March 2021 – Life Update

Alright. I realize that I owe you all some explanation as to where I have been, what I have been doing, or, at the very least, why I have fallen all the way off my New Year’s resolution to post weekly. The truth is fairly simple: I have been busy, tired, or wanting for a subject about which to write. More specifically…

1) Applying to medical school – Also in my New Year’s Day post, I announced that I was going to continue to move forward with my long deferred plan of applying to medical school. This is still happening. However, I am SO VERY BORED in my classes and almost failing. Of course by “almost failing” I mean getting a “B” in both physics and organic chemistry* but in the world of medical school applications the hyperbole is warranted. I am trying to engage my coursework with some level of intellectual curiosity, but on most days it just feels like hoops and busy work.

*Note: I might be less stressed if I has listened to C’s sage suggestion to just take one course. But of course I didn’t. Instead, I enrolled in two courses, each with their own separate in-person labs, with different instructors, which feels like four courses.

2) Dating – While dating during a pandemic is already pretty rough, it’s even rougher when you are back at home with your parents. While my parents are pretty darn awesome and have given me tons of space, I haven’t quite made peace with being a boomerang child (I prefer the U.N.’s “displaced person” due to natural disaster…I know); and, telling someone you just met that you are in your mid-thirties and staying with your parents is pretty much a red flag no matter how you spin it. I do have a guy that has been lurking in my life for some time now (years) but I am mostly trying to pretend I am no longer attracted to him. We will call him Dude Avery for future reference.

3) University B – I am a bit overwhelmed by work at University B at the moment; less overwhelmed by what needs to be done and more overwhelmed by my lack of real control over it. Unfortunately, when I was bored last semester, before I decided to chase my medical school dream, I allowed myself to become over involved at work. If I weren’t taking classes, it would be more than manageable, but at the moment, I am feeling tired and undervalued. My supervisor recognizes this and has given my team a couple of “comp/mental health” days that we have been able to use instead of vacation but the students still need a lot of attention at the moment and they have begun to significantly creep into my personal time. The advice I have received from mentors is to pull back, which makes sense, but I haven’t figured out how to do that yet. For the moment, my plan is to let one or two things (committee assignments) to find their natural semester end, and to abstain from serving in the summer and next year.

4) Living at home – It has been pretty awesome. Unfortunately, my parents aren’t letting me pay for anything at the moment (I still forcibly buy groceries and other stuff for them), but as I have shared in the past, they are aware that I still have some student loan debt and want to support me in this way to help pay it off faster. Originally, the plan was to sign a new lease for June 1, 2021. However, now I am not so sure… (Note: My parents are very happy to have me at home and have encouraged me to stay for as long as I like.) Ultimately, I think this will be determined by the success or failure of my application to medical school. If I fail to gain acceptance to medical school, then I will certainly move out and move on with my life. However, if I am admitted somewhere, it will necessitate a move and it might make more sense to move then as opposed to moving for less than a year only to move again.

5) Consulting Work – So after I decided to apply to medical school and I moved in with my parents, I mostly set my New Year’s plans of aggressively chasing consulting work to the side. Applying to medical school meant I didn’t have the time and living with my parents meant I could achieve my immediate financial goals without it. But because life never cares, a good friend and mentor decided to open his own consulting firm and has been steadily tossing work my way. While I have helped him in the past, ad hoc, he has decided that he wants this to be his primary source of income and wants to step away from University B at some point in the near future. We had a meeting with a client this morning and later this afternoon he text me, “…There is actually a much longer year long engagement we are starting to talk about. I am pretty sure I will have (sic) an intellectually engaging opportunity for you that will help to chip [a]way at those student loans.” Yea. More on that later…

So that’s it. That is where my life stands at the moment. I have been making good progress on the financial front thanks to my new living arrangement, the ongoing pandemic, and fairly low spending. You will see this reflected in my April 2021 – Student Loan Balance(s) post.

March 2021 – Student Loan Balance(s) Update

To the numbers!

