Help with Residency Relocation Costs

For those moving for residency, there’s a new free service from a couple of fellow docs called Backlode.

The idea is based on the fact that moving companies can often be persuaded to give a discount for the return leg after a long-distance move (because they need to drive back to their home base anyway, and an empty truck doesn’t earn them squat).

The idea of the site is that you put your info in and see if you can link up with another graduating medical student or resident who is doing the opposite move and then coordinate your moves together.

Founder Arun told me this:

The idea stems from my own experience moving from Saint Louis to Ann Arbor for residency. I found a moving company in Ann Arbor that was moving an incoming fellow to Saint Louis within my time frame. Because they otherwise would’ve been driving home an empty truck, they discounted my move and saved me about $1,500.

My goal is to leverage the collective network we have as medical professionals and mitigate their relocation expenses by recreating this for others.


Neat. This isn’t even a money making thing, it’s just a cool way to potentially reduce the financial hit of moving when you’re already broke.

A Partial Win for Non-501(c)(3) Nonprofits & PSLF

When the Department of Education started reversing FedLoan’s employment certification form (ECF) decisions about qualifying employment, people were rightfully troubled. The American Bar Association (and four individuals) sued.

The case is over, and three out of the four won. That’s nice, but the fourth would have made all the difference.

The memorandum opinion from Justice Timothy J. Kelly filed on February 22 is helpful in understanding why. In summary, Kelly calls out the Department of Education for being both terrible and unconvincing:

The Court concludes that Defendants acted arbitrarily and capriciously when the Department changed its interpretation of the PSLF regulation in two ways without displaying awareness of its changed position, providing a reasoned explanation for that decision, and taking into account the serious reliance interests affected.


The Suit

PSLF-qualifying employment is straightforward in cases of government or 501(c)(3) work. The lawsuit, which concerns shifting definitions of non-501(c)(3) nonprofit eligibility, hinges on this part of the PSLF law (emphasis mine):

[A] borrower’s eligibility for the PSLF Program is not determined by her job responsibilities, but rather by whether her employer qualifies as a “public service organization.” Under the regulation, “public service organization” includes any government organization, not-for-profit organization classified under Section 501(c)(3) of the Internal Revenue Code, or not-for-profit private organization that is not classified under Section 501(c)(3) so long as it “provides [qualifying] public services” and does not engage in certain disqualifying activities. […] The qualifying “public services” include, among many others, “public interest law services,” “public education,” and “public service for individuals with disabilities and the elderly.”

The lawsuit alleged that the DoE changed the roles by adopting three new standards: the “Primary Purpose” standard, the “School-like Setting” standard, and the “Outright Provision of Services” standard.

These were essentially changed to limit the number of qualifying non501(c)(3) organizations by saying that an organization needs to not just supply public interest law services but to have that be its primary purpose; that an organization cannot just provide public education but most do so in a school-like setting; that it must provide “public service for individuals with disabilities and the elderly” directly and not just facilitate the provision by others.

The court agreed that the “primary purpose” and “school-like setting” rules were changed after the fact illegally. The court didn’t agree about the “outright provision” standard.

The American Bar Association (ABA) was the lead plaintiff. It initially qualified as a PSLF-employer because it provides public interest law services. Later on, this decision was reversed because the Department of Education decided that providing public interest law services was not its primary purpose. As we’ll see, the Department of Education changed the rules and pretended it didn’t. Not Kosher.

In the claim that lost, The Vietnam Veterans of American (VVA) was the employer. Although it “provides advocacy and support services to Vietnam veterans,” it does so be helping Veterans apply for and receive support services–but does not provide them directly. For totally obvious reasons, helping veterans in this capacity is meritless and should earn no governmental support.

As the law says, it’s not the work that matters, it’s the employer. Unfortunately, the direct provision requirement was felt by the court to be a valid reading of the initial law, and there was no written evidence/proof that the Department’s interpretation of this component changed over time.


What does this all mean, and how did we get here?

