Tag: doctor of physical therapy

Which Student Loan Repayment Plan is Best for the Average Travel Therapist?

~ Travel Therapy Mentor ~ Leave a comment

I’ve been writing and talking about student loans a lot more lately now that it looks like they’re finally going to go back into repayment in September 2023. Most people have thought very little about their student loans for the past 3.5 years while payments and interest have been paused. Now that repayment is about the start again, everyone is trying to determine the best plan for their own student loans, especially with recent changes.

The big change that I wrote about recently is the introduction of the SAVE (Saving on a Valuable Education) plan, which is going to be taking the place of REPAYE (Revised Pay as You Earn). I’d long been an advocate of the REPAYE plan for healthcare travelers, so now that SAVE is taking its place, many travelers have been asking if they should switch to SAVE, or if PAYE (Pay as You Earn) or potentially even the standard 10 year repayment plan would be best for them.

There are many pros of the new SAVE plan over REPAYE, but also a few cons as well. If you’re unfamiliar with the differences, then check out this article to see what all is changing. You can also check out this video we made discussing the new changes.

Some of the questions that we’ve gotten after putting out the above article and video about the new SAVE plan caused me to sit down with an excel spreadsheet to model out some scenarios to determine what is the best choice for the average travel therapist. The conclusion from the article and video were that basically the best choice would depend on your situation, especially what you chose to do after traveling, but that doesn’t really help people practically speaking. I wanted to go more in depth with some numbers and charts to give people a look at what plan might be best for the average traveler, along with the considerations that would impact the choice.

Check out the hypothetical scenario and the results below, which should help you determine the right student loan repayment option for your own situation.

The Average Travel Therapist Scenario

We’ve interacted with several thousand travel therapists over the years and have seen a variety of different situations.

Some travelers travel for only a contract or two and then settle down. Maybe because they found a facility or city they loved and couldn’t leave, maybe because they found their soulmate and decided to stay, or maybe because they decided travel wasn’t a good fit for them so they went back home to find a permanent job.

Some travelers, like us, start traveling and then can’t stop traveling. Either because of the higher pay, the adventure, the freedom, and/or the flexibility, they end up doing travel therapy for 5+ years before settling down somewhere. Some even choose to do a version of semi-retirement and continue to travel indefinitely.

These situations are outliers though. The average traveler travels for 2-3 years before settling down into a permanent position. I wanted this scenario to be representative of the majority of travel therapists to help as many people as possible. So, for the hypothetical scenario below, I chose to assume that this travel therapist graduates from school, travels for three years, then settles down into a permanent position where they receive normal raises over the course of their career.

Here are all of the details:

  • Single individual with no spouse or children
  • Travel therapist for 3 years after graduation
    • Working 48 weeks per year as a traveler and making $25/hour as their taxable wage
    • $15,000/year contributed to 401k for retirement
  • Permanent job starting after year 3 with a beginning salary of $75,000/year
    • 3% annual raises on permanent job salary
    • $15,000/year contributed to 401k for retirement
  • $140,000 in federal student loan debt at graduation, all from grad school, with no private student loans
    • 6% average student loan interest rate
  • The Federal Poverty Line (used to determine payment amounts on SAVE and PAYE) continues to increase at 2.4% per year, which is the average over the last 10 years

The traveler wants to decide between SAVE, PAYE, and standard 10 year repayment for their student loans, with the goal of paying the lowest amount over time.

First, let’s look at what this traveler’s annual taxable income, Adjusted Gross Income (AGI) after 401k contribution, and the federal poverty line will look like over time, to get an idea of how those variables change throughout the repayment period.

Annual taxable income and AGI stay steady for the first few years while traveling before jumping up due to the higher (taxable) pay at the permanent job. (Remember, as travelers our taxable hourly pay is lower than at most perm jobs, and this is what is used to determine student loan repayment, while stipends are not accounted for). After year three, total income and AGI after 401k contribution both rise in tandem at a rate of 3% (assuming 3% raises each year), and assuming the 401k contribution of $15,000/year stays constant. At year 25, annual income ends just below $140,000/year. The federal poverty line increases at the recent average rate of 2.4% starting at $14,580 (the amount for 2023) and ending at just under $26,000 after 25 years.

