Doctors do have the chance to work off the loans, through certain service commitments. I could see that for some college kids (more and broader than the current offerings.) She gets a job and the money gets paid back.
no, no, no . . . I don’t have all the answers but I know this is not the one.
Perhaps. But doesn’t the clock really start when the first year resident is only making $55k? Regardless of the balance at the end of ten years, I’d be interested in the OP’s thoughts about forgiving remaining loan balances for some top 1 percenters.
@bluebayou some residents we know continue to not pay at all…maybe forbearance?
The ‘clock’ starts when the first payment starts. The borrower makes 120 payments, not necessarily in 10 years. If the doctor/resident is smart, yes, he’ll make payments when his income is $55k, (if working in a qualified, non profit job) but if he requests a deferment? No payments made toward the 120 needed. The IBR has to be recalculated every year based on salary. For high income professions, the monthly 10% repayment is probably close to what the regular payments would have been.
Public service loan forgiveness is a nice deal for many, especially lower income professions, but it is only for some loans and most are getting Stafford loans and Perkins loans forgiven not the mega big (private) loans.
Why are federal loans considered harsh? The current undergraduate rates are somewhat reasonable considering that they are unsecured loans with no credit checks whatsoever. They have many flexable repayment plans including income based repayment. There are options for loan forgiveness for working in certain types of jobs. There are grace periods. Repayment is on hold until you are no longer a full time student. The total undergraduate loan limits are set so most people should be able to repay them.
So why are they harsh? Because the goverment expects them to be repaid? That they can not be discharged in bankruptancy? What am I missing?
Now private loans are another issue all together.
And yes, most of them are pretty smart. 
If not, there is plenty of financial advice available online. To wit:
Indeed. But perhaps not the future taxpayers, many of whom were class mates of those who loans will be forgiven.
http://www.businessinsider.com/loophole-forgives-student-loans-for-high-earners-2015-12
Ten years is a long time for a doctor to commit to public service and lower pay. How many are really going to think “Hey, if I just work for pennies for 10 years, I’ll have that big student loan forgiven.Yeah, that’s the plan, make no money and stick it to the taxpayers.” It’s really a nice option for those who want to stay in public service but wouldn’t be able to if the program didn’t forgive the loans. Go peace corps workers! Go asst district attorneys! Go teachers and social workers!
^^that’s the beauty of health care. The vast majority of hospitals and health care and research are non-profit and practically all qualify for the tax-free loan forgiveness deal. So, for someone interested in hospital-based practice and/or medical research, 10 years is a small part of the career.
My daughter was a Peace Corps volunteer. The only loan cancelled partially due to her OC service was her Perkins loan. Her Direct Loans were not reduced due to her PC service.
If she made payments during her Peace Corps time, she could have counted them toward the 120 payments. You have to be in an active repayment status (even if the payment is $0) to have the payment/month/time count toward the 120. If you are in deferment, the ‘$0’ Payment doesn’t count.
During PC Loans are in forebearance. Perkins loans are canceled partially. Direct Loans are not.
She began repayment when she completed PC, and paid for three years. She is now back in school…so loans are deferred.
Peace Corps recommended forebearance…not active repayment at $0. Since they advise thousands of PCV’s it seemed wise to take their advice.
Maybe they don’t consider the PC working. Did she get paid?
PC volunteers get a stipend at the end of their service. They get a living allowance during their service to cover local living expenses.
My student loans are on a 30 year payment plan and auto-debited. I could have paid them off long ago but my monthly payment is very low and my interest rate too low to repay early. My wealth manager agrees with not paying it off early.
@bluebayou, taxpayers are on the hook in the US system as well. If taxpayers get 80 cents on the dollar in both the US and Aussie systems but the US system wrecks credit and lives but the Aussie system doesn’t, do you think that the US system is better?
Good point on the quality of the students and programs, however.
Government-subsidized loans (certainly of the Aussie-variety) probably should only be given to those attending accredited public and non-profit schools (possibly after the student has net some standard) rather than to folks entering for-profit diploma mills that don’t impart any useful skills.
And why do some people insist on reading stuff I didn’t write? I never suggested increasing the amount of loans. In fact, earlier in this thread, you would have found me in favor of limiting them.
And I don’t get the revulsion towards automatic deduction for debt repayment. If you are an honest person, what difference does it make if it is an automatic deduction or whether you pay it off yourself? In either case money from your salary goes to pay off debt.
Because I also don’t want my landlord getting his cut from my paycheck and the electric company. What if I want to dispute the amount? What if the student loan gets paid twice and I can’t get them to fix it? It’s not being an honest person, it is losing control of your finances. As an employer, I wouldn’t want the hassle of paying bills of my employees. Employers don’t like garnishments.
I worked for a finance company that had a division in the ‘islands’, Bahamas, Caribbean, Panama. It was a little different down there, and we served as their check cashers too, something we could never do under state laws in the US. On Fridays, people would line up with their paychecks and at one station we’d cash the check, at the next we’d take our loan payment, and then give them back what was left. We didn’t really care what other creditors got paid, but we did. Every week. I don’t agree with that type of system. They really had no recourse to our taking our payment because they didn’t have banks or anyone else to cash their paychecks. Just like a company town. My daughter worked for Disney and they took her rent and charges out of her paycheck. No discussion, no accounting, the money was just gone from the check. Total loss of control.
@twoinanddone, and for that loss of control, you get income-based repayment where you don’t have to deal with the stress of paying student loans when unemployed and/or drowning in debt. Do you think that you’ll never have financial issues? To me, that’s a worthwhile trade-off.