AccountDebtMin. PaymentInterest Rate
Private Student Loan 1$0.00$110.460.000%
Private Student Loan 3-$8,454.39$153.826.620%
Private Student Loan 4-$9,564.89$245.403.750%
Private Student Loan 2-$7,109.52$93.305.140%
Federal Student Loan 1-$21,440.37$0.006.800%
Federal Student Loan 2-$13,946.84$0.005.310%
Federal Student Loan 3-$11,184.47$0.006.800%
Federal Student Loan 4-$7,748.09$0.004.450%
Federal Student Loan 5-$5,561.12$0.004.450%
Federal Student Loan 6-$3,147.30$0.005.600%
Federal Student Loan 7-$2,863.10$0.004.660%
Federal Student Loan 8-$2,457.12$0.006.800%
Federal Student Loan 9-$2,307.18$0.006.800%
Federal Student Loan 10-$2,003.02$0.005.600%
Federal Student Loan 11-$1,639.01$0.006.800%
Federal Student Loan 12-$1,144.25$0.005.600%
University Student Loan 1-$4,004.61$60.418.000%
University Student Loan 2-$3,090.59$42.430.000%
University Student Loan 3-$568.18$30.008.000%
University Student Loan 4-$370.13$30.008.000%

February 2021 – Student Loan Balance(s): -$110,210.06

March 2021 – Student Loan Balance(s): -$108,604.18

Total Payments: $1,739.59

Net Difference: $1,605.88

Not bad. I’ve reached a mini-milestone as I am now under $110,000.00. -$108,604.18 is still a huge student debt load, but each month it gets a bit easier to see my way out. March is going to be a decent student loan debt repayment month, and as of 1st of March, I have already put more towards PSL3 than the total amount I put towards all loans in February. Much of the huge initial payment in March comes from the fact that I am currently staying with my parents, rent free. More on that later this week.

At the moment, I am perhaps the most hopeful I have been at any part in my student loan debt repayment journey. At the beginning of the year, I set a goal of paying off both PSL3 and PSL4 by the end of the year with no real plan as to how I would accomplish this. There is now a plan. My life is incredibly busy right now and some days I am barely holding it together, but I am so incredibly hopeful.

My car. My car debt.

Okay. Let’s talk about it.

(This is not a photo of my actual vehicle but a car with the same make, model, and color.)

One of the things I appreciate most about this blog is that I can be entirely transparent about my finances…if not entirely transparent about my identity. I find this not only allows me to talk about the financial stuff I wouldn’t really feel comfortable talking about elsewhere but it also means when I am in need of financial advice, you all have a much more informed perspective than any person in my “real” life. However, when I was looking at my potential budget for March (the first budget for which I will not have apartment associated costs) I realized I needed to share it with you all as things have changed quite a bit. I then realized some things, like my car payment, would come as a surprise because I have never discussed it.

For my September 2020 – Student Loan Balance(s) post, I removed my car lease debt line from my reporting. At the time, it didn’t feel like such a big deal. The focus of this blog has always been about my journey to pay back my student loans, and my relationship with them. However, in hindsight, I could also see how that might feel like I am trying to hide something from you all. That was never the case. I just hadn’t made up my mind about what I was going to do when my car lease ended in early January, and I had already flip flopped, several times on the issue. I just wanted time to think about it.

Well, like all things, late December finally arrived and I had to make a decision.

I currently owe $13,856.43 on my 2018 Ford Focus. And for now, I feel like it was the correct decision. To understand that decision, I will share a brief history of my car ownership as an adult.

2012 – I had returned to the U.S. after several years spent abroad and lived in a place where I needed a vehicle. I bought a used Prius for $10,000.00. The car had a little more than 50,000 miles on it and was a good deal. While I owned the car, I moved several times, finally settling back into a city in which I have previously lived, very close to my best friend.

2014-2015 – I was actually sharing the vehicle during this time with my best friend. She was paying me half the car payment to have access to my vehicle for 50% of the month. While this worked initially, over time, it became annoying, and she decided to buy her own car.

2015 – I took my friend to the dealership to purchase (lease) her vehicle. My friend explained all the reasons that she was deciding to lease vs. buy and at the time, it all sounded fairly convincing. What I should have done was left the dealership and reflected on how very different my friend’s and my financial situations were. But I didn’t do that. Instead, I leased my first vehicle.

2015-2017 – While in graduate school, I once again become hyper-focused on getting out of debt (this has happened at various points in my life) and was upset with the idea that I had a car lease as I now lived downtown, in a small city, with excellent public transportation. I investigated lease buyouts, selling the car and paying off the lease, etc. I just wanted out. However, at some point, I decided I was heading back to the East Coast and moving to a city where I would once again need a car.

