Month: March 2022

How 3 Pharmacists Had $700,000 of Student Loans Forgiven

Robert Lopez, CFP® and YFP Planning Lead Planner, discusses the current state of the PSLF program, plus three pharmacists share their PSLF success stories.

About Today’s Guest

Robert Lopez, CFP®, is a Lead Planner at YFP Planning. Along with his team members, Kimberly Bolton, CFP®, and Savannah Nichols, he helps YFP Planning clients on their financial journey to live their best lives. To go along with his CFP® designation, Robert has a B.S. in Finance and an M.S. in Family Financial Planning. Prior to his career in financial planning, Robert worked as an Explosive Ordnance Disposal Technician in the United States Air Force. Although no longer on active duty, he still participates as a member of the Air Force Reserves. When not working, Robert enjoys being outdoors, playing co-ed volleyball and kickball, catching a game of ultimate frisbee, or hiking with his wife Shirley, young son Spencer, and their dogs, Meeko and Willow. 

Today’s episode also features PSLF stories from three pharmacists, Kimberly Gale, Ashley Hicks, and Kyle Sobecki. 

Episode Summary

YFP Co-Founder & CEO, Tim Ulbrich, PharmD, talks with Robert Lopez, CFP® and YFP Planning Lead Planner about the current state of the PSLF program and why the Biden Administration’s PSLF waiver is resulting in a lot of forgiveness earlier than expected. Robert kicks off the conversation with some advice relating to PSLF, who qualifies, what changes have occurred recently, and what it means for you. With over $700,000 forgiven tax-free combined, Kimberly Gale, Ashley Hicks, and Kyle Sobecki share their PSLF journeys and ultimately how they attained PSLF. Each pharmacist shares how they came to decide on PSLF, what challenges they faced along the way, and how pursuing PSLF helped accelerate the process of pursuing other goals. Kimberly Gale shares the story of how she first became aware that PSLF was an option, communication challenges she faced early on, and how forgiveness has enabled her to attain the lifestyle she wanted for her family. Ashley Hicks tells us about roughly $200,000 in forgiveness and the challenges that uncertainty and anxiety posed for her in the process, plus her optimization strategy surrounding the PSLF process. Lastly, Kyle Sobecki shares the details of how PSLF pertains to pharmacists in the non-profit space and tells his story of having over $189,000 in student loans forgiven. 

Key Points From This Episode

• Introducing today’s topic: the PSLF success stories of three pharmacists.
• A reminder of who Robert Lopez is and his role at Your Financial Pharmacist. 
• An overview of the first and second half of the show and what we will cover.
• The basics of PSLF, Public Service Loan Forgiveness, and who qualifies.
• Which changes were made to the rules of PSLF. 
• What the big news comes down to: you don’t have to rule out forgiveness.
• What the limited waiver meant for those in the military.
• Optimization strategy with PSLF and how Robert recommends you reallocate your finances.
• The benefit of switching to a lower payment plan while achieving a long-term forgiveness plan.
• An introduction to Kimberly Gale’s journey into the world of pharmacy.
• The amount of debt she graduated with and how much was ultimately forgiven.
• How she discovered PSLF through a friend’s recommendation.
• Challenges she faced along the way, including communication at the beginning. 
• How PSLF helped her to afford the lifestyle she wanted for her family.
• Ashley Hicks’ story of gravitating towards pharmacy because of her love for people.
• How much Ashley ultimately had forgiven through PSLF.
• The challenge that uncertainty and anxiety posed within her PSLF process.
• How optimization and strategy can help navigate late discovery loans.
• The opportunities that PSLF opened up for her and her husband to focus on other goals.
• Meet Kyle Sobecki and learn about his work as a pharmacist in a nonprofit hospital.
• Kyle’s story of having had exactly $189,038.72 forgiven.
• Homework he has done along the way leading up to choosing PSLF.
• How PSLF works when you work for a non-profit.
• Uncertainties and challenges he had along the way. 
• His advice with regards to filing your paperwork on time each year.
• Goals the PSLF plan freed Kyle up to pursue including paying off personal debt.

Highlights

“That really is the big news here. Many folks that may have ruled out forgiveness before or thought that forgiveness was still a few years in the future. We’re actually seeing some of those dates come to fruition.” — Tim Ulbrich, PharmD [0:07:00]

“There’s an old adage that says: money is power. I don’t believe that’s true. I think options are power and money gives you options.” — Robert Lopez, CFP® [0:13:33]

“The intent of the program was true. That’s really what they did, is make sure that, if you work for a non-profit for 10 years, you are eligible for forgiveness. They wipe away some of the intricacies that maybe held some people back in the past.” — Kyle Sobecki, PharmD [0:38:43]

Links Mentioned in Today’s Episode

• YFP Planning: Financial Planning for Pharmacists
• Schedule a free Discovery Call with YFP Planning
• YFP 214: How Anna Got $127k Forgiven Through PSLF
• Ask a YFP CFP® 090: How can I decide if pursuing PSLF will be beneficial for me at this point in my payoff journey?
• PSLF Help Tool
• The Your Financial Pharmacist Podcast
• Learn More About Our 1:1 Student Loan Analysis with a CFP®: use code YFP for 10% off
• Your Financial Pharmacist Disclaimer and Disclosures

Episode Transcript

[INTRODUCTION]

[0:00:00.4] TU: Hey everybody, Tim Ulbrich here, and thank you for listening to The YFP Podcast where, each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, we have a special episode for you, highlighted by three pharmacists sharing their PSLF success stories, in total, more than 700,000 forgiven tax-free. Some of the highlights from today’s show include talking with YFP planning, lead certified financial planner Robert Lopez, about the PSLF program and why the Biden administration’s PSLF waver is resulting in a lot of forgiveness earlier than expected.

