A recent report put out by the President of Student Loan Hero reveals that approximately 39% of graduating students cannot repay their student loans. The study goes on to state that one in five former college students are currently living paycheck-to-paycheck. With such overwhelming debt, it is more important than ever for graduates to find a suitable repayment plan and reduce financial stress during these tough economic times.
The “locum meaning” is a loan that is taken out to cover the costs of education. The “Student Loan Planner.” is an online tool that can help you find the best repayment strategy for your situation.
Are you currently being approached by locum tenens recruiters and wondering how an assignment will affect your student loan payments? New physicians as well as CRNAs, PAs and NPs often ask us about locum tenens student loans. These are the main problems I see with a locum tenens lifestyle with significant student debt:
- Non-availability of loans for government employees (PSLF)
- Difficulties in verifying your income
- Uncertainty about your long-term job
- A potentially more difficult period for refinancing
Fortunately, these problems can be easily overcome with a well thought out student loan plan. We specialize in helping people with part-time jobs deal with their student loan debt, especially when that debt is between $100,000 and $1 million.
Paying off medical school debt as a part-time doctor opens up opportunities that others don’t have. Here are a few of them:
- Adjusted gross income (AGI) lower than that of working peers (allowing 20-25 year loans to be forgiven).
- Performance of own services
- Flexibility in income and location
We will first examine the challenges faced by locum tenens practitioners and then highlight the opportunities open to them.
You cannot receive the LSPF while you are busy
The main drawback of locum tenens work is, in my opinion, similar to that of practicing physicians. You are not eligible for the federal welfare loan program if you work as a local employee. The reason?
The definition of locum tenens comes from Latin and means to occupy a place. This means that you are an independent contractor working on a site-by-site basis. Only full-time employees can take advantage of the exemption offered by the PSLF program.
As a result, temporary medical professionals have to repay their medical debts through IDR loan forgiveness for 20-25 years or through an aggressive repayment strategy such as refinancing.
How can I get a loan while working at home
Even if your locum tenens job doesn’t count toward the PSLF, you may be able to get a full-time job with an eligible nonprofit employer.
It would be a big mistake to refinance or aggressively repay your federal loans right away, unless you are sure you can’t do that.
I have seen many stories of physicians who worked part-time at home during their assistantship, internship, or early career as a supervisor and after a few years went to work full-time.
Remember that monthly PSLF payments do not have to be consecutive. This means you can make payments under a REPAYE or PAYE plan while working as a locum, and if you transfer to a qualified position, you may be eligible for PSLF.
Even if you work alongside a fellowship or part-time job, you may qualify for PSLF if your primary job is a full-time position with a government or 501c3 employer. In other words: A little locum work doesn’t ruin your job.
Receipts from credit institutions are a problem for Locum Tenens
Do you have to report all of your income as a locum tenens physician when you apply for income-based reimbursement programs? The answer is yes, according to the government’s definition of taxable income. If you look at the IDR verification form you have to submit every year, the government wants to know:
You must provide proof of all taxable income that you and your spouse (if applicable) currently receive. Taxable income includes, for example, the following items B. Income from employment, unemployment benefits, dividend income, interest income, tips and alimony.
It is clear that income as an independent contractor is earned income. However, this income varies greatly depending on your current job. Therefore, I recommend that you check the box My income has not changed substantially, unless you have a compelling reason to indicate otherwise.
Use of tax return to support income-related payments as local agent
If you indicate that your income has not changed substantially, you must file your tax return with the lender. Then you use your adjusted gross income (AGI) to determine the amount of your loan repayment.
If you had to call your credit bureau every time your income changed over the course of your employment to clarify, you would spend a lot of time doing so. So I only see the tax return as the best way to verify payments.
Temporary nature of local specialists can make planning difficult
If you don’t work long term, you may find it difficult to plan for the future.
If you have student loans and are taking a locum tenens job, this is important because you may or may not get a full-time position at a public or non-profit hospital one day.
For example, let’s say you were employed for two years. Chances are you will be working full time in a non-profit organization after retirement. If this is the case, you will still be entitled to the PSLF if you have worked for 10 years. In this case, your total compensation would be 12 years if you worked 2 years as a local employee and 10 years as a full-time employee.
If you try to make a comprehensive plan before you know what your future will look like, you may be making the wrong decisions.
In general : Never refinance your medical student loan until you are sure you will not be working in a 501c3 or VA.