2018 – My car lease was coming to an end and I had a decision to make. Unfortunately, I had waited to the VERY LAST MINUTE and my car lease was ending in two days. You would think this would be the moment where I took a step back, re-evaluated, and made a different decision that I did in 2015. Right? You would be wrong. Instead, I allowed myself to be again talked into getting a second car lease. Ugh.

December 2020 – So here I am. Once again, trying to decide what to do about my expiring car lease. Looking back, I realized that if I had kept that Prius I purchased in 2012, it would have been paid off in 2017. Or if I had purchased that car I leased in 2015, the car would have been paid off in 2021. This time I did take a moment and took a step back. I reasoned that whether I get into medical school or not (please, oh, please let me get in) I am likely to live in a place where I need a car for at least the next ten years. When I purchased my car lease in December, it had a little over 35,000 miles on it and was a 2018 model. There is no way I could have purchased a used car in that condition for $10,800.00.* And I like my car. So I decided to keep my car.

For now, I am happy with that decision.
_ _

A few other things… I plan to continue staying with my parents at least through June (more on that later), when my classes end. Unfortunately, this means my round-trip commute to campus in now much, much longer. My twice a week commute is about 35 miles each way, with traffic. Ouch. Gas prices this far south are still relatively reasonable so the difference between rent and increased fuel costs is almost negligible.

I still want this debt paid off prior to my debt free goal day or prior to my 40th birthday. To make that happen, I have increased my monthly car payment to $300.00. Given how low the interest rate is (lower than all but one of my student loans) it just doesn’t make sense to move it up any further in my debt payoff order.

And finally, the difference between my car’s purchase price and the loan amount shown on my statement above is state sales tax, dealer fees, registration, and an extended warranty. The extended warranty was the only “optional cost”, but covers all non-tire related electronic and mechanical failures, including lost keys, for eight years. I think this was a good choice.

Student Loan Interest: 2019 vs 2020

Yeah, yeah, yeah…I’m going to save my excuses. I’ve decided that if I get one post up per week then I am meeting my posting goal.

Saturday, while working university programming, I decided to try and multi-task and get my taxes done during the lulls. My taxes are pretty straight forward and I usually qualify for one of the free tax filing services. Initially, I began my federal filing with TurboTax, as I have the past five years. However, this year, to complete the forms necessary to claim the student loan interest tax deduction, the software prompted me to upgrade to the Deluxe version, which would have cost me $40.00 for my federal tax filing and $40.00 for my state tax filing. Ummmm…no. While I like the TurboTax software, and the ease of having some of my data from the previous year imported, $80.00 seems a bit excessive for such a simple return. It takes me less than an hour to file my taxes and my time is yet to be worth $80.00/hour. So, while I didn’t finish filing my taxes (I found other software that includes the educational tax forms in their free version), I did get close enough to being finished that I noticed the following:

Wow. So, I don’t know how it escaped my notice that in 2019, I paid $8,066.00 in student loan interest. This does NOT include the interest that accumulated on my federal student loans, which did not require payment on the income-based payment plan, and instead CAPITALIZED on my federal student loans. Ugh. Maybe I just didn’t want to notice?

In 2020, the onset of the COVID-19 pandemic significantly lowered interest rates and I only paid $2,519.00 in student loan interest. This was buttressed by the fact that in March 2020, the U.S. federal government created an interest and payment moratorium on federal student loans which meant the only interest that accrued on them, to be subsequently capitalized, is the interest that accrued between January and March 13, 2020.

For the 2020 tax year, the student loan interest tax deduction allows you to deduct up to $2,500.00 in interest paid from your taxable income. For obvious reasons, while not paying any interest is the best, the less you have to pay over $2,500.00 the better. This year, I was very fortunate. $2,519.00 in interest payments is not great by any means, but given the amount of my outstanding student loan debt, it’s not terrible. However, $8,066.00 in 2019 is ridiculous. This is the amount I actually paid to my student loan lenders. Two months of my GROSS income. I worked for two months in 2019 just to service student loan interest. Yea. …a slave to the lender.

I don’t really know what to say. Put in the terms above, I am so incredibly angry with myself, and sad. The most hopeful thing I can say in reflecting on that number is that 2019 is a peak on a downward slope.

Forbearance or no forbearance?