We hear from those successful with PSLF about how they determined that PSLF was the best option for them, what bumps along the road they experienced, and how pursuing PSLF helped them accelerate achieving other financial goals. 

Before we hear from today’s sponsor and then jump into the show, I recognize that many listeners may not be aware of what the team at YFP planning does in working one-on-one with more than 240 household in 40 plus states. YFP planning offers free only, high-touch financial planning that is customized for the pharmacy professional. 

If you’re interested in learning more about working one-on-one with a certified financial planner may help you achieve your financial goals, you can book a free discovery call at yfpplanning.com. Whether or not YFP Planning’s financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom. 

Okay, let’s hear from YFP Planning lead certified financial planner, Robert Lopez followed by three pharmacist PSLF success stories.

[INTERVIEW]

[0:01:41.9] TU: Robert, glad to have you back on the podcast.

[0:01:43.7] RL: Happy to be here.

[0:01:45.8] TU: For those that haven’t heard you before on the show, I know it’s been a while, tell us a little bit about yourself and the role that you have with YFP Planning?

[0:01:52.2] RL: Yeah, Robert Lopez, certified financial planner, lead planner with Your Financial Pharmacist, been on the team for a little over two years now. I work with clients, mostly pharmacists, we help them figure out how to adult financially, how to pay back student loans, how to be most efficient use of their assets and their income to make sure that they’re living their best life.

[0:02:13.7] TU: I wanted to bring you back on as one of our student loan experts, obviously, you do much more than student loans but have worked with many clients through the public service loan forgiveness, we’ve seen some wins recently and the way we’re going to do this show is we’re going to breakdown some of the nuts and bones of PSLF briefly. We’ve covered that on the show many times before, we’ll talk about some of the updates with the PSLF waiver.

Some of what you’re seeing and working with clients at YFP planning and then the second half of the show, we’re going to feature some YFP PSLF success stories. Robert, before we get into the waiver and make making sure folks are aware of the opportunity out there as a result of that waiver, just quick high level, nuts and bolts of PSLF, who qualifies, who doesn’t, number of payments, how the taxes work.

I know we’ve covered this before, we’ll link in the show notes episode 214, we talked about this as well as episode 90 of ask a YFP CFP but just give us the basics of PSLF.

[0:03:09.0] RL: Yeah, PSLF, Public Service Loan Forgiveness, it’s a program created back in 2008 to offer loan forgiveness opportunities for people who are working in the public sector, right? If you work for a government organization, a not for profit, any organization listed as a 501(c)(3), that just means not for profit, it’s a way for them to get their loans completely forgiven, it’s tax-free forgiveness. 

There are some qualifications, the original PSLF qualifications, which you had to have direct federal loans, which are a type of loans that were created 2010. Anybody who started school after that is probably what they have. It also works for direct consolidated loans, they had to be entered on to an income-driven repayment plan which would have been pay as you earn, which is payee, revised pay as you earn, which is rep payee or income-based repayment, which is IBR.

They had to make 120 on-time payments and that is cumulative, not consecutive, so roughly 10 years but if you took a break you continued counting right back where you left off and that forgiveness just gets wiped away like it was never there. One day it’s on your books and one day it’s not.

[0:04:16.1] TU: We’re going to hear some, I think we need to talk about this, Robert. Three, four years ago, especially when there’s a lot of negative press around PSLF, it was kind of that feeling of, “Is this for real?” We’ve got success stories to share and as you mentioned, especially with the tax-free forgiveness, one day it’s there and the next day it’s not. 

You mentioned the original rules of PSLF and you just outlined those. Suggesting that things have changed. Give us a summary of the Department of Education PSLF waivers, some of the updates that came in fall of 2021 and why that’s such big news for folks out there that may qualify.

[0:04:50.2] RL: Yeah, big change came October 6th, that’s 2021, the Biden administration passed a limited waiver. Limited, meaning, you have one year, you have until October 31st of this year, 2022 to apply for this different waiver. The way it changes, is it changes the types of loans that can be forgiven, it changes the types of repayment plans that can be forgiven, then kind of just how those accounts work. 

The new rules are any previous federal loans, that includes direct, that includes FFEL loans and that include Perkins loans, those are all eligible for forgiveness under PSLF now, assuming you go through the consolidation process. For some people out there who are aware of the consolidation process, it’s where just all your loans gets smashed together and you get a weighted average interest rates, it’s no change, it’s no benefit mathematically.

What it did do is it took loans that didn’t qualify and it made them qualify because it turned it into a direct loan, so you still have to do that but it used to restart your 120 clock when you did that because it’s a new loan and now it does not, so you actually get the oldest loan count on there. Anybody with old loans, it’s a great way to do about it. 

They’ll go back in time and they’ll recalculate all those payments and if you made payments not on an income-driven plan, if you were on, say, the standard 10 year or the extended or the graduated payment plan, those previously did not count as 120 but now they do, those are the biggest change now. All that’s required is you work for a public organization, government or 501(c)(3) not for profit and you have 120 payments.

[0:06:20.0] TU: That was why Robert, as we talk about this and my goal and part of this episode is to continue to shout from the mountaintops so folks are aware and assuming that October 31, 2022 deadline stays for the temporary waiver, obviously, we’ll keep an eye on that but we don’t want folks to miss this window of time, right?

