patrick.net

She should go get a job at a Federally Qualified Health Center in her region. Most FQHC's pay competitively with the industry and they work with challenging and underserved populations. The plus is that most all FQHC's also participate a National Health Service Corps with offers a Student Loan Repayment program with $50000 per year in loan forgives with a 2 year (or more) commitment. Furthermore, the loan forgives is non-taxable, which is better than the incentives that other systems like Kaiser or Dignity (which offer taxable incentives) could offer because it is government sponsored. That way she can keep her fully earned income and apply it to other things, like a house, or use her income along with the 50K per year (100K over 2 years) and she just might get out of debt a lot quicker.

http://nhsc.hrsa.gov/loanrepayment/

BayArea says

A family member went to med school (3yr program) to become a Nurse Practicioner. She graduated in 2013 and got a job shortly after working ER (Emergency Room).

NHSC is a start. There are many loan repayment programs out there, especially for someone in a high demand like a good ER person. Start with looking at AAMC.org, HRAS.gov, IHS.gov/loanrepayment . The military offers loan repayment programs, although married might be a problem. There are many state programs also. Google is your friend.

Being flexible and willing to put in a couple of years somewhere could save many years of grinding out high monthly payments.

I would say that income-based repayment would be good, except with 3 years down on a 10 yr loan, that might not be efficient. With IBR, the payment is set at (Salary-poverty level)*0.15, so it is 10-15% of your income. The remaining balance is forgiven after 23 years. The best way that would help her is if she is working for an institution that qualifies for 10 yr forgiveness.

Because the gov has been stingy with refinance options (not providing any) to people with good credit, the private market has stepped in. You can get lower rates on the private market.

BayArea says

A family member went to med school (3yr program) to become a Nurse Practicioner. She graduated in 2013 and got a job shortly after working ER (Emergency Room).

Federal school loans summed up to about $175k

That's $58,333 a year. I assume working part time while going to school wasn't considered?

Blurtman says

That's $58,333 a year. I assume working part time while going to school wasn't considered?

How do you know they didn't work part time? or for that matter that the amount doesn't include loans from getting a bachelors degree for 4 years? 175k over 7 hears of education makes more sense, but the information wasn't provided.

Is this the usual interest rate for educational loans ~ 8%? It's huge. Are they considered risky?

You guys are sharp...

The $175K starting point did included some small amount of undergrad loans.

Some of the loans are just under 8% and some just over 8%. Aggregated it comes out to about 8.0%. I'm told that's not unusual for a federal loan (which is remarkable considering that you can get a home mortgage loan today at 3.75%).

There was some amount of part time work. But part time minimum wage work wasn't a very effective trade-off...

If she has 401k plan at work, max it out, then take a loan to pay off the student debt - the interest will be much less than 8% and she'll be paying it to herself. I haven't done the calculation to see if it's worth it, just an idea to consider.

She should take out a bunch of credit cards. Pay off the balance with cash advances. Declare bankruptcy. Discharge the card balances... Sit in credit jail for 10 years... Start anew in a much better financial position than she was ever in before.

turtledove says

She should take out a bunch of credit cards. Pay off the balance with cash advances.

I'll do that a year or two before I die (I've decided when that will happen - makes planning life a lot easier).
:)

My college was paid for each quarter.
My son's college is paid in full.

Those that borrow are failures in Entrepreneurial Free Enterprise America.
I'm sure there are plenty of excuses like parents & students are stupid,suckers,incapable of critical thinking.

This is what stupid Americans intend.

http://www.usdebtclock.org/

BayArea says

There was some amount of part time work. But part time minimum wage work wasn't a very effective trade-off...

OK, so didn't get an undergrad degree that could be turned into a decent waged part time gig. English? Political Science?

But it still sounds like a lot of that loan was to attend school full time to get the Nurse Practitioner degree, which sounds like a good degree, considering, but how much was yearly tuition? Even $50,000 per year sounds like a lot of debt, unless tuition and books was $25,000 or so.

turtledove says

She should take out a bunch of credit cards. Pay off the balance with cash advances. Declare bankruptcy. Discharge the card balances... Sit in credit jail for 10 years... Start anew in a much better financial position than she was ever in before.

You know, if she wasn't three years into the 10yr note, your suggestion wouldn't be a bad idea...

HEY YOU says

I'm sure there are plenty of excuses like parents & students are stupid,suckers,incapable of critical thinking.

Unfortunately I wasn't there to advise her to avoid the expensive private undergrad degree and instead either go public 4yr or go to community college for 2yrs and transfer. Her parents didn't go to college and I'm not sure they quite understood what taking on that much debt means... Let's say it's a sore topic.

Blurtman says

OK, so didn't get an undergrad degree that could be turned into a decent waged part time gig. English? Political Science?

Biology...

And not everyone may know but a nurse and a nurse practitioner differ by 1yr of schooling and several tiers on the payscale.

BayArea says

And not everyone may know but a nurse and a nurse practitioner differ by 1yr of schooling and several tiers on the payscale.

Sounds like a wise career move. Getting an MD would have been a good one, or better, an MD/PhD, but not everyone can get on board with that type of sacrifice, or want that level of responsibility. An acquaintance got a physician's assistant degree. He took a lot of classes at the local medical school, but was out sooner than the MD's, and was able to start earning money sooner. Of course, he probably wouldn't make as much as an MD, but doing OK. And with less sacrifice.

turtledove says

take out a bunch of credit cards. Pay off the balance with cash advances. Declare bankruptcy. Discharge the card balances

We've suggested this in the past on PatNet. I always wonder if anybody has ever taken the advice. Would be interesting to know if this works as simply as it does on paper. "He who dies with the most debt wins".

Blurtman says

An acquaintance got a physician's assistant degree.

