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I know a few people in this type of debt and they are on the "loan forgiveness plan". There seems to be some type of horrible denial going on with this Loan Forgiveness BS. These people are doing 1 of 3 things. 1) Just not paying the loan, its not like they can take your house right? This is true, but you can have your wages garnished and you'll be forever forced to pay 15% out of every paycheck in good times or bad. 2) Income based repayment, this is such a bad idea as how are you ever going to pay off $300k with $42 a month.. youre not. 3)deferment, just saying "I'll pay it back later" but the whole time interest is building and building.
So lets say this person thinks in 25 years they can just have the loan "forgiven" so they do everything possible to pay the lowest amount. It doesn't matter that in 25 years the balance on the loan will be $900,000 since it will all be forgiven right??? WRONG! Besides the fact that you have a moral obligation to pay back the loan, you are going to need to pay INCOME TAX on the forgiven amount.
So $900,000 will cost over $300,000 in taxes the year it is forgiven. More then the original amount of the student loans. And you no longer owe that money to SallieMae. You owe it to the IRS and they WILL take your house and everything you've ever worked for. You WON'T get social security or any other benefits you may be entitled to.
I WOULD GET OUT NOW!!!.. there are plenty of people out there, you don't need someone that self destructive in your life.
It's just federal loans that are forgiven, and your SO did not get $300,000 in federal student loans, especially not in two years (the first two years of Med school are the hardest, these next two are a lot of fun).
The cap on federal student loans is $138,500, and that includes undergrad. So while your SO can IBR that first $138,500 to about nothing, they are going to get hammered by private loan payments.
$300k-$138k=$162k
$162k paid back over 20 years = $1,200 a month.
Buck up, and it gets better, I promise it gets so much better after second year (and then intern year brings back the bad days, but that makes PGY2 and beyond seem so much better, so it all works out, plus doctors lounges in residency programs are amazing).
You must pay taxes on loan forgiveness!!! If they aren't doing a public service job where it can be forgiven in 10 years it'll take 25 years to be forgiven. At that point compounding interest will have probably tripled the balance. When its forgiven you'll have to pay taxes on that amount, very likely giving you a higher balance then when you started. And you'll owe the IRS and they'll take everything from you!
Get ready everyone.. cause in a 20-25 years when everyone goes to get their loans forgiven and realize this little secret we're going to see a lot of homes getting repossessed and sold off by banks for big discounts. The housing market will crash again, but for those heavy with cash it'll be a great buying opportunity!
If you car at all about living a decent lifestyle, owning a home, and affording kids this person is not for you.
Would have to agree here....otherwise his/her $300K in debt is now indirectly your $300K responsibility as well. Plus you are getting a good look at their desire to pursue and complete goals they set.
Break up with them, suffer through the pain, go find someone you can achieve your goals with.
I'd get out of the relationship. And pray this person isn't crazy -- in addition to being mentally ill. (as if that's not an oxymoron).
Clearly this person is not making good decisions about money, his/her career, or life in general.
Unless YOU also want to be saddled with that.....I'd move on.
I'm not saying be cruel about it. You don't even have to say "it's because YOUR NUTS!" Just get out the easiest and least hurtful way you can. So you don't set this person off in some way.
I'm not saying people who have a 'slow' or 'wandering' start in life -- can't get it together and be super successful later. Heck, welfare mom's have become MDs and PhDs. BUT do you want risk YOUR financial future waiting and hoping that happens...because it MIGHT not ever happen.
Call me shallow. Call me uncaring. But, I've never had mush patience for people who can't manage their lives, and that includes their finances. OP, you can be broke by yourself. People don't usually need any help with that. IF you've got the money to financially carry this person. fine .....ride off into the sunset together. But that would make you a better person than I am.
I'm actually more curious about YOU. And how long you've been in a "relationship" with this person. Is all this a surprise to you? How long have you known this was the situation? Are you the co-dependent type?
Federal loan forgiveness programs forgive the entire balance of loans after 10 years when working in a government position.
Has to be a direct position. Contracting and working in a private group for a govt hospital dose not count, and even then it's just the federal portion which has a relatively low cap.
Unless you went to state school for undergrad and were lucky and got admitted to a instate medical school you are not going to have just federal loans at the end of med school. Judging by the debt already incurred I'm thinking the OP's SO is in a Caribbean School or one of the new for-profit DO schools here in the U.S. and not a state school.
OP, I'll say it again you are the rock to your medstud, motivate them, encourage them. Med school debt with a completed residency is hard enough, harder still if scorned by the match and left with just an MD, but unimaginably hard with just two years of schooling.
Reflecting on all that anguish of undergrad, the weeks spent on MCAT preps, the thousands spent interviewing, and all the time spent in the books these last two [three] years might just be enough to push forward. It might not feel like it, but your SO has done the vast majority of the hard stuff (at least until residency, but that's a different type of hard).
OP, I'll say it again you are the rock to your medstud, motivate them, encourage them. Med school debt with a completed residency is hard enough, harder still if scorned by the match and left with just an MD, but unimaginably hard with just two years of schooling.
How much of YOUR energy do you want to put into pushing, pulling, coaxing and dragging someone through med school -- who's already almost dropped out twice, and is only half way though. You want this for the next two years -- or more? Say this person gets out of med school in two years? THEN what? They don't want to work in medicine, OR research.
OK ....they want to teach. Uh, teach WHAT? High school science? Yoga? Meditation? Social Studies? History? Computer science? Gymnastics? Circus tricks? Magic? Math? Financial planning? English in third world countries?
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