In 2016, the Department of Education basically said that FedLoan’s employer certification form (ECF) approvals don’t really count and could be reversed at any time including when applying for PSLF itself after 10 years. The Court shot them down pretty robustly: The DoE can’t just change the interpretation of the law in order to maliciously reduce the number of people who qualify for forgiveness. This is extremely reassuring. If your job should qualify and you get the go ahead, a reversal is unlikely to hold up in court. More or less.

There’s a big exception, which has to do with the failed fourth plaintiff.

The court pulled back from holding the DoE accountable to uphold FedLoans’ “mistakes” by reaffirming that the details really matter. The DoE can reverse FedLoan’s ECF approvals if it can justify the mistake as a “contractor error,” even if fixing that “mistake” would be devastating to the borrower.

Unlike the other cases where internal Department and FedLoan communications made clear that the Department was changing the rules after the fact, there is no clear evidence that the “outright provision” standard had changed over time. Remember: it doesn’t really matter what you do, it matters who you did them for.

The bottom line: if you have a some approved ECFs for a non-501(c)(3) organization that does something similar (i.e. something good but not direct), your PSLF-eligibility is not safe.


The Victors

The DoE basically tried to get off on a technicality, arguing that its capricious denial letters were not “final agency actions” (which is required for judgment in cases like this). They argued that nothing is “final” until the formal PSLF application is reviewed:

The Department does not make a final determination on eligibility
for PSLF until the borrower files her application . . . after making 120 qualifying payments.

The Court didn’t bite and pointed out that, more or less, it would take a special kind of idiot to be denied but keep working in a job that would doom them financially and then apply anyway years later in the vain hope that the government would throw them a bone.

[T]he mere possibility that an agency might reconsider in light of
‘informal discussion’ and invited contentions of inaccuracy does not suffice to make an otherwise final agency action nonfinal.


[The] Court concludes that the Department changed the standards by which it assessed whether non-501(c)(3) not-for-profit organizations qualified as public service organizations under the PSLF Program. Moreover, these changes were arbitrary and capricious because, in adopting the new standards, the Department failed to display awareness of its changed position, provide a reasoned analysis for that decision, and take into account the serious reliance interests affected.


Defendants argue that the denial letters did not have “an immediate or significant practical effect” on the Individual Plaintiffs because their “eligibility for PSLF had not yet been finally determined.” […] This is nonsense. In the face of growing debt burdens, the Individual Plaintiffs structured their careers and long-term financial plans around their eligibility for the PSLF Program. The Department’s determinations quite obviously had an “immediate” and “significant” impact on their ability to plan their careers and finances, despite the fact that they have not had (and may never have) the opportunity to submit an application for loan forgiveness.

Hear, hear!


Organizational Losers

The Court wasn’t interested in forcing the DoE to entertain requests to change its mind about qualifying organization-status:

As an employer, the ABA has no such rights or obligations, since it has no possible claim to loan forgiveness. And indeed, there is no procedure set out in [the PSLF law] or the Department’s guidance by which an employer can seek to validate whether it meets the definition of a “public service organization” in a manner similar to the process available for borrowers to track the number of eligible payments they have completed.

The flaw in appellants’ [finality] argument is that the ‘consequences’ to which they allude are practical, not legal.

So while the court can see how important it is for a non-profit to qualify for PSLF in order to attract and retain talent, this is not a legal consequence. Because, despite Citizens United and its toxic effect on campaign finance, organizations are not people, have no property rights, and thus no claim to PSLF.

There is no formal or legal appeals process for an organization to win back its status or appeal a rejection.


The non-501(c)(3) takeaway

Where you work can make all the difference. Again, government or 501(c)(3) work is a non-issue.

For those working at non-501(c)(3) organizations, when you worked matters, a lot. Because the rules changed.

If you started working in 2016 or later (or 2014 for public educational services), you probably were always under the new tighter definition. In this case, hopefully your job actually meets the requirements avoe. If it didn’t, you were probably denied already (“appropriately”). If you have an approved ECF, and your job doesn’t line up, this may have been a FedLoan contractor error and could be reversed. If you worked earlier and were rejected, like the plaintiffs in the case, than the DoE may have changed the rules on you and cheated.

Otherwise, look at your job and see if it passes the sniff test. Don’t ask yourself if you’re doing a public good–that’ how people got in trouble in the first place. It doesn’t matter what you do. Ask yourself if your job checks the right boxes.