Because one of the things we’ve heard over and over again is, “Hey, I’m four, five, six years in the payments but didn’t consolidate” right? I had FFEL loans, Perkin loans or you know what? I was an extended graduated plan but I wasn’t in an income-driven repayment plan. As you mentioned, once that consolidation piece happens, still an important part of what needs to happen but those payments are then going to count. 

That really is the big news here of many folks that may have ruled out forgiveness before or thought that forgiveness was still a few years in the future, we’re actually seeing some of those dates come to fruition. As we’re going to hear with a couple of stories here in a little bit, that’s something, Robert, I know you and the planning team have been seeing as folks that maybe thought forgiveness was still another two, three, four years away but they’re starting to see that happen now, right?

[0:07:22.3] RL: Yeah, the big thing that everyone needs to be aware of is if they’ve already consolidated their loans and they currently work for a not for profit or government organization, all they have to do is submit the employment certification form and they’ve actually simplified that process even farther. If you just Google PSLF help, it will take you to the government’s PSLF help tool at studentaid.gov.

You fill that out, it’ll create the document for you for you to give to your employer, once that form is submitted, they will automatically go back and recalculate all your payments. Automatically with the government could mean three or four months but it is a process that you no longer have to do anymore work. 

If you’ve already submitted an employment certification form in the past, they’re already going to update you. Some of our clients have had those letters come out the mail that says, “Hey, congratulations, we recalculated 60 extra payments for you” and their numbers just jump from say, 65 to 125 and congratulations for this forgiveness but that’s all that’s really necessary.

Anybody that has those FFEL loans currently, you can go and get a consolidation as well again, studentaid.gov. Come to YFP, we’ll help you through the process as well. 

[0:08:25.0] TU: One of the other benefits, Robert, I’ve heard from several folks is, because of the administrative forbearance, not only are some folks finding that this is happening sooner than they thought it would but also, they haven’t had to make payments for now, going on a couple of years and those have been counting as well, correct?

[0:08:40.6] RL: Yeah, ever since the administrative forbearance for COVID started in March of 2020, no one has been required to make payments and the interest rates have been set at zero. No one’s accruing interest in this time period as well. If you chose to make payments throughout the time, that’s great. You’re just paying off a crude interest, if you had any or paying down principle, you will continue to make payments. 

If not, that’s going to continue until May 1st as of today. It’s always subject to change as we’ve seen with the government but as of right now, those loan payments will turn back on in May 1st and the interest rates will turn back on as well. Yeah, this has been – it’s going to be 27 free payments I believe and then all have counted towards PSLF as long as you qualify for PSLF.

[0:09:23.8] TU: One other thing briefly Robert, I want to touch on that you mentioned before the show that we have not talked about in much detail but for those in the YFP community listening that are in the military pharmacist position, there’s also an important part that they need to be considering here as well. Tell us more about that?

[0:09:37.6] RL: Yeah, as a part of the limited waiver that came out last October, they basically said, if you were in the military and you made payments, those all count on PSLF now as a part of that waiver. Any active-duty military members, any full-time military members, just complete that employment certification form, submit it to your superior officers and you’ll get all your payments to count.

We actually have a client that that’s going to happen for, they’ve been in the military 10 years, they have the wrong loan type, they’re on the wrong repayment plan, none of their stuff counted and now, all the payments are going to count and they’re going to get forgiveness this year.

[0:10:09.4] TU: Awesome example. One of the challenges you mentioned was you know, timeline when we think forgiveness and say, hey, one day you had your loans, the next, you didn’t, we might think of that as an overnight thing, that might be months, right? By the time papers get processed as we talking about PSLF, that could be a challenge or an uncertainty.

Anything else you’re seeing out there? I know there’s been a lot of concern with loan servicing companies that are going to be changing, there’s certainly a fair amount of horror stories with PSLF that are still out there from before the waiver. Other challenges that you’re experiencing, Robert, as you’re working with clients that are pursuing PSLF?

[0:10:43.7] RL: Yeah, the uncertainty is the big one, we know that some loan servicers have ended their contracts with the US government. FedLoans in particular is ending their contract and FedLoans is important because they actually manage all the people who are in the PSLF program.

FedLoans contract is going to expire at the end of this year, they got extended so then we have until the end of 2022 and that’s going to switch over to MOHELA. Anybody that is actually making that move and they apply for the employment certification form to get their loans counted, their loans are going to transfer to FedLoans and then transfer again later this year to MOHELA, it’s unfortunate but it’s just the way of the world at this point.

That’s kind of the biggest thing that we’re seeing is just, who do I make payments to, how does this work? If I make overpayments, will they get repaid to me? Which historically has been yes, but we haven’t seen since the admin forbearance if it’s going to be the same.

[0:11:32.8] TU: Last thing I want to pick your brain on is, I think we’ve done a decent job talking about the benefits of tax-free forgiveness, obviously less money that’s paid out of your pocket, somebody else playing the bill, that’s a good thing.

I don’t know if we’ve done as much on the optimization strategy and the optimization side of this as folks are considering this strategy among others. As we look at someone who maybe making that decision of PSLF yay or nay, I think there’s the tax-free forgiveness but there’s also the question of, what else could I be doing with dollars to move forward my financial plan if I’m not having to put as much towards those loans because they’re going to be forgiven?

I know this is an area that you and the planning team do a lot of work with our clients on. Talk to us more about the optimization strategy here with PSLF.

[0:12:19.6] RL: They, the opportunity cost is that big decision point thereof, “How can I better utilize these dollars?” Sometimes it’s easy to fall into the PSLF route, right? I had a PGY1, PGY2, I was making not a lot of money, I don’t want to make extra payments, I’m going to go income-driven in the meantime and then when I get out of my residency, I’ve got 24 months of payments but I only owe $100,000 in student loans.