This post is coming in after my self-imposed Friday posting deadline because 1) I am studying for general physics and organic chemistry exams next week, and 2) I hate posting just to post, and I wasn’t sure I had anything about which to write until this evening…

This evening, I received an email from American Education Services (AES), the student loan servicer for Private Student Loan 3 (PSL3) and Private Student Loan 4 (PSL4). The email directed me to my message inbox where a decision about my forbearance request awaited me. Huh? Thinking it might be SPAM, I ignored the email link and logged into the website through my browser. Upon opening the message in my inbox, I was informed that my in-school forbearance request had been “approved.” I toggled over to the loan details page to see the following:

That’s right. I have been approved for an in-school forbearance on PSL4 until January of 2024. What?

So, how did this happen? I have no idea. I obviously did not make this request. I am also very confused as to what triggered it as I have been in-school previously (I completed a master’s degree and was enrolled for a second bachelor’s degree when I began completing medical school prerequisites three years ago) and an in-school forbearance was not automatically applied to my account. My financial situation was much tighter during both of those periods so I would have applied had I known it was an option.

I don’t know exactly what to do or if this really changes anything. While it will be a stretch, PSL4 is targeted for payoff this year. Given that interest would still be accruing, would there be any benefit is pausing payments on PSL4 and applying them to PSL3? It seems like the only benefit would be psychological in that it would allow me to be even more aggressive in targeting PSL3. However, it seems like a potential “cost” would be the interest accruing on a slightly larger PSL4 balance for the six or so months while I pay off PSL3.

Additionally, while PSL4 does continue to accrue interest during an in-school forbearance, my University Student Loans do not… Actively applying for an in-school forbearance on my University Student Loans would effectively lower my interest rate on those loans to 0%. While I could also forgo payments on those loans and apply that minimum payment to PSL3, a part of me thinks it might make more sense to continue making the minimum payment on those loans, allowing the 0% interest rate to stretch the minimum payment that much further.


February 2021 – Student Loan Balance(s) Update

No preamble. To the numbers…

AccountDebtMin. PaymentInterest Rate
Private Student Loan 1$0.00$110.460.000%
Private Student Loan 3-$9,646.94$153.826.640%
Private Student Loan 4-$9,782.78$245.403.750%
Private Student Loan 2-$7,174.85$93.305.140%
Federal Student Loan 1-$21,440.37$0.006.800%
Federal Student Loan 2-$13,946.84$0.005.310%
Federal Student Loan 3-$11,184.47$0.006.800%
Federal Student Loan 4-$7,748.09$0.004.450%
Federal Student Loan 5-$5,561.12$0.004.450%
Federal Student Loan 6-$3,147.30$0.005.600%
Federal Student Loan 7-$2,863.10$0.004.660%
Federal Student Loan 8-$2,457.12$0.006.800%
Federal Student Loan 9-$2,307.18$0.006.800%
Federal Student Loan 10-$2,003.02$0.005.600%
Federal Student Loan 11-$1,639.01$0.006.800%
Federal Student Loan 12-$1,144.25$0.005.600%
University Student Loan 1-$4,038.50$60.418.000%
University Student Loan 2-$3,133.02$42.435.000%
University Student Loan 3-$594.42$30.008.000%
University Student Loan 4-$397.68$30.008.000%

January 2021 – Student Loan Balance(s): -$111,621.55

February 2021 – Student Loan Balance(s): -$110,210.06

Total Payments: $1,577.31

Net Difference: $1,411.49

Not bad. It feels good to be making real progress again. (A not insignificant amount of which I owe to the continued interest rate and payment abatement on federal student loans). Obviously, recent events have changed some things for me financially. While it’s going to take a couple of weeks for all the unplanned moving costs to shake out, it is my expectation that February will still see a bump in my student loan payment.

Student Loan Target Update

With my “debt snowball-avalance-made-up-ish-but-focused” I am currently targeting Private Student Loan 3 (PSL3). I began targeting PSL 3 in December 2020, after a pause in aggressive debt repayment to establish a three month emergency fund.

January 2021 – PSL3 Balance: -$10,666.59

February 2021 – PSL3 Balance: -$9,646.94

A net difference or more than a thousand dollars. Not bad at all. It felt really good to see this balance drop below $10,000.00. At the beginning of the year I set a goal to have this paid off in June. At the time, I had no idea how I would accomplish that goal; for the moment, it’s still seems possible.

I’m moving.

I’ve finally finished working for the day. I have to work tomorrow. And I’m just getting this post in under my self-imposed Friday deadline. Also, I don’t want the pennyfolk to think I’m a flighty person. I mean, historically I have been, but I’m I trying to be better.

