A Strategic Approach to Managing Your Debt and
Finances During Your Utah Residency
University of Utah Resident Orientation
Presented by John Collins, Managing Director of GL Advisor
Agenda
• IBR versus PAYE
• Tying the Knot
• Training Exit Interview
• White House Budget Proposal
Changes in Student Debt Levels
~$300k+
~$220k
~$89k
~$50k
1993
2000
2013
Debt levels have quadrupled in the last 20 years
* Based on data collected by AAMC, AMA and GL internal student database
IBR vs PAYE
INPUTS
Total Federal Student Loan
Debt
Weighted Average Interest
Rate
$300,005
7.09%
Family Income, Last Year
$0
This Year's Family Income
$26,000
1
Family Size
State
Lower 48
Assumed Attending Salary
$250,000
• PAYE provides
additional $2,270
in liquidity during
residency
$3,000.00
Monthly IBR
Payment
$2,000.00
Monthly PAYE
Payment
$1,000.00
$0.00
$0.00
1
2
3
Years in Residency
3
4
5
• PAYE reduces
total cost by
$83,450 compared
to IBR when
considering PSLF
Recent order by Obama broadens eligibility
Tying the Knot
A PGY2 resident with $207k in federal student loan debt on
academic career track gets married. How does the loan repayment
strategy change if the spouse has no student loan debt and makes
$90K salary?
Forgiveness Potential
$3,000.00
$232,039
$2,500.00
$2,000.00
$1,500.00
$1,000.00
Forgiveness potential
$500.00
$150,305
$0
1
2
3
4
5
6
7
8
Year
Monthly Payment, Filing Separate
Monthly Payment, Filing Joint
9
10
11
EXIT INTERVIEW
After 4 years of training, a graduating
resident contemplates the next step in
her career. How does loan forgiveness
impact the economics of working for a
non-profit?
Original Debt:
Debt after training:
Non-profit salary offer:
For-profit salary offer:
$250,000
$308,000
$155,000
$205,000
Salary Equivalent Public VS Private
$300,000.00
Actual For-Profit
Practice Salary
Additional from
Public Service
derived from
forgiveness
$250,000.00
$200,000.00
$94,076.74
$150,000.00
$205,000.00
$100,000.00
$155,000.00
$50,000.00
$Public/Non-Profit
Actual Public
Service Salary
Base Salary
For-Profit
Added Salary Equivalent for PSLF
Assumptions: PAYE eligible. The taxable equivalent amount assumes a marginal federal tax rate of 20% and a marginal state tax rate of 5%.
White House Budget Proposal
Repayment Under Obama's
Proposal
Income Driven Limited to 10% of
discretionary income
Repayment
Cap on payments
Calculation
removed
10 Years if working in
the Public Sector
AND loan balance
less than $57,500
Loan
Forgiveness
20 years for
borrowers with total
loan balance less
than $57,500
25 years for
borrowers with total
loan balance greater
than $57,500
• Expansion of PAYE to all
federal loan borrowers
• Helps reduce cost for
borrowers, simplify process for
servicers
• Removal of the cap on
payments
• New cap on amount forgiven
through PSLF
• $57,500 limit, based on max
borrowing amount for
independent undergrads
• Balances above $57,500 will
not be forgiven until 25 years of
participation
• 20 and 25 year forgiveness
options to be tax-free
White House Budget Proposal
Average Student Loan Debt Portfolio, 2014 Med Grad
Loan Type
Original Balance Rate
Subsidized Stafford
$17,000
6.800%
Unsubsidized Stafford
$155,00
6.522%
Grad PLUS
$24,700
7.528%
Total
$196,700
6.672%
Loan Repayment Analysis
Average Monthly Payoff Term
Payment Scenario
Total Spent
Payment
(months)
PAYE and PSLF (today)
$807
120
$96,893
PAYE and PSLF (proposal)
Difference
$1,216
$409
240
120
$291,829
$194,936
*Loan balances, rates, and payment information based on GL Advisor client data. Payment calculation assumptions can be provided upon request.
Action Plan
 Consolidation:
Evaluate and complete a consolidation with the Direct Loan Program.
 Income-Based Repayment / Pay As You Earn:
Apply for and enter IBR or PAYE (during residency). Re-apply annually with
income documentation and family-size verification.
 Manage Liquidity:
Ensure you have sufficient cash flow to make all necessary loan payments.
 Manage Discretionary Income:
Determine how to allocate extra cash to insurance, retirement, and other needs.
 Public Service Loan Forgiveness:
Track eligible payments, maintain employment documentation.
 Tax Filing:
Incorporate impact of taxes on federal loan subsidy programs when filing
For more information and to schedule a
complimentary personal consultation, please see
John in the lobby after Orientation:
jcollins@gladvisor.com
Main: 877.552.9907
All government sponsored programs are subject to their continued existence, availability and participation requirements.
GL Advisor is a division of Graduate Leverage, LLC. GL Advisor currently does not offer all services to residents of North Dakota.