Biden Continues the Pandemic Student Loan Pause

Good news for student loan borrowers, President Biden has extended the pandemic pause on federal student loan interest and payments for borrowers until September 30, 2021. You might remember this first started with the CARES Act last, which I discussed here.

No reason to make this complicated:

  • $0 Payments
  • 0% Interest
  • These months continue to qualify for both PSLF and IDR loan forgiveness programs.

While this is ultimately a small gesture in the context of the raging pandemic and the ongoing student loan crisis, this is an unequivocally nice thing for current borrowers. Attendings going for PSLF are probably the biggest beneficiaries nationwide.

If you’ve been wondering about the possibility of windfall loan forgiveness, most readers shouldn’t hold their breath. Biden has really only signaled an interest in waiving $10k, too small to make a dent for most doctors and one that is likely to be means-tested with a phase-out for higher earners. It’s possible that residents may still fall in the sweet spot there, but don’t expect to have your debt wiped away with the swish of a pen (ever).

For students graduating in 2021, you’ll still want to consolidate immediately. You should read the whole book (which is free), but the chapter on Direct Consolidation explains the rationale.

Charity Tax Deductions and the CARES Act

Another quick PSA:

The Trump tax cuts raised the standard deduction, which has meant that a lot fewer people are itemizing deductions. For example, the kind of house a resident can afford is the kind of house that doesn’t generate enough of a deduction to make itemizing worth it these days.

And if you don’t itemize, things like charitable donations aren’t deductible. Still worth doing, of course, but not meaningfully supported by the government.

Except for this year, because the CARES Act allows for a $300 “above the line” deduction for charitable donations, meaning that a) everyone can utilize it even if they don’t itemize, and b) the deduction also lowers adjustable gross income (AGI), which is what’s used as the basis for income-driven repayment (among other things).

So if you were on the fence about donating to any causes before the year is out, the government supports your giving a little more than usual.

Unisex Disability Insurance Rates Are Basically Gone at the End of 2020

I’ve been meaning to write about this for a while, but just wanted to put out quick post for those of you who should have already purchased disability insurance but haven’t gotten a policy yet.

Women pay more than men for disability insurance across the board (while men pay more for life insurance). One of the ways many female physicians have been able to avoid paying the tax of higher premiums is by purchasing a “unisex” policy. Recently, that’s been available with only one of the big six insurance companies, Principal. The unisex rate is typically significantly lower than a female-gendered rate, which is the reason why my wife bought a Principal policy several years ago.

Principal is getting rid of their unisex offering on December 31, 2020. If you’re a female attending or a female trainee in your final year of training with a signed employment contract, then you may qualify for a unisex policy. This is the time you want to at least talk to an insurance agent, price out some options, and make sure you don’t lose out on a much cheaper policy.

My internet friends the folks at Pattern are one option to rapidly give you your choices. (You have to buy a policy from an agent, but all agents are paid by the insurance company; policy quotes and information are always free to you). It’s always a good idea to talk to a couple of different agents to make sure you’re getting the best possible rates.

WCICON 2021

The next Physician Wellness and Financial Literacy Conference (WCICON21) will be online from March 4-6, 2021. I’ll be there virtually to answer questions and give two talks, one about writing (worth CME) and one about student loans. It’s a great opportunity to use those CME funds that are feeling neglected during the pandemic. Registration is now open.

In related news, this week is the White Coat Investor’s “Continuing Financial Education Week,” which means that all courses including Fire Your Financial Advisor are 10% off and they’re throwing in the original WCICON Park City course for free. You can nail that deal through this link.

What Money Buys

From How to Think About Money by Jonathan Clements:

First and foremost, money buys time and autonomy. Secondarily, it buys experiences. Last, and least, it buys stuff, and more often than not, the stuff we buy makes us miserable.

Most people live their lives with these in the opposite order, but Clements is absolutely right.

You don’t have to be a FIRE-fanatic to realize that setting up your professional life, spending, and saving to optimize for number one is the winning strategy.