Payments Over Time

Next, let’s look at how this traveler’s payment would change over time on each of the repayment plans.

On the standard 10 year repayment plan, the payment amount remains constant at $18,648/year ($1,554/month) for the full 10 year term.

The PAYE plan would start with start with a low payment while traveling (under $100/month) before jumping to $3,652/year when beginning the permanent job after year four. This payment would gradually grow over time to $7,103/year ($592/month) in year 20 when the remaining loan balance is forgiven.

The SAVE plan would start with a $0/month payment while traveling (due to the low taxable income) and then jump to $2,478/year ($206/month) when beginning the permanent job after year four. This payment would gradually grow over time to $6,656/year ($555/month) in year 25 when the remaining loan balance is forgiven.

An important thing to point out here is that even though the repayment term on SAVE is five years longer than PAYE, the ending payment amount (and all the payments along the way) on SAVE is lower than the ending payment amount on PAYE due to the difference in how discretionary income is calculated. PAYE bases payments on 10% of the amount over 150% of the poverty line whereas SAVE bases payments for grad school loans on 10% of the amount over 225% of the poverty line. In practice, this leads to lower monthly payments on SAVE than on PAYE for any given income level. You can also see on the graph how the rate of change for payment increases over time is slower on SAVE than PAYE due to this difference.

Increases in Interest on Loans Over Time

Now that we know what the payments would look like over time, let’s compare the interest accumulation on SAVE vs. PAYE.

Here is where you can see where the new SAVE plan shines. Even though payments are lower on SAVE throughout the repayment term, no interest accumulates on the loans at all, no matter how low the payment is each month. The accumulated interest is automatically subsidized each month, which means the loan balance never grows.

On the PAYE plan, interest accumulates more quickly the first three years due to payments being lower while traveling. After year three, the accumulated interest slows down each year since payments are now covering a larger portion of the interest each month, making the loan balance grow more slowly. On PAYE, capitalized interest is capped at 10% of the original loan balance, so no more interest is capitalized after year two, but the interest continues to accumulate on the loans throughout the full term, which will become important at the time of loan forgiveness.

It’s interesting to note that at no point during the repayment term on either of these plans does the monthly payment get high enough to exceed the amount of interest accumulating each month.

The standard 10 year plan isn’t included here since the payment is a fixed amount each month and the loan is paid in full at the end of the 10 year term.

Ending Balance at Time of Student Loan Forgiveness

Now that we know how much interest accumulates each year on SAVE and PAYE, let’s look at what the ending balance will be for each of the different plans at the end of the respective loan period.

The standard 10 year plan would have no remaining balance after year 10. The balance on SAVE would still be the original principal amount of $140,000 at the end of the 25 year term, due to no interest accumulating on the loans over the full repayment term. PAYE would end with a balance of a little over $231,000 since the loan balance gradually grew over time as interest accumulated each month.

Taxes Owed on Forgiven Student Loan Debt

Now that we can see the ending balances for each plan, let’s take a look at how much would be owed in taxes on the forgiven amount at the end of the loan terms.

Currently, taxes are owed on any student loan debt that is forgiven outside of the Public Service Loan Forgiveness (PSLF) program. I believe there’s a fairly high probability that this will change over time, but for now, it’s prudent to plan to pay taxes on any forgiven student loans on the PAYE or SAVE plan.

There’s no way to know exactly how much will be due in taxes, because tax rates and standard deduction amounts change each year, but we can estimate. I think that a realistic estimate is 35% of the forgiven amount for this individual working a full time permanent job at the time of loan forgiveness.

Assuming a 35% tax rate on the forgiven amount, $49,000 would be owed on SAVE, while just under $81,000 would be owed on PAYE. This is a sizable difference between the plans.

No taxes would be owed on the standard 10 year repayment plan since no student debt would be forgiven.

Total Paid Over Time

Now let’s look at the most important part of this hypothetical scenario: how much is paid in total over the life of the loans.

Despite SAVE having the longest repayment term, it would result in the lowest amount paid in total by nearly $30,000!

