person is going to come out of nowhere and just demand 300,000 from the MOA at once, and they’re going to have to live like paupers all over again because they already lived that way during fellowship and residency. Now, they’re going to be an attending. They’re going to owe all of this money, and they’re going to be totally screwed. The only way that happens is if you go buy a house that’s three times your income, and lease a brand new BMW, and spend all your money and all you do is like the match at work, 4% for a retirement. Yeah, you could be in big trouble.

If you’re kind of thinking about your finances from a situation of abundance and not living a doctor’s lifestyle like they popularized in TV shows, then you’ll be in such good shape. Medicine is such a good career, so stable. You can make of it what you will. The thing with medicine is just there’s more variability, right?

Ryan

Yeah.

Travis

You’ve got a way bigger high end and it’s still, still a high income like low end, but from a net worth’s standpoint, gosh, there’s teachers that are worth a lot more than a lot of surgeons out there just because they just spend everything they make.

Ryan

Yeah, and it’s a tough thing. One of the reasons why I’m starting this podcast is because I know at Physician Wealth like eventually, I’m going to cap out. It’s probably going to be pretty soon in terms of number of clients I can handle. I want to expand my knowledge and help people. I created this financial residency podcast to give them the training and to help them out financially, I guess with their education, because they never received any formal training in school. I’m not talking about like actual training, I’m talking about financial training. They never took a class on how to budget or everything.

How to spend responsibly and what the ramifications of their spending is going to turn into, or how to invest, or what stocks or bonds are? Some of these are very basic things that you and I take for granted because we love this stuff and we’re kind of sickos with it; but for most people, they don’t know that and it’s not their fault. I talked with clients and prospects all the time and they said, “Hey, this is probably a dumb question but,” and I know what’s coming after it. It’s not a dumb question. You’re not expected to know. You’re not expected to be an expert in student loans. You’re not expected to be an expert in financial planning. It’s just we go to school. We train for this. This is what we did. Physicians, they look at it differently, and it’s different. My wife is significantly smarter than I am. I mean perfect scores, ACT, SAT.

Asking questions about your student loans isn’t dumb.

Travis

Hey, me too.

Ryan

She just got published in the Journal of Cystic Fibrosis and was like, “Oh, yeah. No big deal.” I’m like, “what? Like that’s amazing.” It was nothing to her and this is something that I thought was celebrate the wins. I was like, “Let’s have a party. Let’s call everyone we know. Let’s do it.” She’s like, “No, no, no. It’s not a big deal,” but then we talked about budgeting, and finance, and all that, and she goes, “I have no idea what we spent. I just … I know that if I spend too much, you’re going to tell me I spend too much.” She doesn’t balance the checkbook, which I guess isn’t a thing these days but the concept still stays.

She’s not involved in the finance, doesn’t want to be involved of the finance, doesn’t understand a lot of the investment stuff. She’s lucky to be married to a financial planner that likes it, understands it, and knows the pitfalls; but not every physician is afforded that. It’s one of the reasons why I definitely created the podcast is to help them with the education and to get them thinking differently. Is worrying about Public Student Loan Forgiveness a viable thing? Yeah, you should probably be a little concerned about your student debt and what you’re doing, but don’t let it consume your life. Live your life, understand why you’re making these choices and educated decisions.

I really appreciate all of the advice you’ve kind of dropped here, and I hope people really take a look at what you’re doing. I can tell you. When tough student loan issues arise, Travis is my go-to guy. I’m very knowledgeable and understand the ins and outs of student loans, but I like having at another expert look at stuff as well. Travis can you tell everyone a little bit about where they can find out about you, and your services, and everything?

Head over to the Student Loan Planner website for access to the calculator.

Travis

Yeah, for sure. If you go on studentloanplanner.com, you’ll see … If you go in your desktop, you’ll see across the top, there’s a Hire Us button. You can click on that, and there’s like contact forms in there, but the easiest thing to do is just send me an email travis@studentloanplanner.com. travis@studentloanplanner.com again. That’s just you send me an email, tell me what your situation is. Tell me what your big concerns are, “I’ve just get married. I’ve got 200,000, and married to somebody’s making 300,000. We’re worried about PSLF,” or “Hey, I’m about to take this job in a private practice group. I’m concerned about getting the best refinancing deal.” “Hey this is what I’ve got through this bank that I was about to click the button on, and I just wanted to see if this is the best I could do.”