I could probably pay this back if I’m going to keep working but if you don’t, we have clients paying $3,000 a month to be aggressive towards your student loans and if that’s your prerogative, awesome but if you were to switch to staying income-driven, maybe your payment drops to $500 a month and now you can better utilize that $2,500 difference there.

Maybe that’s paying down other debts. Some parent plus loans that your parents took out and helped you with to get through school, maybe it’s paying down some credit card debt that you used to travel for residencies, maybe it’s to pay down auto loans, maybe it’s to save for that home that you’ve been – that delayed gratification you’ve had for the last 10 years probably.

Maybe that’s something you want to go towards or maybe it’s starting a family. We see a lot of spouses that decide to go part-time because we have lower student loan payments. There’s a lot of flexibility that that money gives you. There’s an old adage that says, money is power, I don’t believe that’s true. I think options are power and money gives you options, right?

If you have the ability to switch to a lower monthly payment while still achieving this long-term forgiveness plan, it’s saving dollars in the long run but also giving you the option in a short-term to best utilize those dollars for your personal financial life, I think that that’s really powerful.

[0:13:54.5] TU: Great stuff, Robert. I really appreciate you sharing your expertise and experience you’ve had in working with clients at YFP Planning. Now, we’re going to transition here in PSLF success stories.

[INTERVIEW]

[0:14:05.7] TU: Kimberly, thanks for coming on the show.

[0:14:07.3] KG: Thanks for having me.

[0:14:08.8] TU: Before we talk through your PSLF journey, tell us a little bit about yourself including your journey into the profession of pharmacy, where you went to school and the work that you’re doing now?

[0:14:18.5] KG: Sure. I actually came to pharmacy a little bit later in life than most people. I went through my undergrad program like many, I think do, just kind of floundering around, trying to figure out what was a good fit, so undergrad took a little longer than usual. During one of those kind of times in my life where I just wasn’t sure of my direction, my mom suggested, “Hey, why don’t you maybe take a little time off school but maybe go work in a pharmacy?” we’re always interested in that aspect, she was a surgical nurse so I grew up around medicine. 

I was like, “Okay, sure” so I went and applied as a clerk typist for a long-term care pharmacy in my town but ended up never taking the time off school, so I was doing full-time work and full-time school. I decided to get a business degree and just be done with it and then, I just never left the pharmacy, I worked as a clerk typist and then became med tech and I spent about eight years there and then I finally was like, “Well, I’m at the top of my game with what I can do here and I want more.”

So I decided to go to pharmacy school. I went, I started at Touro University of California in 2007 when I was 30 years old and graduated from there and am now after a stint in some in-patient pharmacy work, I am now anticoagulation pharmacist.

[0:15:44.5] TU: Very cool, thanks for sharing the journey. Tell us more about the amount of debt that you graduated with when you came out of Touro and how much was ultimately forgiven through PSLF?

[0:15:56.2] KG: I think, ballpark at graduation was right around, I don’t know, like 280, 290,000 when I entered repayment and then what ultimately was forgiven was about the $352,000.

[0:16:12.4] TU: Okay, obviously some interest that would have naturally accrued on that amount and then more was forgiven than the original balance and amount you had upon graduation.

[0:16:22.2] KG: Yes.

[0:16:22.8] TU: Okay, so our listeners know, we’ve talked a lot about PSLF in the show, they know that PSLF is one of many options when it comes to paying off student loans. My question here for you is, for folks that are – especially on that front end of making the decision about, is it PSLF, is it refinancing, is it something else.

That decision, although it’s very significant numerically can be paralyzing at times and so, tell us more about how you came to the decision to pursue PSLF, especially at a time, I would argue that there wasn’t as much information, tools and resources out there to support those that were on the PSLF journey?

[0:16:59.1] KG: Yeah, I was introduced to the PSLF program while I was still in school. There was an upper classman year ahead of me, had learned about it and was sharing the information about it and then I said, “That sounds like what I’m going to need to do” just because knowing how much I was going to graduate with what a standard repayment plan would look like. I didn’t know a whole lot about refinancing outside of the Department of Education kind of loan programs.

My loans had a variety of interest rates, anywhere from three to almost 8% just across the board and just looking at what extended repayment plan would be, was basically a mortgage payment in it of itself. I was like, “I’m not going to be able to do anything else with my life while I’m under this student loans” you know? The thought of, especially in the Bay Area of being able afford a house, have a child because childcare was going to be $1,500 a month. I was just like.

I’m already older than most of my classmates and this is just going to be part of my life but if there’s a chance that I can get it forgiven in 10 years and be done with it then that was what I was going to pursue, I really didn’t consider anything else.

[0:18:23.3] TU: That makes sense Kimberly, when I think of 280 to 290, especially at a higher cost of living area, out in California, other expenses, you mentioned childcare and so forth, you know 280 to 290, that’s a big monthly payment. You mentioned a mortgage payment that would be a really big mortgage here in Ohio but in California no. 

[0:18:41.2] KG: Right, not so much.

[0:18:42.0] TU: Yeah, I certainly see why that directed you down the PSLF path. Fair or not, there still a lot of skepticism and uncertainty about PSLF and one thing I mentioned to you before we hit record is that, I think there’s some lingering’s of horror stories of early situations and missteps that folks took and that’s still having an impact on perspective PSLF individuals today that are considering that as an option.