The total payments over time between SAVE and PAYE were pretty close, but the big difference was the taxes owed at the end of the repayment term, which is due to the very generous SAVE monthly interest subsidy. Not having your loan balance accumulate interest over time is a really big deal.

The standard 10 year repayment plan would be by far the worst choice in this scenario. Not only would this individual pay $42,000 more than on SAVE and $13,000 more than on PAYE, but it would also be paid over a much shorter time frame. This is important due to the effects of inflation over time. $1 paid at year 10 is worth significantly more than $1 paid at year 20 or year 25. A dollar lost over 40% of it’s purchasing power in the last 15 years, to illustrate how significant the effects of inflation can be over time. For that reason, the standard 10 year repayment plan is actually even worse than it looks on this chart in inflation adjusted terms.

Considerations

In this hypothetical scenario for an average travel therapist, SAVE comes out significantly ahead of both PAYE and the standard 10 year repayment plan in terms of total amount of money paid.

Although I think this scenario is fairly close to the average traveler situation, of course everyone’s situation will be different in reality. For that reason, I want to now discuss how changes in various factors would change the outcome.

  • As income increases, PAYE and the standard 10 year repayment plan start to become a better choice. Assuming all variables above stay the same, but starting income at the permanent job increases to $95,000/year with the same 3% annual raises, all three of the repayment plans are actually pretty equal in how much would be paid over time when adjusted for inflation.
  • On the other hand, lower incomes heavily favor SAVE over the other two plans. This could also come into play for those that plan to switch to part time or PRN work at some point in their career, which means a lower income and favors choosing SAVE.
  • The higher your student loan balance, the more the numbers favor SAVE. The lower your student loan balance, the more PAYE and the standard 10 year plan begin to be a better option.
  • Higher interest rates favor SAVE. Lower interest rates favor PAYE and standard 10 year.
  • Higher retirement account contributions favor SAVE due to the lower AGI. Lower retirement account contributions favor PAYE and standard 10 year.
  • Getting married and/or having kids heavily favors SAVE. To illustrate this, let’s say that at the end of year 3, you get married (filing separately) and have twins. With all of the above variables staying the same, SAVE now would come out nearly $100,000 ahead of PAYE and $140,000 ahead of the standard 10 year repayment plan. This is due to how discretionary income is calculated on the plans as I mentioned above.
  • Traveling longer before settling into a permanent job favors SAVE; whereas, traveling for a shorter period before settling down begins to favor PAYE and the standard 10 year repayment plan.
  • There are also some situations where a traveler who thinks they’ll earn a very high income (well over $100k) once they settle down would be best off taking a mixed approach of SAVE while traveling to take advantage of the low payments and interest subsidy, and then paying off their loans ASAP once they stop traveling.

Taking a look at these variables, you can choose which options may more closely align with your actual situation. Then, try to determine which plan would be most favorable for you.

Conclusion

I hope that this article will give you some insight into how to plan for your own student loan repayment. Based on the numbers, it seems that most healthcare travelers will be in the best shape over the long term on SAVE, but there are a lot of variables to consider.

If you’re a traveler who plans to settle down into a normal paying perm job after a few years and have a family while saving for retirement, then it’s hard to make a case against SAVE.

If you’re a traveler who plans to stop traveling, start a business, earn a lot of money, and never have kids, then SAVE won’t be as beneficial.

If you’re a traveler who plans to travel for a long time while saving heavily, then only work part time/PRN when eventually settling down and having kids, then SAVE is a no brainer.

If you’re a traveler with a low student loan balance, then SAVE might not make sense and paying off the loans ASAP may be prudent.

Some people are very debt adverse, and even if it makes more sense mathematically to go on an IDR plan, they’d prefer to just get rid of their debt, and that’s understandable as well. Student loan debt repayment is basically a “choose your own adventure” where a lot of variables and psychological factors come into play. There’s no one size fits all answer for everyone, and sometimes even the best mathematical choice won’t be the right choice for you based on your life circumstances. But, assessing all your options and being well informed is vital.

If you aren’t sure what’s the best choice for you or want to double check your decision, I’d recommend creating an account at FitBux where they can help you assess your personal financial situation.