Whatever it is, just like if it’s student loan, anything, just send me a note, and I’ll be able to tell you what I think I could do for you if anything. I mean sometimes I can’t, and I’ll tell you that too. If you go on the website studentloanplanner.com if you want to follow along like specific things just doctors, you’ll see in like the categories. You can click doctor, and you’ll see all the stuff that’s relevant to that. Then, you want to make sure you get the calculator too. That’s really valuable thing people tell me.

Ryan

It definitely is. Calculator is awesome.

Travis

I got a landing page to that now. You just go to studentloanplanner.com/calc. You’ll be able to get on the landing page, enter your info, and they’ll send it right over to your email. You can play around with it, see what your REPAY payments are going to be in the future, figure out when the income threshold is going to be where you’re going to have to switch over. It’s pretty powerful. You definitely want to get that because it’s free, and everybody likes free stuff.

Another thing I’d say is I’m not trying to help everybody. I know that some people prefer to self-provision on things and that’s fine, but I would say that there is just too much money at stake. Even if you think that you are doing everything that you possibly can be doing to benefit with your student loans, you probably not. Probably 10% of people are doing everything they can, but 90% of people from the statistics that I have, from the clients that I’ve had that I’ve done reviews for, have been doing something that was costing them an excess of $10,000.

My fees are $249 for an individual, and 349 for a couple that are both borrowers. For the value of knowing that you’re doing everything you possibly can, sometimes I have people that were making a $100,000 mistake or about to. I think that, that’s probably a no brainer. If you value your time as a physician, if you make more than $50 an hour, you’ll spend at least three hours on the phone with FedLoan Servicing trying to figure everything out.

Working with a financial planner will involve a bit more money, time, and commitment, but is extremely affordable.

Ryan

Absolutely.

Travis

I like to think that the service pays for itself really fast.

Ryan

It’s going to be some of the best money they’ve spent. Working with an actual financial planner will involve a little bit more money, and time and commitment, but for just student loans, a flat fee is extremely affordable and it really sounds like it will be the best money they’ve spent in a long time; even though it might not be the most fun, it will definitely have the most benefit, long lasting benefit for them.

Travis

Yeah. Another thing for your listeners, Ryan’s service is incredible value. I mean, it’s a lot of people that specialized in physicians. Usually when people say they specialized in physicians, because they specialized in making commissions off of physicians. I can say that Ryan is someone that charges a very fair price for exceptional service. If you can get a flat fee planner like that, that’s like the best thing you can possibly get on your team if you don’t consider yourself somebody who loves digging in the spreadsheets and thinking about finances all day. You want to find somebody who that you jibe with obviously, but that charges a fair fee in what they do. I would jump at that Ryan before you get capped out dude. I think you probably need to hire some more people because that’s a great cost structure and a great value proposition I think.

Finding a first-class financial planner is money well spent.

Ryan

I appreciate it. Now, that was unsolicited and a surprise. Thank you, I appreciate that. It’s one of those things where I’m building up my own life practice. I don’t envision it growing to five advisers, and 600 clients, and billion under management or anything. That’s just not what I want to do with my time of my life. My kids are important and spending time with my family is important, so it’ll definitely be me. 85-90 seats on the bus, and I’m very selective currently with who I worked with and all that. I appreciate the kind words though.

Travis

Yeah. I mean and hopefully, you get me before I just blow up too because having had 400 clients, it is challenging sometimes because people kind of get your phone number and reach out to you and want to talk to things. It’s just very difficult so, yeah I mean-

Ryan

You’re providing an awesome service for a really affordable price, and people will notice that. People are jumping on it, and you are saving. What was the average savings you save your clients?

Travis

Average savings achieved right now is about $63,000.

Ryan

Wow.

Travis

For 440 clients, average debt load, 274,000. For physicians, I’ve seen everything from 50,000 that you need to refinance because mom and dad helped with most everything to 800,000 lived in New York City supporting a bunch of kids, single parent. I’ve seen everything in between. There’s kind of nothing that surprises me anymore. That’s the savings that I don’t count like the PSLF savings, or somebody that was already on PSLF and already knew about it. That’s just savings that like I find. A lot-

Have a party for the small (and big!) wins!

Ryan

That’s remarkable. For a few hundred bucks, they can save 60-plus thousand dollars is a no brainer to me.

Travis

On average, right? Some people saved a couple of thousands. Some people saved a lot more than that.