My question here is, were there any uncertainties that you had, any challenges that you faced along the way? That is just a long process, it’s a lot of time and I think often, folks are like, “What if it doesn’t go right?” What if something happens along the away? You got to the finish line but any uncertainties or challenges along the way?

[0:19:26.6] KG: Oh yeah. There was a lot of just they were not really forthcoming early on. The servicer wasn’t ensuring that you were in the right type of loans, there’s yeah. I, for the first maybe year I was in, a couple of my loans weren’t in the appropriate format. I finally got the right information, consolidated all my loans but that restarted the 120-payment clock. 

I was already a year later than into the program and so I was like, “Okay, well that’s fine, it’s just I’ll be maybe done in another year” but there was a lot of trepidation because nobody had reached that 10-year mark for a long time so we didn’t know how hard it was going to be, how many we’re going to be rejected. It was just blind faith, all we could do was make sure we were making payments on time in the right type of loan that we were certifying our employment.

I made sure that I was annually and any time I changed job, I changed job one time that I got my employment hours certified and submitted every year and made sure that everything was in line and cross my fingers. One thing that I didn’t realize, what was considered part-time, if one employer considers 32 hours a week full-time, that’s great but if your next employer doesn’t consider 32 hours full-time, then that doesn’t certify.

That is something you have to take into account when you’re thinking about changing jobs as well is that you know, does this job meet the requirement and/or is there going to be some payments that are going to be qualified, that just extends the timeframe.

There was a lot of learning on the go that had to happen and just kind of staying on top of everything and making sure that the documents are all in line was basically all I had to do and then once – 2017, I think was when the first people reached their 10 year mark and started doing their applications and oh my goodness, so many of them weren’t getting approved and for one reason or another, all the things that you started to hear and the reports and you guys were reporting on it, it was just like, “When my time comes up, what’s going to happen?”

Yeah and I think in the back of my mind, I was always a little worried about some administration’s going to come in and they’re just going to gut this thing and before I even get to that point, it’s not even going be in existence anymore. I had that anxiety as well.

[0:22:15.0] TU: Yeah, one of the things I shared with folks, Kimberly, when we were talking on this topic is that I think there’s been more angst previously about administrative changes that might come into program. I think that’s been eased more recently just because the tone has been a lot friendlier towards PSLF and backed up with some actions here in the last couple of years.

I’ve often said, I’m not sure that’s the biggest risk, I think the risk folks need to be thinking about is, what if for some reason I can’t find myself working for qualifying employer, you know? I think, what mobility or flexibility do I have if I need to pivot or move employers, I think that’s often something that folks need to be thinking about.

[0:22:53.9] KG: Right.

[0:22:55.2] TU: Kimberly, my last question for you is, one of the things I often encourage folks to be thinking about is, if you’re going to go into PSLF, go all in. The goal is to maximize forgiveness and minimize what comes out of your pocket. We certainly don’t want to be in the middle, right? Where we’re paying more than we have to and ultimately, those dollars could be forgiven and those dollars could be used elsewhere in the financial plan.

I think PSLF affords folks an opportunity if it’s a good fit for them to be able to pursue and prioritize other financial goals beyond student loan repayment. How did PSLF for you, help you be able to pursue other goals and was that a reality for your situation?

[0:23:33.3] KG: For sure. PSLF and being an income-based repayment, so a lower repayment than standard, did definitely free up some money just on the month-to-month basis and being able to have that meant that I could maybe move to a slightly lower cost of living area but still remain in California and purchase my first home with my husband and we had a child and we could afford to do all of that and then now without any, you know, having the forgiveness taken care of, now I can shore up the other parts of the financial picture. 

You know, making sure that we’re set for retirement, making sure that the kids provided for, for his education and feel a lot more safe and financially sound, so it’s been a blessing. 

[0:24:28.3] TU: That’s awesome. I was really excited when I heard the news of the $350,000 plus that was forgiven, so really excited for you for what lies ahead for the financial plan and thanks for taking time to come on the show and share your story. I really appreciate it. 

[0:24:41.5] KG: Thanks for having me. 

[INTERVIEW]

[0:24:45.0] TU: Ashley, thanks for coming on the show. 

[0:24:46.3] AH: Thanks for having me.

[0:24:47.5] TU: Before we talk through your PSLF journey, tell us a little bit about yourself including your journey into pharmacy, where you went to school and the work that you are doing now? 

[0:24:55.6] AH: Sure, so I came to pharmacy to pursue my love of working with people, my passion for healthcare, and really just my desire to give back and so that helper mentality really brought me to my career path of pharmacy and in terms of what that path looked like, I did all of my schooling at the University of Wisconsin Madison. I am a local, so that’s pertinent to know that I paid in-state tuition the entire time I was doing my seven total years of pharmacy course work there in Madison. 

After graduation, I did do two years of residency in Minnesota to specialize in oncology pharmacy and so I graduated in 2011, so after my two years of residency, I took my first job in Chicago at Northwestern specializing in hematology, oncology as well as bone marrow transplant pharmacy and so I was an in-patient pharmacist there for about five or six years before I took another detour and discovered Informatics and so I am currently back in Wisconsin working for UW Heath and I am working in Informatics now, so it’s been a fun journey and I guess now I am somehow about 11 years out of pharmacy school. 

[0:26:20.4] TU: I can relate to that as well. I mean, cool story of chemo training. Obviously you spent time specializing, transition to Informatics not one you commonly hear, so really cool, glad to hear you found that path that you enjoy. Tell us a little bit more about the amount of debt that you graduated with. You mentioned 2011, two years of residency. How much did you graduate and how much was ultimately forgiven through PSLF? 