If you have questions about travel therapy or student loan repayment options for travel therapists, feel free to send us a message. We also have additional resources you can check out below!

If you’re interested in getting started as a travel therapist, check out our free Travel Therapy 101 Series and get connected with the best recruiters by filling out our Recruiter Recommendation form.

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Jared Casazza

Written by Jared Casazza, PT, DPT – Jared has been a traveling physical therapist since 2015. He has become an expert in the field of travel healthcare through his experience, research, and networking over nearly a decade.

Travel Therapy with My Spouse & Kids

~ Travel Therapy Mentor ~ Leave a comment

Here at Travel Therapy Mentor we often get questions from clinicians who are considering travel therapy but who are wondering if they can make it work with their spouse and/or kids. Fortunately, we know many healthcare travelers who have hit the road with their family and found different ways to make it work.

You can check out this post where travel nurse Alex discusses how her and her husband, a physical therapist, travel with their kids and alternate taking travel healthcare assignments. Or this post, where Kayla, a physical therapist, discusses traveling with her spouse who works remotely.

Below, we are excited to bring you Michael’s story. Michael is a physical therapist who travels with his wife and two kids, and his wife takes care of their children while they travel. We hope these stories will be inspirational to you and give you insight if you’re considering pursuing travel healthcare with your spouse and/or family!

Pursuing Travel Therapy with My Family

During the COVID-19 pandemic, I am sure I can speak for many people when I say that working as a healthcare provider, especially in the hospitals, was utterly exhausting. I love what I do as an acute care physical therapist, but the feeling of burnout really started to feel overwhelming as we were pushed to our max, with little hope in sight that weekend requirements and work-life balance would improve.

It was at this time in the early months of 2021, that I began to sincerely feel a change needed to be made. Shortly after I had started to feel this stirring for something different, my wife, Tessa, suggested one night the idea of doing travel therapy. Tessa expected me to say something along the lines of, “No way, you must be losing your mind!” But unbeknownst to her, I had already been considering it.

I was both surprised and a little scared, if I’m being honest, about the real prospect of leaving our permanent positions to pursue the travel therapy life. But, WOW, am I glad we took a chance and decided to embark on this new adventure together!

One of the most important factors for us as a family was ensuring our “why” aligned with this transition.

We realized that travel therapy could help us towards our ultimate goals:
  • avoiding burnout professionally
  • our desire to travel and explore this beautiful country rather than waiting for our “some day”
  • continuing to make progress towards our financial goals of paying off student loan debt and saving for a house
  • allowing Tessa to spend more time at home with the kids during these important formative years, without completely sacrificing our income
  • and seeking opportunities which offer a better work-life balance to open up the door for more quality time as a family

As we more seriously considered this opportunity, we began to dig deeper into researching what we would need to do to prepare ourselves to make such a transition. From me leaving my permanent acute care position, to my wife deciding to leave her PRN nursing position, we decided to say “YES” to our new adventure!

Making it Work: Logistics of Traveling as a Family

Getting On the Same Page

It may sound cliché, but I truly believe the most important first step in making a transition to travel healthcare, if you are married, is to ensure that you and your spouse are both on the same page. Tessa and I promised each other that we must both be in agreement that this is the right step, since this wasn’t just going to affect the two of us, but our two young kids, Luca and Marley, as well.

Telling Our Families

We knew telling family would be tough, and it was, as they were sad that we would be gone for several months at a time. With the kids having grown up no more than ten minutes away from all our Ohio family, we knew that being away from family for possibly half a year at a time would be extremely difficult for everyone at first. However, after the initial shock our intentions sunk in, they were very much supportive and understanding of why we were pursuing this lifestyle change.

Deciding on Housing

Once we were committed to pursuing this journey, we started doing research on the housing type that would best fit our needs. RVing was something we were strongly considering. This led us to joining a few full-time living RV Facebook groups to learn about family life in an RV, what we would need, and how to take care of an RV. The more we discussed and researched, the more we felt ourselves leaning toward getting a camper instead of navigating short-term housing. We ultimately decided it was important for us and the kids to have consistency when it came to “housing,” so the RV life it was!