PA and NP have nearly identical schooling requirements, responsibilities, and payscale.

Thank you for sharing your insight on this.

Philistine says

We've suggested this in the past on PatNet. I always wonder if anybody has ever taken the advice. Would be interesting to know if this works as simply as it does on paper.

It doesn't. The "adversary proceedings" allow the credit card companies an opportunity to argue why their debt shouldn't be discharged. I could be wrong, but they probably aren't stupid. If they see that you took out a large cash advance, they are going to dig into what you did with that money. Once they see that the money went into your checking account and then paid a student loan, you will find yourself in trouble, potentially facing fraud. I'm not saying that a person couldn't get away with it... But you'd have to plan it over a very long period of time. Like perhaps, put other expenses (no asset purchases that would have to be liquidated) on the credit card and then make larger payments toward the student loan debt. At the point, many years later, that the student loan is gone, you bide your time for a while... Then when you have an opportunity to lose your job, you lose it. Then, you start the bankruptcy proceedings. It would probably take too long to be practical without risking finding yourself behind bars....

turtledove says

If they see that you took out a large cash advance, they are going to dig into what you did with that money. Once they see that the money went into your checking account and then paid a student loan, you will find yourself in trouble, potentially facing fraud.

That make zero sense. There is no fraud in taking a cash advance to pay off student loans. Nowhere in all of the fine print is there anything stipulating what a cash advance can be used for.

Getting a big enough credit line to actually pay off student loans would be the sticking point. Especially for a new grad just starting a new career.

Using credit cards to pay off student loans and declaring bankruptcy would be regarded as a fraudulent conveyance. That means the bankruptcy court could declare them non-dischargeable.

Then, instead of a long term loan, you would be forced to pay short term credit card debt at outlandish interest rates that you could not discharge in bankruptcy.

The whole purpose of bankruptcy is to discharge the debts, which requires reasonable showing of good faith, or at least, non discoverable evidence of bad faith.

There is also the awkward logistics of getting credit card balances high enough to pay off a student loan to begin with, and paying the minimum credit card payment long enough to toll the conveyance.

Very bad idea all the way around, you would have to expect the CC companies of being dolts who would let it pass.

TD, it's a funny proposal but I don't think it's realistic...

how many credit cards (with low limits) would a fresh grad need to open to pay off 6-figs of medical school loans? And how many could they open before their credit score dropped and red flags consumed their upcoming applications?

A person right out of college could start putting all of their purchases on credit cards and paying the minimum balance and rolling over the debt to new cards with 0 interest offers. Then, they could take all of their after rent/retirement account income and put it toward paying off their loans. After 5 yrs or so, they would have most of their loans paid off and their CC debt would be based on purchases. They might be able to get away with discharging that. With this technique, they might not be able to pay off all of their CC debt, as they would have to declare bankruptcy once the card companies stopped playing along. That would depend on the fiscal environment as much as anything else. I don't know how much the card companies pay attention to balances on other cards, so they might start cutting the credit limits early on in this process.

It's best to start establishing credit earlier for the ol chap 7 student loan debt purge.

BayArea says

Federal school loans summed up to about $175k with an aggregate interest rate of about 8% on a 10yr term. She has been paying the loan off for three years now. The min payment is $2150/mo and she's been paying down a little extra each month when possible.

The current balance is $130k with 7yrs remaining.

I don't know what the current laws are, but it seems to me that OBama has made some headway on this recently.

She should look into the current deals for turning it in to a low interest rate long term loan, through (consolidation). If she already did a consolidation it might be limited. It seems messed up that she ended with such a high interest rate.

IT's been a while, but if she never consolidated see what the current rates are. THe markets are acting like we are never going to have serious inflation again, but I think we will. So if she can turn it in to a 30 year loan at 3% and then there's a few years of big inflation 5 years from now, she will be effectively paying back a smaller amount (in real dollars).

But maybe she just needs to wait, for the dust to settle on Obama initiatives and for further progress from Hillary.

http://time.com/money/4310765/student-loans-new-consumer-protections/

Or maybe a variable rate is the route to go. There are a lot of these sites rating student loan consolidators.

https://www.credible.com/blog/best-companies-to-refinance-and-consolidate-your-student-loans/

I can't believe she hasn't done something else with it. Again, I don't know what's currently going on.. Maybe the thing to do is wait. Sometimes in the past, the federal govt was involved in making those consolidation rates lower, but that was when all interest rates were higher.

Hard to tell which of these websites are basically advertisements

https://www.credible.com/blog/best-companies-to-refinance-and-consolidate-your-student-loans/

I think I would wait a few months at this point to see what's on the horizon with Hillary. Once consolidation is done, it does lock in the commitment. But I am not a school loan expert. Unfortunately most people that would claim to be school loan experts are probably selling something.

Consolidating the loans should get her a longer term - maybe 20 years or 25. That would bring down the monthly payment. Unfortunately, the interest rate of the new consolidated loan would be roughly the average of the loans consolidated. So it's not a great long term solution.

vanbomel says

That would bring down the monthly payment.

Sadly, the only thing most people think about today.

vanbomel says

So it's not a great long term solution

You can say that again.

vanbomel says

So it's not a great long term solution

vanbomel says

Unfortunately, the interest rate of the new consolidated loan would be roughly the average of the loans consolidated. So it's not a great long term solution.

I don't think this is right. If it is, that's messed up. Then refinance (which I thought consolidation essentially does). A new loan in this interest rate environment should be at a much lower rate.

That's what the government should do (or one of the things they should do)) to help people with student loan debt. Let them refinance at rates only only slightly above current bond/note rates. For example let them refinance 15 years at 3%. (about $900 payment for your sister for 15 years)

Let the people benefit a little from these low rates !!