http://studentaid.ed.gov/students/attachments/siteresources/LoanForgivenessv4.pdfSo I received a request to talk about this topic for tonight from a friend who's currently in med school. It's a bit of an elaboration on a prior post. So what's the trick to pay nearly nothing for medical or dental school? Borrow money from the federal government's student loan programs (no private loans!). Then upon graduation do the following three things:
1) Consolidate all student loans into the Federal Direct Loan Program
2) Select the Income Based Repayment payment method
3) Go get a job working for a VA Hospital or some other government or non-profit entity and make 120 payments while under their employ until you are eligible for the rest of your loans to be forgiven by the government.
Now people will say, but doesn't the government pay a lot less than you'd make otherwise? And the answer is quite possibly yes. But factor in items such as not having to pay for health insurance, double social security and medicare taxes, paying for an office, the student loans that you won't have to pay as much back on, better hours, and even the potential ability to start to establish a home office perhaps, and suddenly the difference in salary starts to disappear. Don't forget also, after 10 yrs of doing what I described above, there's nothing stopping you from leaving government or non-profit employment to work wherever; or concurrently work a second job for someone else while also working for government (assuming you don't have a conflict of interest or are barred from external employment for some positions).
Income Based Repayment: http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp
Loan Forgiveness for Working in Gov't: http://studentaid.ed.gov/students/attachments/siteresources/PSLF_QAs_final_02%2012%2010.pdf and http://studentaid.ed.gov/students/attachments/siteresources/LoanForgivenessv4.pdf
Health Profession Loans: https://ifap.ed.gov/dlfsheets/doc0008_bodyoftext.htm and http://bhpr.hrsa.gov/dsa/sfag_past/sfag_01_00/health_professions/2hpslcom-03.htm
The image below shows that under the assumption that you make $200,000 a year and have $300,000 in debt, you'd still be eligible for income based repayment! Your estimated monthly payment would be only $2,295 per month! You'd pay a total of $275,400 back over 10 years, and remaining payments after that would be forgiven. This assumes a single person with no one else in their household. If you take into account the deduction of student interest from your income taxes, and inflation over 10 years, it's as if you're paying perhaps 40% of the $275,400, or roughly $110,000.
Compare that with any of the other repayment plans, and you will realize that Income Based Repayment for nearly anyone with federal student loans is the best route to follow, unless you have a very low dollar amount of student loans, or they're not consolidatable under the Federal Direct Program guidelines. See screen shot below for comparison of other student loan payment options. Also note that you must use Income Based Repayment to be eligible for loan forgiveness after 10 yrs.
Hit Control + to zoom in to see the screen shots below more clearly or View, and then Zoom menu in your browser.