In depth article from the Wall Street Journal about the dramatic increase in federal loans for grad and professional school.
The article has a bit of an ideological tinge. They found a woman who said she stayed in a PhD program at a for-profit university to defer payments on her previous federal student loans, knowing that she would never pay the loans back.
The increase in med school loans is less of an issue. In fact, there are some private companies that are happy to re-finance federal loans at a much lower interest rate for med school students after they graduate.
The article also says that many new doctors are able to be eligible for “public service” federal programs that reduce debt by simply working for a non-profit hospital. The program was originally intended to have doctors serve in areas with high need, but some loan reduction incentives apply to work in any non-profit hospital.
The big increase in loans for law school students is an big issue. The article talks about how federal repayment reduction programs may in effect cause people to take out excessive loans, and can cause law schools to charge excessive tuition.
Georgetown Law used to have a video of a prof who explained why taking out the maximum amount of loans available was a great idea since the Feds would eliminate them after 20 years. However, due to the embarrassment – of the truth – GULC took it down.
You only need a nonprofit for PSLF. For IBR or PAYE (or the new version, I believe) it’s based on income level regardless of the tax status of the employer. There are a couple profession specific ones as well, such as for teachers.
One of the points in the article is that if we are going to continue to offer reduced payments and forgiveness for federal student loans, then there should be stricter maximums on the total amounts of federal graduate student loans that can be taken out.
The maximums are much less strict for grad and professional students than undergrads. When the politicians talk about helping students with paying back burdensome federal loans, they mainly talk about undergrads. However, the federal system is set up so that people with grad and professional degrees are likely to see most of the benefits of reduced payments, at great costs to the taxpayer.