Ryan

Of course.

Travis

Then, sometimes I just confirm that they’re on a good path and they’re like, “Oh, thank goodness,” like so when you go to the doctor and you get a checkup, and they tell you there’s nothing wrong with you. You’re like, “Yeah!”

Ryan

Yeah, nothing like some great validation. That’s another reason to have a party. I like reasons to have parties apparently but that’s another one. You go see Travis and he tells you all is well, that’s a good sign as well.

Travis

Yeah.

Ryan                     

Now, it’s time for the Curbside Consult.

Ryan

We’ve got a physician that’s participating in PSLF, six years of qualified payments and they’re just starting to make some real money as an attending. Their question would be what happens to my loans and repayment amounts when I no longer qualify for IBR?

Travis

The first thing that you got to make sure is you actually don’t qualify anymore. A lot of people think that they won’t, but if you have 300,000 in loans and you’ve got a 200-something thousand dollar income, REPAY is still going to be less in a 10-year standard cap. You can stay on that and not worry. Furthermore, you can max retirement accounts and further keep your income low, and keep yourself below the cap. First off, I tell them make absolutely sure that you’re actually going to hit the cap. If you are, then you want to be on IBR pay. It’s supposed to be based off of the original 10-year monthly payment that you would have had to pay, to pay off your original loan balance when you exited school to pay off the loans in full in 10 years; not including all the interest accrual that’s happened in the meantime.

FedLoan Servicing can be a difficult to navigate.

I’ve got a bunch of people in this Facebook group that I’ve been seeing, freaking out about FedLoan Servicing telling them something different, but I’ve showed them it’s literally in the federal documents that that’s how it’s done. If somebody’s ever … If you’re going through something like, “Please reach out to me,” worst case scenario if it’s really bad, I’ll help on the phone with FedLoan Servicing and just ripped this people, because they’d just are making stuff up and that’s not acceptable.

I would say that you don’t have to worry like you’re supposed to cap out of the 10-year standard plan, and so you’ll make maybe four years’ worth of payments as an attending of 3-4,000 a month. Then, you’ll still have a couple hundred thousand left over to forgive or maybe 100,000 left over to forgive; but that’s still a lot better than refinancing. Furthermore, there’s always a lag on when the income certification happens. In other words, the first year you’re attending, your payments probably don’t change until about half way through.

Then, they reference your tax return from the prior year when maybe you were an attending half the time. Then, your payments go up maybe a significant amount but not as much as if you would had the full year attending income. Even somebody who only is going to be on an attending salary for four years, the last four years of PSLF, they might be on a standard capped payment for only like two to 2-1/2 years of that. I would tell the person don’t worry about it.

A physician hasn’t planned on utilizing PSLF but they want to refinance. Where should they start? What’s the process like?

Ryan

Awesome. That’s great advice. Okay, so the next one. A physician hasn’t planned on utilizing PSLF but they want to refinance. Where should they start? What’s the process like? I know that you’ve got some pre-negotiated discounts for some of the private student loans; maybe mention that as well in the answer.

Travis

Yeah, for sure. I mean, if you’re going to refinance your loans, I’ve got about 95% certainty that I’m going to find you the best deal that exists, period. There’s always some random like professional society stuff that might be negotiating with somebody somewhere that I don’t know about, but in almost every single case that I’ve seen, I’ve been able to get a better rate for somebody if there’s a better rate that exists. It’s not just the better rate, it’s the best rate. That’s my goal.

There’s other websites out there, you’ll see links to refinance or whatever, and those sites generally keep the entire referral bonus for themselves. My thought process was I’d rather split that with readers and clients. I try to negotiate the max cash bonuses that they’ll give me, to give to clients and readers on my website. Studentloanplanner.com/refinance or you can actually just go to the website and see the refinance-student-loans I think, probably just want to click across the top bar on my website to get that. We’ve got bonuses anywhere from 100 bucks for ELFI to 500 bucks for CommonBond. I’ve got deals where I can’t even say it, kind of publicly because I just have these things that I can do for clients that I can’t even mention.

Ryan

Hey, that’s great.

Private deals can be negotiated for better rates depending on your situation.