Patriot Act inadvertently demonstrates the needless complexity of student loans

Hasan Minhaj, discussing student loans on his Netflix show Patriot Act.

You can’t call loan servicers financial terrorists. Terrorists take responsibility for their actions.

Full clip:

Minhaj spends a lot of time slamming Navient, which makes sense because Navient is terrible.

It’s a solid episode that also spends a nice amount of time lambasting Betsy DeVos (please see her 60 Minutes interview with Colbert commentary), the completely unqualified Trump appointee for Secretary of Education, whose main claim to fame in her current role is being wrong in everything she does and generally being an embarrassment. She was apparently picked because she is rich; she has no qualms practicing petty cronyism; and she believes in charter schools, defunding struggling public schools, and especially loves voucher programs that allow people to siphon money out of cash-strapped school districts to help them pay for private school.

But perhaps the best part is at the 17-minute mark, when Patriot Act inadvertently demonstrates the often-confusing and needless complexity of federal student loans by including a news clip that incorrectly describes the requirements for PSLF!

The expository clip states that both Direct and FFEL loans qualify for PSLF. FFEL loans don’t! The FFEL loan problem is one of the most common disqualifying reasons unsavvy borrowers get nailed for when applying for PSLF, and it has not and likely will never be addressed by Congress.

The clip also says you need to work at any non-profit organization. But that’s also wrong! In addition to government work, PSLF is specifically for 501(c)3 organizations or other orgs that provide certain qualifying services approved on a case by case basis.

Even a 27-minute segment on a well-produced show has a hard time getting it right.


Student Loans Books: Free Forever

When I began the project that eventually resulted in my two books on student loans, my long-term plan was to sell them temporarily, recoup some of the incredible time (and opportunity cost) burden of putting them together, and then eventually release them for free.

I’m happy to say that day is finally here.

From now on, you can always download the Kindle, epub, and pdf versions of Medical Student Loans and Dealing with Student Loans for free right here.

To receive your copy, you’ll need to sign up for my email list, and if you’re not interested in actually hearing from me again (which is totally fine), then just hit the unsubscribe link in the very first line of the email. (Okay, I admit I still haven’t actually started my newsletter yet, so I don’t have any gauge of how good it will be; the plan is quarterly [maybe?] starting 2019).

In order to subsidize the cost of giving these downloads away, I’ve brought on a sponsor. I want you to know that even though there will now be a single ad on a single page of this site (up from the current number of zero), there is no absolutely no tracking or cookies or anything of any kind. Ever. Because that makes the internet worse.

When I thought about who to bring on for the first sponsor, I may have left some cash on the table, but I specifically did not want to bring in a student loan refinancing company. While I have a relationship with most of them, these books are not about refinancing. That’s one chapter, which is a topic frankly not that interesting nor confusing, and I have no interest in endorsing one company over the nearly identical others within the context of this meticulously researched text, even by semi-passive association. So I instead reached out to Larry Keller.

If you ever read any of the sites in the proliferating physician finance blogosphere, you’ll certainly have seen Larry’s face, as he has done a ton to support doctors writing (about money) online. He specializes in disability and term life insurance—the former every doctor absolutely needs and the latter basically every doctor with a family needs—and he’s one of the good guys: an independent agent who knows what he’s doing and isn’t going to try to sell you whole life insurance. I also picked Larry for the first major sponsor of this site because he’s actually my insurance agent, so I can honestly recommend him without reservation.

But most importantly, I’m happy these books are free for the long term. I wrote them first and foremost to help as many people as possible, and making them free forever is the biggest part of that. While they say “student loans” in the title, these are also a good introduction to a decent chunk of personal finance for young doctors and other professionals.

So, learning about student loans and basic personal finance will cost you a few hours and not a dime. And, if you’re on the fence about the time, let me leave you with a quote from a recent review by Dr. James Dahle, author of The White Coat Investor:

[Dr. White] does a fantastic job though; I wish I had written the book. But more than that, I wish every medical school required it to be read before you could receive your first student loan.

Download your copy today.