Buying Our RV & Truck

We decided on a fifth-wheel camper (33 ft 2012 Keystone Cougar), which meant we would need a truck to pull it. In order to stay on budget, and to meet our goal to not go further into debt to start this endeavor, we made the tough decision to sell our beloved Ford Explorer in order to purchase our camper and truck. We did a lot of research on trucks as we wanted to ensure we had “enough truck” to safely pull our camper from the east coast, through the Appalachian Mountains, or even as far as Arizona. After much searching and patience, we settled on our 2008 Ford F-350 dually, which we have been incredibly pleased with throughout our travels.

When traveling, I will drive the truck, pulling the camper, while Tessa and the kids follow behind in our Honda CR-V.  Once at our campground location, I drive the CR-V back and forth to work, while Tessa and kids have the truck available if they need it, but typically there are enough things to keep them entertained at the campground.

Getting Prepared to Start

If anyone is a very “Type A” personality like myself, you will understand the stress and worry that goes into preparing for such a big transition. I am definitely one who researches and plans as much as possible beforehand, so this is why I was so relieved when I found out that Jared and Whitney had created a comprehensive, everything-you-need-to-know travel therapy course to get us started. Their course gave us the insight and guidance we needed to go into our first travel therapy assignment well prepared and confident. It also personally gave me such peace of mind that I was doing the things I needed to ensure my first assignment was successful and a good first experience.

Day-to-day Life, Adventures, and Making Memories

Tessa and the kids have found fun things to do during the days while I’m working. Depending on the area, Tessa will occasionally take the kids to a local library for group activities, story times, socialization, or to simply read books.  Between bike rides, playgrounds, swimming, visiting other campground friends, playing outside (or inside on the rainy and/or cold days), and our kids’ always-favorite golf cart rides, there is usually plenty to keep the kids entertained during the day.

It’s no secret that Tessa has the harder job, entertaining two highly energetic kids, while managing the cooking, cleaning, and also performing regular weekly emptying of the RV tanks if it needs done during the day. Outside of managing all that, Tessa takes advantage of nap times (or “quiet time” for our 4-year-old) to exercise, including walking/running outside around the campground, cardio workout videos, or body weight exercises (inside or outside weather permitting). Depending on the location, a few campgrounds have had workout rooms, but if not, another option has been for Tessa to look for workout facilities that offer childcare (ie. YMCA, Crunch Fitness).

Some people considering a transition to the travel life may fear feeling alone or isolated with no friends or families to connect with during assignments; because I know we did in preparation for our first assignment. But we have been so blessed to have met so many wonderful families and people whom we now consider great friends. We even had previous campground friends from North Carolina come to visit us for a week while we were on assignment in East Texas. The ”regulars” at campgrounds definitely promote a family atmosphere, and as such look out for each other, especially those with young kids so that new families to the area feel safe and supported.

Outside of the campground and day-to-day life of living in a camper, we have had so many great experiences exploring the beautiful areas of the places we’ve been. Thanks to some of my assignments allowing me to work four 10-hour days each week, we have been fortunate to do some fun site-seeing. While in the Carolina’s, we took advantage of the beautiful landscape to experience some amazing hikes and checked some state and national parks off our list. While in Texas, we experienced the Stockyards (highly recommend if you’re ever in the Fort Worth area), the Dallas and the Fort Worth zoos, and of course some amazing BBQ.

However, don’t let some of our highlights give the impression that you have to spend a lot of money to have fun. We are also diligent to look for “free fun” and budget-friendly activities most of the time, such as parks, picnics, and hiking. Our kids have loved all of our adventures so far, and many weekends will ask, “Can we go on an adventure?” as they look forward to doing something new and exciting. We are thankful for these times we’ve had exploring different parts of this beautiful country, but the most important part of this experience is the valuable memories we have made together as a family.

Suggestions for Others Looking to Travel as a Family

Depending on the size of your family, and the ages of the kids, you may decide, like we did, that consistency of environment is an important factor and lean toward getting a camper/RV to begin your travel healthcare journey as a family. This option also provides an easier route for transporting items such as books, bikes, swim toys/inflatables, bedding and stuffed animals, kitchen items and utensils, and more.