[0:26:41.4] AH: Sure, yes, so throughout – I mentioned I was in school for seven years in state but it was a pretty direct path and I worked my way through school as well and in spite of that, I had about $200,000 that I took out total in loans throughout that seven years, so that’s the grand total. Actually, I don’t even know if I looked at that number very closely until the last few years when things are really – when I was working with YFP and really starting to get serious about some things. 

[0:27:15.1] TU: Our listeners know if they’ve been listening to the show for any time, we’ve talked a lot about student loans. I mean, they know that there is many options when it comes to paying them all. PSLF is certainly one of those options, so I am curious Ashley, how did you come to the decision to pursue PSLF especially I think at a point in time, 2011 when you graduated where the information tools, resources to support those that were on the PSLF journey just weren’t as good as there today, to be frank? 

[0:27:40.4] AH: Yeah, I would completely agree with that. You know, I think that I sort of by luck even came across the fact that the program was available and new to me, so I truthfully don’t know that I knew a lot about my other options but I did know though was that as a part of PSLF that I had a chance of having my loans forgiven after 10 years and that my payments would remain income-based and so having done two years of residency, it made sense to me that those two years, when my payments were next to nothing would count towards those 10 years. 

Then given the leg in recalculating payments, I kind of determined that almost half of my ten years, my payments would be extremely low and that actually ended up being true. I didn’t really hit what I would consider to be really high payments until the last three years of my PSLF, which luckily for me, two of those, almost two of those ended up being during the pandemic and so it was a lot of faith and believing that the program would work for me and knowing for me that I didn’t want to deviate from kind of the academic setting. 

I think that was another consideration is I knew that I would be tied to a qualifying not for profit organization and for me that didn’t feel like a restriction based on what my projected career path looked like and so you know, given the amount of debt that I had, I kind of took a leap of faith and went for it. I will say I did encounter another professional who was able to tell me that I was doing all the right things to be in the PSLF program about four years in. 

However, I did find that I had about $35,000 worth of loans four years in that weren’t in the program and so for me, that was a point where I was like, “Gosh, do I just pay it all off or do I continue in the program?” and what I ended up doing, my husband and I saved up $35,000 over the next couple of years and earmarked it for that portion of loan that wouldn’t be forgiven in my initial 10-year mark and so that was kind of my backup plan so that I could hopefully be done with all of my loans at 10 years regardless of what was all part of PSLF at that point. 

[0:30:14.0] TU: That’s a common thing Ashley that we hear, where folks realize you know, several years in. I am hopeful as time goes on that that’s going to happen less and less. You know, I think that there’s more and more information out there but especially for folks that were early on in the PSLF, we have to remember 2008, you know, this was enacted legislatively 2007. 2008 was the first group that was really the beginning of the 10 years and so you weren’t too far off from the beginning of it. 

So again, not as great of information that was available. Besides the 35,000 of loans that were not eligible and obviously was a wrinkle in the journey that you and your husband had to kind of work through, were there any other uncertainties or challenges that you faced along the way in the PSLF journey? 

[0:30:54.0] AH: You know, I think that that was the main one. I was very – you know, I’m a pharmacist, we’re all type-A so I was very diligent about completing the paperwork. I was also very skeptical when the program did hit 10 years based on the very low number of people who are seeing forgiveness being successful but other than the late discovery of loans that weren’t consolidated, I think that that was the main hiccup. 

You know, other than that, it’s just that anxiety and that uncertainty about not knowing if you are actually doing everything correctly and when you call the loan servicer, you get a different answer sometimes depending on who you talk to and that’s not a very good feeling and so that’s why I was very excited when I came across the YFP Podcast and I was able to start working with you. 

I actually got a lot of reassurance that made me feel like I was doing all the right things, that I was doing everything in my power to ensure that I was keeping myself eligible and in a position to be forgiven when that day came around. 

[0:32:01.3] TU: Yeah, maybe easy right now that we look back 10 years, you know? It may feel like, “Oh it wasn’t that bad but in the midst of it, you know, especially if there is five plus years ahead of some of that uncertainty, having that reassurance can be really valuable. Optimization of PSLF is something that we’re trying to talk more and more about. Yes, it is nice to have debt that can be forgiven and forgiven tax free, that’s great. 

But there is also this whole other strategy of because you are not making as big of student loan payments, it allows other dollars to be put to work at other parts of the financial plan and you already mentioned earlier Ashley that because of two years of residency and because of the delayed timing of how that income-based repayment amount has increased. You made a comment about five years out of ten, we’re really at a pretty low loan payment amount, certainly much lower than what it would have been like the standard ten year. 

[0:32:52.5] AH: Right. 

[0:32:53.1] TU: Then you also had to adopt at that two years of pandemic and so you saw some great opportunity throughout that ten years because of the residency, because of the pandemic. My question here is, because you weren’t having to make massive student loan payments throughout that entire journey because ultimately it was going to be forgiven, did that allow you to optimize other parts of the financial plan that perhaps you might be playing catch up on now? 

[0:33:14.9] AH: Yeah. I mean, I think it had a number of benefits allowing my husband, myself, and our family to do some things that we may not have otherwise been able to do and so in terms of just the payment strategy, I think it allowed my husband, for example, to work in a startup industry where maybe he wasn’t making his salary that he would have been if he had been working in a more corporate environment. 

You know, I think the payment strategy allowed us to purchase our first condo in Chicago, which ended up being really great investment than when we sold it. It allowed us to purchase the home that we live in now and it also allowed us to kind of put ourselves in a financial position where my husband was able to purchase a gym that we now own and that he runs, I should say we own and that he runs. 