Travis

Private deals that I’ve negotiated, and I’ll be able to use those for you if you’re a client and probably beat basically anything that’s out there. Regardless of what situation you’re in, I can find you a better rate. Then, I can even help bend the rules sometimes in terms of when you can apply. If you’re still a resident, you rather not do REPAY and you rather just refinance [inaudible 00:51:24] something in but your contract is in. You signed a contract eight months before your start date, and the max that they’ll do is six months until your start date for using that for refinancing to lock in a lower rate. Maybe I can help with some of the relationships that I had, bend the rules you can apply anyway.

There’s a lot of different things that I’m able to do just because of the super niche focus that I’ve got where all I do is student loans. I know a lot of these people because I’m just dealing with it all day. If you want to refinance and do it on your own like, “Okay, but I’m going to find better deals than even that exist and some of the most popular websites that doctors read.”

Ryan

The typical person is going … These cash bonuses are few hundred bucks, so I mean that almost pays for your whole fee.

Travis

Yeah, I mean yeah.

Ryan

Getting your advice almost for free, right?

Travis

Yeah, I mean like that’s kind of the goal, and not everybody needs that. Some people would prefer to just click on the links and shop for their own rates and that’s great. That’s awesome. I love that. If somebody wants to talk like variable versus fixed, and what’s the benefit with this lender? How much term life insurance do I need? Should I co-sign for better rates for my spouse who also has loans? What does that mean when I co-sign, and what’s the benefit of doing like a 10-year, versus a 15-year, versus a five-year; and kind of talking through all the really technical things about what that means for your life? That’s why I charge the consult fee for that kind of call.

If you just want to contact me at travis@studentloanplanner.com and maybe you’ve already refinanced, send me a note of what you want to get and what you have, and I’ll tell you if it’s possible for free. I’ll just tell you like, “Yeah, you could probably get better than that, and here’s where you could go,” so that the benefit there is not doing the consult just for the bonuses, you can get those on my website. I want to really have a valuable conversation and then go to that for you with some of these places, try to play banks off of each other and try to get the best deals. I mean as a general rule, who should refinance, who should go for PSLF?

There’s so few people have that debt-income ratio in medicine where they’re working at a for-profit type employer.

If you, “I have a really small amount of student loans,” probably you should refinance and just pay it off, so like 100,000 or less. As a physician, probably you should just pay that off. If you’re in a private practice, obviously, you should just refinance and pay it off. If you’re a 501(c)(3) physician, obviously, you’ll try to go for PSLF. Then if you owe like way more than your income, like if you’re a primary care doc in a private office with like 3-400,000 of loans and only 130,000 income, that’s probably like the only scenario where a physician wants to go for one of the long-term 20 to 25-year loan forgiveness options, and that’s something that’s a little bit different kind of niche. I very rarely see that.

There’s so few people have that debt-income ratio in medicine where they’re working at a for-profit type employer, it’s kind of interesting. The PSLF I think is just going to result in way if you are primary care docs or at least … It’s a huge disincentive to be a primary care doc because why would you do three years of training, and then go be a family doctor making 130-140,000 when you could go do six or seven years of training, have your loans forgiven at the end of it at the 501(c)(3) hospital as a cardiothoracic surgeon or something like that. Then, go to a private group and make tons of money and have no loans. I mean-

Ryan

It just disincentivizes them. It’s tough.

Travis

Yeah. It’s just a huge disincentive. I’ve written articles on my website about that too, but we’ll see. I think physicians will get the PSLF party for a couple of more years. We’re not going to see anybody get it until 2020 like in huge volume because that’s when the direct loans started being issued for the first time. Basically, people can chill until 2020 because that’s when we’re going to know something. I mean, we’ll have a couple of people…

We’ll see how that works out.

Travis

Thanks for having me on the podcast Ryan. I just say, check out your services and studentloanplanner.com and just try to get the help that you need in your life. Don’t do medicine by yourself. Get people around you, whether it’s people that will help with child care, or clean your house if you don’t like doing that, or whatever it is. Free up stuff that you don’t like to do. You eliminate that in your life so you can focus on just being happy, and just not having to think about stuff you don’t like.

Ryan

That’s great advice. I do have one more question for you.

As a new resident, I want to try and qualify for Public Student Loan Forgiveness. How do I go about certifying my payments every year?

Travis

Oh yeah, sure.

Ryan

As a new resident, I want to try and qualify for Public Student Loan Forgiveness. How do I go about certifying my payments every year? Should I file my taxes separately from my spouse? Should we file it jointly? How do I work through those details?