One of the most important factors to making a successful transition to traveling if you are considering getting a camper/RV is to do your research ahead of time. Some may be in a position to make this transition happen sooner, but for us, this meant spending several months researching, learning, planning, preparing, and saving money before we could begin our journey.

Based on the needs of your family, you may decide to be pickier when it comes to camper layout. For us, having a separate bunk room for the kids was important so the kids can have their own space for toys and clothes, and also provide a quieter place for nap times, or “quiet time” if they are growing out of naps. 

There is a lot to learn about living in a camper, whether it’s a travel trailer, fifth wheel, or drivable RV. Plus, if you don’t have, plan on having, or are unable to afford a drivable RV, you will definitely want to research dependable truck size (and power) to ensure you have “enough truck” to pull your camper weight. You also want to determine what types of areas you might look to travel. Are you wanting to stay more local, within your state or maybe only 1-2 states away?  Or are you open to, and possibly considering, going anywhere and everywhere? You want to consider some of the possible distances you might cover, and if you’re going to be going through mountains to get there.

A great resource is to join Facebook groups related to full-time RV/camper living (ie. “Full-time RV Families”, “Full time RV Living with Kids”). These groups provide a wealth of knowledge from individuals and families living life in a camper/RV. You will learn some very useful tips and tricks, especially recommendations and lessons from people who have “learned the hard way,” helping you to avoid similar mistakes.

Some areas may even have Facebook groups that can provide helpful information in regards to alternate campground vs. housing options (possibly outside of the typical platforms of AirBNB, Furnished Finders, Vrbo, etc.), or recommendations for family-friendly things to do or see. When considering short-term housing vs campground RV living, finding and moving to short-term housing may be easier at times, but campgrounds will typically always be cheaper. Although, buying a truck and camper will be a bigger up-front cost, so I recommend crunching the numbers and determining the potential cost-analysis based on how long you may potentially travel.

Looking Toward the Future

Overall, we have been very happy with our decision to pursue travel therapy as a family, and very happy with our choice to travel in a fifth wheel camper. We have had amazing experiences as a family and made many life-long friendships in the process.

As for the future, we are definitely discussing when we may settle down vs. continuing to travel. In regards to school for the kids, Tessa currently does pre-school level activities with Luca who is 4 years old. Marley is 2 years old so we have a while before school will be a concern for her. We have talked about the possibilities of home-schooling the kids for a time, but haven’t completely decided how long into school years we will travel. We are currently saving to buy a house, and possibly might settle down by the summer of 2024, which would be a good time for Luca as he starts school. But, we are still open to extending our travel adventures if we decide it’s still what we think is best for our family!  Home truly is wherever we’re together!

About Michael & His Family

Hi, I’m Michael. I was born in St. Louis, Missouri, but my family moved to Mount Vernon, Ohio when I was 6 months old.  I transferred high schools going into my Junior year, which is where I met and started dating my now wife, Tessa. We got married in 2016, after dating for nearly 9 years. I got my undergraduate degree in Exercise Science from Olivet Nazarene University in Bourbonnais, Illinois. Then I completed my Doctorate of Physical Therapy degree in 2017 from THE Ohio State University! I started out my PT career in acute care in a level 2 trauma hospital in Columbus, Ohio. This August (2023) marks 2 years since my family and I started doing travel therapy, but I still hold two PRN positions at a few hospitals back home in Ohio, which allows me to pick up shifts any time I am home. Tessa and I have two wonderful kids, Luca (4) and Marley (2), and they LOVE the travel life and all the places we get to explore. Marley was only 10 months old when we started traveling, so travel life is pretty much all she’s known.

Feel free to follow along with us as we continue our adventures!  Follow us on Instagram or email us if you have any specific questions or just want to connect as a fellow travel family.

Ready to Start Your Own Travel Therapy Journey?

We here at Travel Therapy Mentor would love to help! Our free Travel Therapy 101 Series is a great place to start learning some of the basics. If you’re ready to dive deeper and learn everything you need to know to be a financially successful travel therapist, take a look at our comprehensive travel therapy course.

If you’re within a few months of starting your journey, you can fill out our Recruiter Recommendation form to get connected with the best travel therapy recruiters. Feel free to message us if you have any questions!