I think the overall strategy has allowed us those opportunities really to kind of see some of our dreams come to fruition and now that we have this money that we’ve put aside in the event that the $35,000 worth of loans get forgiven, we have a big chunk that we can put to finish our basement, which is something that we didn’t really think was going to happen so soon and so yeah, I think overall the strategy and committing and staying in the program has had a number of benefits for our financial goals. 

[0:34:40.2] TU: That’s excellent. I really appreciate you taking time to share your journey. Congratulations on getting to the finish line and wishing you and your family the best going forward, so thank you so much Ashley. 

[0:34:50.0] AH: Thank you. 

[INTERVIEW]

[0:34:52.8] TU: Kyle, before we talk through your PSLF journey, tell us a little bit about yourself including your journey into pharmacy, where you went to school and the work that you are doing now. 

[0:35:00.8] KS: Sure, yeah. Thanks Tim, I am really happy to be on the show today and just give a little story about myself. So I am Kyle, I work in a hospital, a non-profit hospital system. I have been in that position for a little over 10 years. I graduated in 2011 from NEOMED and then I did my residency a year after that, so I’ve been kind of in the non-profit world for the last 10 plus years. 

[0:35:22.7] TU: First graduating class of NEOMED, so exciting. That’s where our paths crossed back in the day when I started on faculty there. You guys had a great class and we had the opportunity to work together for a period of time there as well, so excited to get an update on what you’re doing as well as your success here with PSLF. Tell us more about the numbers, amount of debt that you graduated with Kyle and how much was ultimately forgiven through PSLF. 

[0:35:44.1] KS: Sure. Yeah, I’ll kind of run through my numbers here. My total debt loan was $186,301.07. Just a little bit of breakdown on that, about 18,000 of that was from undergrad that I kind of rolled into the loan after I graduated. About a 168 or so, 160, 170 was from just pharmacy school going through that for four years because we were in a two plus four program and then after the $186,000 or so that was the principle, I also had accrued a little bit of interest. That number was $2,737 of interest, so if you look at the total, the principle plus interest that was recently forgiven was $189,038.72. 

[0:36:28.4] TU: Awesome, love the specificity too, so tells a bit you are doing your homework along the way, which is obviously important when it comes to loans in general but specifically with public service loan forgiveness, making sure that we’re crossing T’s, dotting I’s. Now Kyle, our listeners know that there are many options when it comes to paying off student loans. I often tell folks when I am teaching this topic, you know, whether we like it or not, the system around student loans and the complexities, it is what it is. 

It’s the hand that we’ve been dealt and so we’ve got to do our work to understand it and PSLF is just one of the many options that were out there. I am curious to know, how did you come to the decision to pursue PSLF where that was what you had thought was the best strategy for you individually especially at a point in time. You mentioned graduating in 2011 where the information tools and resources to support those on the PSLF journey just weren’t as readily available or good as they are right now. 

[0:37:21.5] KS: Yeah, that is a great topic and one that almost every pharmacy student that’s graduating should have some serious discussions about is the repayment plan but for me, we started pharmacy school in the fall of 2007 and if you remember the program for PSLF was started in October 2007, so we were just hearing about this program and certainly nobody had been in the program 10 years to have anything forgiven, so we didn’t know much about it. 

By the time I graduated in 2011, we were hearing more about the program and its availability and I always knew that I wanted to do residency, which in the hospital is most likely going to be a non-profit hospital depending on if you do one year or two year, you are probably going to have two years of non-profit work and I also knew I wanted to work in a hospital, so at the end when I graduated in residency and moved into a position, a clinical position and a shared position at NEOMED it was something that kind of fit the PSLF mold. 

Where I would be working for a non-profit and as long as I work ten years and made my on time payments, everything should be forgiven. The option for me was I always kind of have it on the back burner that this might be a perfect repayment plan for me because I had already planned to go the non-profit route and work at a hospital and then it kind of just all fell into place with this and then certainly as everyone is aware, the Biden administrations, their work on expediting the PSLF program and making sure those – 

You know, the intent of the program was true and I think that’s really what they did is make sure that if you work for a non-profit for 10 years that you are eligible for forgiveness, and they kind of wipe away some of the intricacies that maybe held some people back in the past. 

[0:38:58.4] TU: That exactly is Kyle why we are seeing so many folks now come forward with, “Hey, we’ve been forgiven. We’ve been forgiven” it felt like it was at snail’s pace for so long and part of it has just been time. You mentioned the timeline of when this was an active legislatively, so we are seeing more pharmacist that are coming forward but also because of some of that work that the admiration has done to help expedite the process and remove some of the nuances that are there as well. 

With that being said Kyle, there still is a lot of skepticism that I hear, a lot of uncertainty about PSLF and I think some of that comes from, you know, maybe some horror stories that have gotten over-glorified, some things that haven’t been updated in a period of time. Tell us about for you, any uncertainties you had along the way or challenges that you faced in the pursuit of PSLF? 

[0:39:42.3] KS: Yeah, that is a big one for me, so my story, I mentioned kind of having a little bit of some undergrad debt when I started in residency, I made sure to file the paperwork right away and get into the program just in case the program was done away with that way. They usually grandfather people in that were in there but one thing that I didn’t realize is I had FFEL loans while I was in the program for about a year and then I had called them. 

They basically said, “Well, you have to consolidate your loans into direct loans” and then at that point, it was probably 2012 when I did that and I consolidated them all together but in doing so, they also told me that’s going to push back my repayment date. Before the Biden administration updated their standards and how things will be forgiven, my repayment date or my payoff date was going to be May of 2023. 