I was a bit too optimistic on Tuesday after my apartment flooded. I was hearing what I wanted to hear instead of what was really being said.

Outside the glass patio door is eight inches of dirty water; inside the glass, are my plants floating on an inch of water on top of my carpet.

What I wanted to hear was: “This is terrible. We are at fault. This has happened before and we didn’t make the adjustments to the exterior drains and maintenance that we should have. We are going to remove the wet carpet and padding, and get your place back into a “livable” condition.” What was actually being said was, “We’re going to do this as cheaply as possible. We’ll start by putting a single fan on your wet floor. That will dry up the carpet that got less water on it. We are going to remove the carpet padding from the ‘wettest’ places and replace it in a couple of days once everything dries. We are going to leave the carpet. Oh, you want it to be shampooed? Sure, just call the office.

Yea. It took a day or so for it to sink in that they were planning to keep the same carpet. I went back and forth with them trying to get them to make the appropriate repairs. At one point, I think I was even negotiating against myself. I was just so tired and wanted it fixed. Eventually, I broke and asked them about breaking the lease. They jumped at this and agreed to waive the thirty (30) days notice…which is of course what they have wanted for some time now. I live in a city that has experienced steady migration (enough to change the political landscape…) for several decades now. My apartment is well under market value and one of the only units not yet renovated. My lease includes a price step increase clause and they could not make the repairs/renovate and charge me the rate they now charge other units (+$300.00).

I have to be out this Sunday. Yes…in two days. Between work, packing, and school, I am exhausted. However, I am also very fortunate. There are few other instances in the past where I would have been able to make this choice, prioritizing my health and well-being. I am fortunate to have flexible employment, be able bodied, and perhaps more than anything, have parents who love me a great deal and are happy to have me at home for a while.

I just need to make it to Monday.

That time my apartment flooded…

It’s 6:00AM…which is a perfectly normal time for someone to be awake. It is a terrible time to be awake if you are a night person…or if you were awakened at 3:00AM by the sound of thunder and lightening, followed swiftly by panic at the sound of water trickling into your apartment. Ugh.

By 4:00AM there was at least an inch of dirty, reddish water standing above the carpet, in the main living area, of my studio apartment. Unfortunately, the floor in my apartment has a slight slant (I don’t know the grade) which meant water made it’s way about six feet in, and trickled into my kitchen where there was about a half an inch of standing water on the vinyl floor. Ugh.

But wait, it gets at bit worse. I generally wear rubber house slippers around my apartment. It’s good for my feet, and I have always been suspicious as to the maintenance of carpets in apartments. However, as I was climbing onto my bed to write this post, I “accidentally” stepped on the rug in front of my bed to discover that even though the carpet looked dry, it was squishy and wet. I assume it is the padding underneath. Ugh.

So here I am, sitting on my bed, worried about how quickly my apartment complex will fix this and whether or not they are going to try and make me liable for anything. Also, they don’t do a great job of “fixing” anything so should I rent my own carpet fan/dehumidifier? Wet/dry vac? Pay for a carpet cleaner? Move? And how to pay for any of this? Should I try to pull it out of my meager miscellaneous budget for February? My emergency fund? Why didn’t I get renters insurance? None of my personal property was damaged, would this have been a good investment? Is this what being an adult is?

Yea, okay, so my thoughts spiraled there a bit. Ugh. Well, I am grateful to have the ability to post here. I can’t call my parents because their concern, thoughts about what I should do, and constant need to be updated would create anxiety for me as I try to think through things rationally. To be fair, my father is a pretty stoic and unflappable but my mother is…not. They have been married for more than forty years, and they tell each other everything, so if one knows, the other knows almost immediately. As a non-twenty something adult, I have learned that it is often better to tell them somewhat serious, but non-life threatening, things after the situation has passed.

As I finish writing this, I hear the sound of distant police and ambulance sirens. I am grateful all I have to worry about is a bit of water.

Update – Pictures since my early morning explanation wasn’t great…

My patio is enclosed and the water inside was about eight inches. The water that made it’s way into my apartment (the side where my poor succulent sits) was about half an inch high.
This photo was taken from the foot bridge that crosses to the right of my patio; the bridge is ground level with the front of the building and connects it to the courtyard in the back. Leaves and mud from the courtyard prevented the water from draining and water pouring down from the side of the foot bridge added to the flood.

She’s not paying off her $300K student loan debt. Should I?

