Veterinary student debt Archives - VIN Foundation
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Veterinary student debt

VIN Foundation | Supporting veterinarians to cultivate a healthy animal community | Blog | ESTIMATE YOUR MINIMUM MONTHLY STUDENT LOAN PAYMENT | Advanced Simulator Setting - Poverty Growth Rate

Estimate Your Minimum Monthly Student Loan Payment

The recently updated 2018 Health and Human Services (HHS) poverty guidelines determine your minimum monthly student loan payment. 

Poverty guidelines are used for many different U.S. government programs. One of the most important uses for veterinarians is the Discretionary Income calculation used to generate the minimum monthly student loan payment of federal income-driven repayment plans (IBR, PAYE, REPAYE).  Income-driven student loan repayment plans are extremely helpful for those veterinary graduates with student loan balances greater than their annual incomes.

HHS poverty guidelines are updated annually in January based on recent inflation data. If you’re applying to use income-driven student loan repayment or renewing your annual income documentation in the coming days/weeks/months, your minimum monthly payment calculation will use the recently updated poverty guidelines for your family size and state of residence.  You should always double-check your loan servicer to make sure your minimum monthly student loan payment is correct.  Loan servicers like Navient, Nelnet, Great Lakes and FedLoan Servicing frequently make mistakes and usually not in a way which benefits you.

Here’s an example of how you can use the poverty data to math check your loan servicers:

Let’s say you’re renewing your PAYE plan this February. You’re married, you have one child, and you filed your most recent tax return jointly and plan to file your 2017 tax return jointly as well. Maybe your combined taxable income is $150,000 and your family size is 3.  Your minimum monthly PAYE payment is based on a measure called Discretionary Income, which is dependent upon your taxable income and family size:

Discretionary Income = Taxable income – 150% of the poverty guidelines for your family size and location.

The 2018 federal poverty guideline for a family of 3 in the lower 48 states is $20,780. (If you live in Alaska or Hawaii, the poverty guidelines will be higher.)

In this example, your Discretionary Income = $150,000 – 150%($20,780) = $118,830

PAYE is 10% of your Discretionary Income = $11,883/year or $990/mo.

Take this opportunity to check your loan servicer, re-evaluate your loan repayment plan, and run some loan repayment simulations using the VIN Foundation Student Loan Repayment Simulator.

You’ll find a “Poverty Growth Rate (%)” field in the “Advanced Simulator Settings” of the Loan Repayment Simulator.

VIN Foundation Student Loan Repayment Simulator - Advanced Simulator Settings

VIN Foundation Student Loan Repayment Simulator

 

This setting adjusts HHS Poverty Guidelines over time by the rate you specify. Generally speaking, poverty guidelines track inflation but with a one year lag. Changes for 2018 used inflation adjustments between 2016 and 2017. The 2019 poverty guidelines will be based on inflation between 2017 and 2018, which has been 2.1% (unadjusted).

Recent inflation trends have been below the long-term historical average of 3-3.5%; however, inflation is on a current trajectory to return to a more average value in the coming years.

How will the Poverty Guidelines Growth Rate impact your loan repayment simulations?

The higher the poverty guideline growth rate you enter, the lower your total student loan repayment costs. Inversely, the lower value you use, the higher your total repayment costs. It’s impossible to know exactly what inflation will do in the future, but history is a good gauge. Stick to a conservative estimate for simulations using something between 2-3% for the duration of loan repayment.

Happy Simulating!

And don’t forget the new My Student Loans tool in the VIN Foundation Student Debt Center — where you can upload your NSLDS files to summarize the loan data you’ll need to enter into the simulator.

As always, if you have questions or feedback on the Student Debt Center resources, please do not hesitate to ask!

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My Student Loans

Getting to and through veterinary school takes a long time and a lot of education. Along the way, you can borrow a variety of loan types to finance your education resulting in a complex student loan portfolio. Before you can formulate a repayment plan, you need to understand your student loans.  This short video tutorial will show you how to retrieve and upload your NSLDS file.

 

The VIN Foundation My Student Loans tool will help you make sense of your student loan portfolio. Using your National Student Loan Data System (NSLDS) file, My Student Loans will organize your loans by type, date received, interest rate, principal, calculate a weighted average interest rate, and estimate your monthly interest accumulation. This information is crucial for helping you determine which repayment plans you can use.

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VIN Foundation | Supporting veterinarians to cultivate a healthy animal community | Blog | Veterinary Student Debt Center Launches

Veterinary Student Debt Center Launches

We are excited to announce the launch of our Student Debt Center, a mobile-friendly comprehensive resource for all things related to student debt, in particular veterinary student debt.

With veterinarians leaving school having a debt load routinely exceeding two times their salary, and far surpassing the “healthy” debt-to-income ratio of most professions, this is a critical issue impacting the veterinary profession. Veterinary student debt-related stress is taking a toll on individuals and the profession – a toll measured in physical, emotional and financial stress. The VIN Foundation is answering the call to this crisis with the Student Debt Center.

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