I still technically had 15 months from now to go but because they moved everything up and actually some of those payments the first year didn’t count then and they had to restart their clocks so to speak, so that’s one thing that I don’t think was the intent of the original program was to make it so difficult with the type of loan you had to be eligible for the program. I think that is one kudos to the Biden administration for trying to solidify that plan.

That hey, it really doesn’t matter what type of loan you have if you are working in non-profit for 10 years, you really should be a part of the program and I think they’ve done a really good job of that, so that was probably the biggest challenge, in the beginning, was that I lost some payment time. The other challenge I would say for anybody who is in the program is just make sure you’re – one thing I did was I filed my paperwork on the dot every year. 

When I hit my anniversary at work, which for me was August 1st, every August 1st, I would file a new sheet with PSLF and send it to FedLoan to update my payment account and that way, any kind of mailings that they sent me, any kind of confirmations, I would have a file that I was tracking it along with them. I was religious to that, I did it every year to make sure how many payment accounts I had left and then I would know when my repayment date would be. 

That was another challenge I think that as long as you’re on top of it, once a year is probably enough to do that but you don’t want to delay that because your payment accounts won’t be updated until you send in your sheet. 

[0:41:55.8] TU: Great insights Kyle and one of the things that we like to talk about in the show is, when it comes to PSLF, often the strategy side of PSLF might get overlooked, and what I mean by that is that you know, typically the goal of PSLF is usually to maximize forgiveness and minimize what comes out of pocket and one of the advantages, therefore, can be allowing someone to pursue and prioritize other financial goals beyond student loan repayment if they have that mindset of what can I be doing to maximize forgiveness, minimize what is coming out of pocket. 

For you Kyle, how did the PSLF strategy help you be able to pursue other financial goals for you and your family? 

[0:42:32.7] KS: Yeah, another great thing that I think this program allows you to do to coincide with paying off the debt or being in the program is to prioritize other things that you want to do. In my case, just taking a step back for a minute is if you notice the numbers that I stated earlier, I didn’t pay a dime of principle through the entire ten years. My 186,000 and some change, that was the number that I graduated with and it didn’t come down one penny. 

When you talk about maximizing public service loan forgiveness, you know, that’s ideally what you want to do. You want to have the most available to forgive at the end of the 10 years. One thing that my wife and I did is we ended up filing our taxes separately. We were in the old IBR plan, which I am not sure you’re allowed to get in anymore. I think they have updated and there is a new IBR plan. 

That plan if you file separately, it will only look at my income as oppose to our total income, so we would file our taxes separately. Typically, that’s not advice that you would see for most tax professionals. For most people in the United States except in the scenario where you have student loans and you are in a program like PSLF and then you know, it is just allowed us to maximize some other things we did along the way knowing that hey, we’re making our payments, the payments count and now we can invest in other things like our IRAs. 

My wife and I both have IRAs, we have 529 accounts for both of our kids that were started when they were born, and then we actually had somebody left over, so we started a taxable account so we kind of maximized retirement and then we were able to save for some other things, you know, just house renovations and things that probably wouldn’t be able to be done had we’ve been paying, understand the repayment plan, which would have ended up costing us about 800 or 900 dollars more per month. 

[0:44:12.4] TU: 800 to 900 more per month, right? I think that’s where the numbers and the PSLF math can become so favorable. You highlighted so well Kyle, you know, how can you use that additional margin to expedite prioritize other goals, right? You talk about the tax strategy, super important, you know, college accounts, IRAs, 401(k)s, brokerage accounts and again, not to say having to wait until those student loans were gone to be able to pursue those goals, which we know is so important because of compound interest and time value of money. 

Kyle, I really appreciate you taking time. Congratulations, excited for you and the family to get through this important milestone and really appreciate you taking time to come on the show. 

[0:44:51.2] KS: I’m glad to come on and just wanted to at least give some evidence that the PSLF program can work for everybody and those are in it to stick with it and make sure you’re trying to maximize the amount forgiven at the end. 

[0:45:03.2] TU: Thanks Kyle, I appreciate it. 

[0:45:05.0] KS: Thank you. 

[END OF INTERVIEW]

[0:45:05.6] TU: Well, as we wrap up today’s episode hearing about some PSLF updates with lead planner, Robert Lopez, from the YFP Planning team as well as three PSLF success stories, now is the perfect time as we await the end of the administrative forbearance to make sure that you’ve got your student loan repayment plan knocked down. 

You’ve heard firsthand through these stories about why identifying the best repayment plan, whether it be PSLF, refinancing or another repayment option is so important to make sure that you’re optimizing your student loan situation and considering it as a bigger part of your financial plan. 

That is why we’re excited to have a one-on-one student loan analysis service that is offered by the team at YFP Planning that is specifically focused on having you identify the best repayment plan for your personal situation. 

For this service, you’ll work directly with one of YFP Planning certified financial planners to inventory your loans both federal and private, evaluate eligible repayment options including student loan forgiveness, income-driven repayment, private refinancing and ultimately determine that best repayment strategy for your personal situation. 

You can get started by visiting yourfinancialpharmacist.com/sla. Again, that’s yourfinancialpharmacist.com/sla and you can use the coupon code, “YFP” for 10% off. 

[DISCLAIMER]

[0:46:25.4] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information of the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment. 

Furthermore, the information contained in our archived newsletters, blog posts, and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analysis expressed herein are solely those of your financial pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer. 

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END] 

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