I hate echo chambers. While I generally believe long-term relationships are more functional when you share similar values, I also believe you learn more about the perspective of others, AND your own perspective, when you take time to understand and work through difference. For this reason, for almost every belief I hold, including with respect to my finances, I have sought out others with different opinions or perspectives. One of those different perspectives belongs to an incredible person who blogs under the pseudonym “single gal” or “MERJ.” Their blog* documents their journey towards FIRE (financial independence, retire early).

Their “About Me,” authored in 2018, states:

Today is Feb 20, 2018 and as of today, I am a single 30-something, openly Christian human woman. I love watching TV while eating takeout, and I want to retire early. I currently work as a consultant in a tele-health call center making around $40/hr.** I started my professional life in 2015 at the ripe ole age of 31 after a few false starts. I spent 2016 paying off about $10,000 worth of credit card debt. I spent 2017 paying off about $20,000 in private student loans; I still have about $300,000 in federal student loans for which I am currently on an income-based repayment plan for the next 25 years, give or take.  I started really getting into savings and investing late 2017 when I stumbled upon the FIRE (financial independence, retire early) community.  In 2018, I made the decision to try to save for a sabbatical and maybe if all goes well continue the journey to early retirement.

** As of 2021, MERJ makes considerably more.

If you’ve read Stupidity. Reason. Qualified stupidity. The post where I explain how I got here., then you certainly understand why their journey resonates with me. We definitely have some pieces in common and are about the same age. However, there is significant divergence in terms of our plans to pay off our debt. In a post entitled “Why I’m Not Paying off My $300k Student Loan Debt,” MERJ lays out four reasons for their perspective:

1) “I can’t afford it.” – They argue that the standard repayment, of ten years, would be more than $3,000.00 a month.
2) “The Federal Government is okay with it.” – The argument is essentially, if the federal government is okay with it, then why shouldn’t they be okay with it?
3) “Have I ever mentioned how much I don’t enjoy working.” – They summarize this argument pretty well in one sentence: “I would literally have to put retirement savings on hold for 10 years when my single most consistent goal of late is leaving the workforce…as early as possible.”
4) “But what if…” – In this point they essentially address the arguments others have presented to them about possible changes to Public Service Loan Forgiveness (PSLF) or Income-Based Repayment (IBR). They bring up a friend who they state would be eligible for the PSLF program but who is choosing to pay down their loan. They also note that this other person does not contribute the max to their 403b and is working with a financial planner.

Okay. I think personal finance is personal so I am going to refrain from commenting on what MERJ should do or what I would do if I were MERJ. Instead, I am going to look at MERJ’s arguments (an argument is an assertion, supported by a warrant (reason), and evidence) and evaluate what they mean for my own situation. However, I will admit upfront that in some instances I think MERJ was a bit uncharitable to the argumentation presented by others and kinda played the straw-man. Perhaps this was fair because others made poor arguments. I hope to do better.

1) “I can’t afford it.” – I think this was the first instance of the straw-man argument for me. MERJ sets up a dichotomy between the IBR Plan and the 10-year Standard Repayment Plan. If you have a considerable amount of federal student loan debt, the 10-year Standard Repayment Plan can certainly be unmanageable. Evaluating this for myself, I felt it was also incumbent for me to consider all of the federal income-driven repayment plans, including: Revised Pay As You Earn Repayment Plan (REPAYE Plan), Pay As You Earn Repayment Plan (PAYE Plan), Income-Based Repayment Plan (IBR Plan), and Income-Contingent Repayment Plan (ICR Plan). After 20 or 25 years of credited monthly payments on either of these plans, the remaining loan amount is forgiven. However, the forgiven amount is then taxed as earned income for the tax year in which the amount was forgiven.

Having looked at all four plans, I decided that IBR plan was the best choice for me. For pre-2014 borrowers, it caps payment at 15% of your discretionary income but not more than what your payment would be on the 10-year Standard Repayment Plan. Additionally, months where your payment amount is “zero” based on your income still count towards the “credited monthly payments.” This plan was the right choice for me, even as I plan to pay off my federal student loans, because it reduces the amount I have to pay while my income is relatively small (I currently do not have a payment) and allows me to direct more of my income towards my less flexible, and more expensive, private loans.