How to refinance part-time
Most student loan refinancing companies I work with make the underwriting process easy for W-2 employees. Employees tend to have more stable incomes than independent contractors, so it makes sense. Still, as a salaried physician, one can certainly benefit from refinancing.
I contacted Commonbond to write this article (SLP readers get a cash bonus from this referral link) about the documents they require from an employed borrower. This is what they said:
Refinancing in a Locum Tenens employment situation depends on the type of degree the borrower has. If the borrower received an MD, DO, DMD or DDS, Commonbond should only require documentation of one year of income (1099 or full tax return). Additionally, if the borrower has one of these financial statements and operates as an LLC, we require one year of tax returns. However, if they have another type of degree, we usually ask for two years of proof of income.
If you are a dentist or doctor, it is easier for you to get your student loan refinanced. The need for tax returns for a year is a pretty low standard.
Also, don’t forget that if you consolidate your loans right after closing, you can get zero interest and a huge interest rate subsidy in the first year. So while refinancing in a local 1099 employment situation is not an easy process, it can be done.
Others, such as APs, NPs, and CRNAs, can still refinance with a locum tenens income history, but it seems that companies prefer two years of tax returns.
Ask me about your student loans
Cancellation options for student loans for replacements
Even if your job doesn’t qualify you for the PSLF program, you can still take advantage of student loan forgiveness while you work. You just need to have a debt ratio high enough to make the bill worthwhile.
For example, contractors with a 1099 salary can open an individual 401k and contribute up to $58,000 before taxes in 2021. That’s how it could work.
Timmy will do long-term locum tenens work and earn $250,000 a year as a 1099 contractor. He has $400,000 in federal student loans with an average interest rate of 6.5%. Without independent contributions to a 401k, various IDR plans are paid here:
But Timmy decides to go into business with an accountant who sets up an S corporation with a part-time salary of $120,000 a year. He pays $19,500 as an employee, plus 25% of his salary. This lowers his AGI by $49,500.
Instead of earning $250,000 for tax purposes, he now earns $200,500. Leaving aside the previous figures on student debt, the calculation is as follows:
Note that the value of the Pay As You Earn (PAYE) payments over 20 years, plus the tax bill, results in a lower dollar value today – over $50,000. It’s a lower present value, meaning you could get even more out of it if you invested that money and got a 5% return.
In most cases, you should work with someone like us and a CPA when preparing student loans for locums. The goal is to see if the reduction in your taxable income can make you eligible for a projected deduction under the current rules.
Employers may be willing to make contributions to repay your loans in exchange for a certain length of employment.
Benefits for the job: Income, workplace and labour flexibility
As a locum tenens doctor, the cost of living is generally very low. In most cases, your travel expenses, accommodations and even your malpractice insurance premiums will be covered by your agency. You can also deduct anything your accountant considers to be a business expense.
You also have more freedom and flexibility. And geography shouldn’t stop you from looking for the best paying jobs. You can work extra shifts to increase your salary. If you prefer to work less, that’s possible too (and you can count on income-based installment plans to make it financially feasible).
You may not be interested in working in large medical facilities. So use the services of Locum Tenens to visit many remote places that you would otherwise not see. In addition, locum tenens agencies are known to give bonuses to caregivers who work for extended periods in areas of limited supply.
Have a plan that reflects why you are working as a substitute
Most healthcare workers transition to full-time employment at some point. Until then, make sure the way you manage your student loans reflects your thoughts.
To pay off your debt quickly, consider a revised repayment plan (REPAYE) or refinancing. If you are not sure if you want to do a PSLF, keep your options open and your duty to the federal government.
Do you think you want to play temporary roles as a way of life for a long time? If so, you may want to consider a tax deduction.
Whatever path you choose, have fun and don’t stress about credits. We can help you when you need professional advice, because no one else thinks about locum tenens and lending strategies the way we do.
What do you think of the work of the Locum Tenens? Do you recommend it or is there anything you would do differently?
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All of the above rates reflect the APR. 1General obligation If you refinance over $100,000 through this website, $500 of the above cash bonuses will be provided directly by Student Loan Planner. General Bond Disclosure. 2Earnest: $1,000 for $100,000 or more, $200 for $50,000 to $99,999.99. For Earnest, if you refinance $100,000 or more through this site, $500 of the $1,000 cash bonus will be provided directly by Student Loan Planner. In the above price range, an additional discount of 0.25% is included for automatic paymentInformation on income.
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The “student loans forgiveness” is a program that allows students to have their student loan debt forgiven after they work in the field of public service for 10 years. The “Student Loan Planner”.
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- student loans
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