BUSINESS OF PRACTICE: STRENGTHENING THE FOUNDATION OF YOUR PRACTICE


pending on the total amount borrowed. The monthly payment can be no less than 50% and no more than 150% of the monthly payment under the standard repayment plan. The monthly payment must be at least the interest that accrues.


Income-Driven Repayment Plans


PAYE. Payments under the PAYE plan are based on the borrower’s income and the total amount of debt. Monthly payments are adjusted each year as the borrower’s income changes and monthly pay- ments will be 10% of discretionary income, but never more than would be paid under the 10-year Stan- dard Repayment Plan. PAYE is for a loan term of 20 years. Initial loans can be issued no earlier than 2007 and disbursements must have been received after October 2011. Revised Pay as You Earn (REPAYE) is similar to


PAYE. If married, both the borrower and their spouse’s income or loan debt will be considered when calculating the payment amount, whether taxes are filed jointly or separately (with limited exceptions)—in PAYE this does not occur. Re- payment will likely continue into 25 years, due to graduate loans being included. Income-Based Repayment is similar to PAYE and REPAYE, but caps the monthly payments at 10% to 15% of discretionary income. Repayment is over a term of 20 to 25 years, depending on the types of loans held.


Income-Contingent Repayment is also similar to


those above but monthly payment will be the lesser of 20% of discretionary income, or the amount one would pay on a repayment plan with a fixed pay- ment over 12 years. The loan term is up to 25 years. Income-Contingent Repayment is available only for Direct-Loan borrowers. **It is important to note that income tax is


due on any amount that is forgiven for the standard income-driven repayment schemes. This tax is based on the fact that the forgiven amount is reported as income in the year it is for- given—the entire tax bill will be due THAT year. An excellent chart comparing these options and


their terms can be found at https://studentaid.ed. gov/sa/repay-loans/understand/plans. Ultimately, the choice of which repayment strategy to take de- pends on factors including individual and household income, children, career trajectory, and household expenses. Personal feelings about carrying debt also cannot be ignored—for some individuals, the concept of carrying a large loan that will not be paid off by the borrower (as with income-based repay- ment schemes) is not acceptable. The use of repay- ment calculators can help determine which is the best overall financial approach, while also taking into account the individual factors above. For standard borrowers who are recent or current


DVM graduates, PAYE is typically the best income- driven repayment choice—but everyone’s variables are different and individual assessment is impor-


168 2020  Vol. 66  AAEP PROCEEDINGS


tant. For borrowers who determine that they will repay their entire loan (NOT use income-driven re- payment with loan forgiveness), aggressive repay- ment to minimize interest charges will decrease the total financial burden. For borrowers who utilize income-driven repayment and forgiveness, paying the least amount of money into the loan will maxi- mize the financial benefit.


Loan Forgiveness


Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on Direct Loans after 120 qualifying monthly payments under a qualify- ing repayment plan while working full time for a qualifying employer. Private loans are not eligible for forgiveness with this program. Qualifying em- ployers include government organizations at any level (federal, state, local, or tribal), Not-for-Profit organizations that are tax-exempt [501(c)(3)], and other types of not-for-profit organizations that pro- vide certain types of qualifying public services. The PSLF has gotten substantial bad press over the last 2 years as some borrowers have reached their point of loan forgiveness. Unfortunately, many of the first borrowers to enter PSLF were misinformed about qualifying loans and payments—many 2007 loans did not qualify as is and needed to be consol- idated to qualify under the program terms. Veterinary Medicine Loan Repayment Program


will pay up to $25,000 each year toward qualified educational loans of eligible veterinarians who agree to serve in a National Institute of Food and Agricul- ture (NIFA)-designated veterinarian shortage situ- ations for a period of 3 years. Program details and a map of eligible areas can be found here: www. nifa.usda.gov/program/veterinary-medicine-loan- repayment-program. For mixed large-animal vet- erinarians, this may be a useful adjunct to loan repayment when working in relatively underserved areas.


Armed Forces F. Edward He ´bert Armed Forces


Health Professions Scholarship Program—students receive full tuition at any accredited veterinary, medical, dental, psychology, or optometry program, plus a generous monthly stipend of more than $2,000. There is an active-duty service obligation to the US Army is 1 year of service for every year of scholarship received. Army Active Duty Health Professions Loan Repayment Program pays up to $120,000 over 3 years to repay veterinary school loans for active duty; participants receive $40,000 per year for 3 years. For reserve duty, veterinari- ans are eligible for loan repayment of up to $50,000 over 3 years through the Healthcare Professionals Loan Repayment Program; participants receive $20,000 per year for the first 2 years and $10,000 the third year.


State-Funded Loan Repayment Programs—some


states have passed legislation establishing their own loan repayment or loan forgiveness programs for veterinarians.


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