2) “The Federal Government is okay with it.” – This isn’t really an argument but more of a perspective and I certainly understand it. That being said, I disagree. I think the reason the Federal Government is “okay” with it is because the fixed interest rates they set for most of their student loans are so high (6.8% for my last unsubsized undergraduate student loans taken out in 2008) that for most borrowers, the government is still making a profit (however, there are extremes, such as in MERJ’s case, or an instance where a person’s low income never increases and they never owe a payment under the income-based plans).

I think MERJ’s example is useful to illustrate this point:

Current income based monthly payment:  $570/ mon x 12 mon/ yr x 25 years =  $171,000 repaid
Standard Repayment (2018 values): $3,642/ mon x 12 mon/yr x 10 years =  $437,040 repaid
Difference: $437,040 – $171,000 = $266,040

While I could be wrong, I’d be willing to bet that MERJ’s originating aggregate loan amounts were probably closer to $171,000.00 than the current balance. Which means, by the time MERJ, or most folks, finish making payments under the income-based plans, the federal government has already made back the initial principal lent and some of the interest. Again, I think the reason the U.S. federal government is “okay” with these plans is because they aren’t losing money. They are also make an additional amount on the taxed amount that is forgiven.

3) “Have I ever mentioned how much I don’t enjoy working.” – The logic here seems sound, and again, this is just a difference of perspective as opposed to “evidence-based.” For me, my work/labor has always been about trying to find a balance between my interests, financial security, intellectual challenge, and service to my community. I hope to achieve that with medicine. I think attitude and approach towards work/labor looks different for everyone and I generally don’t slight the approaches of others. When I began paying off my student loan debt, my plan assumed I would continue to work full-time out of necessity until 45. I would then pursue part-time or lower earning income of my choice that allowed me to serve the community, only needing to provide for my basic subsistence. The pursuit of medicine obviously changes that equation a bit.

4) “But what if…” – Ahhh…of all of MERJ’s arguments, this one is the least fleshed out for me. I think there are two major points of contention in our perspectives: A) the efficacy of federal loan forgiveness plans and B) “At the end, the remaining balance is forgiven (and taxed). If I retire early and my income is zero, then guess what: I pay nothing!  Where is bad?”

A) I think that MERJ wasn’t very charitable to the perspective of their educator friend… First, Teacher Loan Forgiveness and Public Service Loan Forgiveness (PSFL) are very distinct from the income-based repayment plans. Unlike the income-based repayment plans, the federal loan forgiveness programs requires: 1) an approved application; 2) consolidation of loans with a private lender (FedLoanServicing) often resulting in a higher interest rate; 3) 120 CONSECUTIVE payments on the consolidated loan amount (NOTE: This is not the same as the credited monthly payments under the income-based plans); 4) the ten years of service required under this plan don’t accrue until AFTER your loan consolidation, not when you begin teaching/service; 5) the private lender requires that teachers certify that their employment qualifies for the program each year and can challenge school certification.

According to the U.S. Government Accountability Office, as of 2018 there were more than 53,749 unique applicants requesting forgiveness of their student loan debt after 10 years in the program, with only 661 being approved. That’s less than 1%. As of 2019, the Department of Education disclosed that the PSLF program has a 99% rejection rate.

B) If someone retires prior to the balance being forgiven, then their income is “zero” which means they owe nothing. – The flaw in the logic here for me is that the idea of “income” seems reliant upon the idea that income is “W-2” based. The U.S federal government defines income very broadly and this includes distributions from retirement vehicles (except Roth), capital gains, alimony, etc. Additionally, for less financially secure borrowers, once the forgiven amount is assessed as “tax,” the federal government has many more avenues for recouping tax debt including property liens, levies, social security garnishment, etc.

Again, my argument IS NOT that MERJ isn’t making the right choice for themselves, but simply how I arrived at a different conclusion, given the same set of facts, and why my choice is the right choice for me…and maybe their educator friend.

Further, the evaluation I perform above doesn’t even touch upon the very real and emotional nature of debt for so many people. I have readily admitted in the past that the sensation that features most for me with respect to my student loan debt is shame…followed closely by anxiety in its many forms. Managing them with respect to my debt has often been emotionally exhausting. Aggressively paying off my student loan debt, at a sacrifice to investing or saving, may not be the best decision according to the math. However, each payment and payoff helps me discharge a bit of shame and anxiety, and helps me feel more like the person I suspect I am without debt.

