PSLF Cancelled!

By Bill Jackson April 1, 2024 5 mins read 97 Views

By Dr. Jim Dahle, WCI Founder

Republicans in the House of Representatives, irate at President Biden's failure to control the border, passed a secret bill this week that will abolish Public Service Loan Forgiveness (PSLF) within 60 days. Amazingly, it also appears to be en route to passage in the Senate, because all three independents have chosen to vote with the Republicans on this issue. The administration has signaled that Biden, fearful of the fallout in the presidential election this fall, will sign the legislation as long as it only applies to households with more than $100,000 in household income.

Physician families all over the country are in tears at this news.

Reforming the student loan system has long been a priority of Republicans. The Republicans on the House Committee on Education and Labor have said, “Reckless loan forgiveness policies are a short-sighted answer that would crush American taxpayers and leave our higher education system more broken than before. They benefit the wealthy and worsen inflation.” They cited a Brookings Institute study that showed student loan forgiveness is regressive whether measured by income, wealth, or education. It's also supposedly racist. Here's a chart from that study:

Reddit, whose users skew younger, was particularly aflame, especially the WCI subreddit. User “BlueFlamingo687” says:

“I'm an MS4 who didn't come from a family with money. I had to borrow the entire cost of my medical school education. I already have over $400,000 in student loans and was counting on PSLF to pay for it. I didn't even sleep last night after I heard about this from a classmate.”

User “HotStuff8421” said:

“I can't believe they're not going to grandfather us all in. I'm PGY 4 of 7. I would have refinanced a long time ago if I had known PSLF could have gone away.”

User “DocGreen67” said:

“I've already got 96 payments. I can't believe they're pulling the rug out from under me. I took this job in rural BFE just to have a PSLF-qualifying job. I feel like I've wasted the last three years of my life.”

User “WileECoyote” said:

“I'm so glad I got in under the new rules for Kaiser docs in California a few months ago. I had $280,000 forgiven. I feel really bad for those who missed out.”

Other redditors didn't exhibit as much compassion. Comments ranged from “Good. I paid my loans back and you all should, too” to “Sorry suckas!” to “I don't see why physicians all think they should get a big fat government handout in addition to their $300,000 salaries.”

Over on Facebook, the responses were even more hysterical. One doctor singled out Marjorie Taylor Greene, one of the bill's sponsors, for blame. “I hate MGT. I think all doctors should boycott medical care for her and her family.” Another said, “Bait and switch! I wouldn't have gone to medical school if it wasn't for PSLF.” Jack Cousteau, a medical school graduate who will be trying to match for the third time this year, said, “I don't know what I'm going to do. My student loans are $520,000 and growing. If I don't match this year, I guess I'll just find a new career that pays less than $100,000 and hope to still qualify for the new watered-down version of PSLF.”

There was a lot less compassion on the WCI Forum. Commenter Scutchy McButchy said, “I knew it. The moral hazard from this terrible government policy is incredible. PSLF was just one more sign that our civilization is on the decline. Maybe now we truly can make America great again.” Moderators quickly shut the thread down as ad hominem attacks progressed toward death threats.

A poll of WCIers asked, “If you were going for PSLF, what will you do now that it's gone?”

22% said, “I'll refinance and pay them off”
27% said, “I'll look into state forgiveness programs”
18% said, “I'm just going to stay the course and hope it changes back after the election”
11% said, “IDR forgiveness”
22% said, “I don't know”

More information here:

Why (and How) We're Disinheriting Our Kids

My New Tesla

How Shorting Ethereum Helped Us Make Payroll

What You Can Do to Help

Andrew Paulson, lead student loan consultant at StudentLoanAdvice.com, tells me that he had 263 consults booked last night alone and that he has over 1,000 unanswered emails in his inbox, mostly from people for whom he has previously recommended PSLF. He says he'll be working overtime for months to modify student loan plans. There are 37 WCI blog posts that will need to be updated with this new information.

PSLF canceled

We've also started a petition, collecting signatures. You can sign the petition here. We also recommend you send a message like this to your senator:

“Dear Senator ________

I am one of your constituents who was enrolled in the Public Service Loan Forgiveness program and in fact was counting on it to help me pay for my education. Employees of nonprofits rely on this program to enable them to do important work, like providing medical care to underserved communities. The passage of H.R. 5376 and its Senate equivalent (S. 2444) will have a chilling effect on doctors, nurses, and many other nonprofit employees that will have catastrophic effects on the medical system. Please vote against this bill and encourage your fellow senators to do the same”

You can find contact information for your senator here.

Is It Better This Way?

Here at WCI, we've never been completely convinced that PSLF is good policy, but, like the Backdoor Roth IRA process, we feel doctors should take advantage of every legal mechanism they have to retire debt and build wealth. We hope that this change will reduce or even reverse the current rate of tuition increases in our medical schools, and maybe in the long run, physicians will even be better off for the change. But it sure is going to hurt a lot of doctors in the short term.

What do you think? Were you counting on PSLF? Do you think this is good policy or bad policy? What's your heart rate after reading this post? What's today's date? How else are you celebrating April Fool's Day? Comment below!

The post PSLF Canceled! appeared first on The White Coat Investor - Investing & Personal Finance for Doctors.

----------------------------

By: The White Coat Investor
Title: PSLF Canceled!
Sourced From: www.whitecoatinvestor.com/pslf-canceled/
Published Date: Mon, 01 Apr 2024 06:30:27 +0000

Did you miss our previous article...
https://peaceofmindinvesting.com/investing/the-absolute-best-match-day-reactions-of-2024