Pete:
I know this is a long and confusing question, but frankly, I’m confused. And I’m wondering if you can shed some light on this. Thanks again for all your help. I appreciate everything you do.
Dr. Jim Dahle:
Do we know about this, Andrew? Yes. We know about this. We’ve been talking about this for months.
Dr. Jim Dahle:
Yeah. So, give him the answer. What’s the scoop on this new PSLF waiver that goes through Halloween?
Andrew:
Yeah online payday loans with no credit check Michigan. Recently, this came out on e out and what this has done is it’s shaken up a lot of the world for public service loan forgiveness. And the reason why they’ve been able to do that is, in the event of a national emergency or war, essentially, the legislators can change up student loan law, albeit temporarily, which COVID has fit within that realm.
Andrew:
And so, essentially the payments that you have made, any payment, as long as you have qualifying employment should qualify. And you detailed one of the key steps is doing a direct federal consolidation. Because in the old rules, when you completed a consolidation, what it did is it erased all of your prior payment history. And we have run into this time and time again with so many clients that like you graduated med school in the 1990s or early 2000s.
Andrew:
Essentially, you got the short end of the stick, just because you borrowed before 2007, 2010, when a lot of the newer loans, these direct federal student loans, were starting to get issued.
In a nutshell, sure, the next thing will be to complete a primary government integration. Immediately following one to goes through, then through that software, you will have to find a fees plan, but I am and if your already generated the fresh 120 payments. You don’t need to make significantly more costs and then possible need to approve your employment, fool around with a jobs degree form, then several a lot more days to go, and after that you will be able to get the immediate income tax-totally free financing forgiveness.
Dr. Jim Dahle:
Yeah, it’s awesome. It’s basically been expanded this year. Even people that didn’t meet the requirements in the program, when the program was introduced, it just got a whole lot more lenient. And that was actually president Biden taking advantage of the COVID emergency to put some emergency rules in place. Take advantage if you can.
Dr. Jim Dahle:
All right. Our next question is from email, it’s actually a two-part question. The doc introduces it. βI’m an academic physician about two and a half years out from training, definitely pursuing PSLF with about 100 qualified payments to date.β
Dr. Jim Dahle:
He has two questions. The first one, βIn addition to funding retirement and a six-month emergency fund, I’ve been saving a PSLF side fund in a high yield savings account. My PSLF side fund will equal my med school debt burden, which is now $325,000 with over $120,000 in interest on top of $200,000 in principle.
Dr. Jim Dahle:
I anticipate that at that time, my attending level monthly payments will be large enough to finally cover the accruing interest and that my debt won’t grow meaningfully in my final year, year and a half of qualified payments.
Dr. Jim Dahle:
What do you recommend I do with the side fund during that time? I know a high yield savings account is the most risk-averse option. Do I just leave it there earning less than 1%? The rest of my personal investments are in low-cost index funds. When would you start adding some of those PSLF side fund monies into index funds too?β Why don’t you give your take on this Andrew, and then I’ll give mine?