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*“Single gal” or “MERJ” is an incredible writer and in addition to sharing their journey towards FIRE, they also document a great deal about their life and career. As they write very openly about emotionally intense thoughts (i.e. reflecting on the reasons and steps necessary to end their life), I wanted to create a layer of awareness for people who might visit their blog via this post. I do not know in what state, or with what experiences of trauma, folks arrive at my site. Reading about emotionally intense thoughts can be difficult, even for humans in a relatively healthy mental state, and this layer of awareness allows readers to make an informed choice.

Single gal’s/MERJ comprehensive post, on why they are not aggressively paying back $300K in federal student loans, can be found here.

Applying to Medical School (2) : The Cost of Applying

The cost of applying to medical school can be financially prohibitive for many. Even if the Association of American Medical Colleges (AAMC) grants an applicant a fee waiver, which is honored by almost all medical schools, applicants still have to shell out for the MCAT (medical college admissions test), and costs associated with interviewing.

I am fortunate to be employed by University B, full time, so I will not qualify for a fee waiver. But before we get to the costs associated with actually applying, lets first discuss the costs necessary for me to become a qualified applicant.

Premed Cost

Prerequisite Coursework – A small number of medical schools across the nation (less than 10) have eschewed firm prerequisite course requirements in an effort to diversify the academic backgrounds of applicants (someone who studied music theory might have an equally interesting mind as someone who studied biology). However, most medical schools still require you to complete eight (8) courses in the basic sciences to be eligible to apply: biology+lab (2 semesters), inorganic chemistry+lab (2 semesters), physics+lab (2 semesters), organic chemistry+lab (1 semester), and either a second semester of organic chemistry or biochemistry. Additionally, some medical schools require a semester of statistics or calculus.

While it would be possible to calculate how much I have spent in the past, making myself an eligible candidate, I think it would be much more pertinent to the purposes of this blog to calculate how much it has and will cost me since I started my premed journey here.

As of January 1, 2021, I still needed to complete four courses to gain admission to most medical schools (although, not all coursework needs to be completed at the time of application…more on that later). For the spring 2021 semester, I am taking organic chemistry+lab and physics+lab. The classes plus associated college fees for this semester cost me: $1,324.00. However, because I work for University B, which has a very flexible employee tuition reimbursement policy, I will be reimbursed for the full cost of tuition ($780.00) which means my out-of-pocket cost for the coursework will end up being the $544.00 in college/university fees. Not…terrible. If only college were as cheap the first time around…

Universal Applicant Costs

While the cost of prerequisite coursework varies by where, when, and how you complete it, the following costs are universal for all applicants to U.S. allopathic medical schools unless you have a fee waiver.

MCAT – The Medical College Admissions Test is required by all American medical schools and many non-American medical schools. The importance of this exam in the application process cannot be overstated and it is a make or break for most applicants. The costs to take the MCAT and have your scores shared with the American Medical College Application Service (AMCAS) is $320.00. This does not include the cost of test prep services which are pretty ubiquitous to the medical school applicaiton process.

AMCAS – The American College Application Service is an application service required to apply to almost every medical school in the United States (except Texas as they have their own service and Puerto Rico). There are two sets of cost associated with this service:

1) Primary application fee – “Most medical schools use the AAMC’s American Medical College Application Service® (AMCAS®) to process applications. Through this service, you are able to submit a single set of application materials and have them sent to the schools you specify. The 2021 application fee is $170 for the first school and $41 for each additional school.” – Pulled straight from their website, cause why both restating it? It is important to note that most applicants to medical school apply to between five (5) and ten (10) schools.

2) Secondary application fee – “The majority of medical schools require a secondary application. Those fees range in cost.” Again, ripped from the site. The cost of a secondary applications generally ranges from $50.00 to $100.00.

Interviews – Assuming you make it through these hurdles, traditionally, most medical schools have required an in person interview. This can be a very expensive process if you are applying to medical schools out-of-state, or even across state, due to the costs of flight and hotel stay. Most medical schools for the 2020-2021 application year moved to a virtual interview process which significantly decreased the cost of interviewing. It is my hope that they don’t entirely eschew this process for the upcoming year.

So…yea. A lot of red. The cost of applying to medical school isn’t going to be cheap. However, I am determined to be as frugal as possible, and to cashflow the entire process. In an effort to try and keep myself “honest” about what this process is costing me, I plan to keep a log on this post that I will consistently update.

AfroPenny’s Medical School Application Costs

1/1/2021Prerequisites – organic chemistry + lab and physics + lab($1,324.00)