Travis

A lot of times, the residents are married to another resident, then it’s real easy. If not, like one time I had somebody who was married to a professional athlete, that’s really complicated and it’s very niched. I can do that kind of analysis. It’s just real weird to be-

Ryan

Yeah, that’s a little abnormal.

Travis

Yeah, but you’ve got some situations where like somebody might be making like 100,000 married to a resident. The spouse is not a medicine and the resident is. Generally speaking, PSLF always shows up as the best, and if there’s a big income difference at all, big meaning like greater than 20,000, it’s probably not a good idea to file taxes separately because the tax penalty is usually greater than or equal to the lower student loan payment that you get. I would just tell people like generally speaking, which is always a dangerous thing. There’s always exceptions. You don’t want to file taxes separately, it’s usually a bad idea because if you are unsure about loan forgiveness, you have the option of having money go to taxes, or having it to go to a smaller loan balance. You’d obviously rather go to the smaller loan balance assuming that those dollar amounts are equal.

How do they go about certifying their payments every year?

Ryan

How do they go about certifying their payments every year?

Travis

Just send the PSLF Certification Form, Google search that. Then, print that out, fill it out, have your residency program manager sign it. Then, just mail it in to FedLoan Servicing and just do that like once a year. As soon as you make your first income-driven payment on your loans, just send it in. Just do that at least annually, I suggest twice a year, and keep good records. Just put a little folder somewhere with your loan certification, just the docs and just put them in there. Then, it’s pretty straightforward. You’re just basically just creating a paper trail, is all you’re doing there.

Ryan

Yeah, absolutely. Once they’ve put that together and started the certification process, is there an easy way for them to keep track of how many payments they’ve gone through, and what their number out of the magic 120 is?

Travis

Generally speaking, FedLoan Servicing tells them but they’re often pretty off. If you have problems with FedLoan Servicing, my suggestion is just keep calling them back and escalating until you find the manager that’s competent that you can deal with. Then, just try to figure out a way to get just directly in contact with that one person.

Ryan

It’s the documentation trail, right? It’s what I tell clients is document everything. Make sure you get it in writing from the servicer. If you’ve had a conversation, ask them to followup via email to summarize the conversation. If you keep submitting the certification forms and something comes back that they tell you and it’s off, you’ve got the paper trail to go back and say, “No, no, no, here’s what’s going on. Here’s what I think it should be. Can you verify? Here’s my copies.”

If you get on FedLoan Servicing system sooner as you get into residency, then you’re good because you’ll have a good paper trail.

Travis

That’s why it’s so important to get a certification going soon. Our big mistake was waiting years into the process before we send in that certification form. If we had done that sooner, FedLoan Servicing would have gotten our docs way sooner and would have been tracking us, and not having to deal with the whole junk that we went through. If you get on FedLoan Servicing system sooner as you get into residency, then you’re good because you’ll have a good paper trail. If you wait until you’re an attending to submit the form, you’re going to be playing catch up and track down old residency program managers, and try to get them to send in docs. It’s just a mess.

Ryan

It is a mess. It’s a tough thing to do. Travis, thank you so much for being on the show today. I really appreciate it. I know that listeners got a huge benefit from listening to you. They can find you at studentloanplanner.com, and I encourage everyone to reach out to Travis if you have any questions just related to student loans.

Travis

Cool. Thanks so much, Ryan. Take care.

Ryan

Holy smokes, that was a fun episode with Travis. Yes, I do just say talking about student loans was fun. I know, I’m a crazy guy but that was a great time. Travis, thank you so much for being on the show. I really appreciate it. I hope you guys got a lot out of that show. I know that I love working alongside Travis. Travis is my go-to guy for really complex student loan cases. I know that if you were looking for some student loan advice at an affordable option, Travis at studentloanplanner.com is a great option for you guys.

With that said, next week’s episode is going to be completely different. We’re going to be doing a mail bag episode where I’ve had several listeners call in and I say “call in” in quotes. They recorded their voice at speakpipe.com/physicianwealth. That’s speakpipe.com/physicianwealth. They recorded their questions. Some of them are going to actually be featured in next week’s episode that we’re going to be playing their questions and I’ll be answering them. If you guys find that of benefit, I really encourage you to go to speakpipe.com/physicianwealth and record your questions. It could be literally about anything that’s keeping you awake at night that is finance related. More than happy to see if it will be on a future show, and to answer those questions. Until next time, talk to you soon.

Ryan Inman