student loans Archives

I’ve written a lot about student loan management and forgiveness over the last six years, so we often get question about student loans from new grads and travelers alike. One of my most recent articles on our FifthWheelPT blog was all about the student loan pause, its impact, and how I think it may end up playing out, which has gotten a lot of good feedback since publishing. After getting a few questions from prospective new grad travelers recently, I realized that I have written very little on this site specifically about student loans for travel therapists. In fact, the only article I’ve actually written about student loans on this site was about how Whitney and I managed to achieve a $0 monthly student loan payment while also paying $0 in federal taxes for several years as travelers while on an income driven repayment plan. Writing so little about student loans on this site is pretty crazy considering the primary motivating factor for most new travelers we talk to pursuing travel therapy is to make extra money to pay off student debt more quickly, or to save more money while working toward student loan forgiveness. Since some of the most common questions we get are about student loan forgiveness options for travel therapists, that should be a great place to start.

Student Loan Repayment and Forgiveness Basics

Therapists that contact us are often confused about what options they have as a student loan borrower. I can vividly remember spending dozens of hours reading and researching to figure out my options for repayment and potential forgiveness when I graduated seven years ago in 2015. In reality, it’s not nearly as complicated as I thought originally. The first thing to understand is that public and private student loans are different, and you may have either public, private, or a mix of both.

For private student loans, your options are very limited. You can either follow the standard repayment plan dictated by the lender, make larger or more frequent payments to get rid of the debt more quickly, or refinance with a different lender. Unfortunately for private student loans, the government student loan forgiveness programs are not an option, so it usually makes the most sense to refinance to get the lowest rate possible, and then pay off the loans as quickly as you can by making extra or larger payments.

For public (federal) student loans through the Department of Education, things get a little more complicated, but loan forgiveness becomes a possibility. For public student loans, you will choose one of the following:

Standard repayment plan: Equal monthly payments (based on your principle balance plus interest) each month for 10 years until loans are paid off. This is the most simple and straightforward repayment plan.
Graduated repayment plan: Payments start lower at the beginning and gradually increase over the course of 10 years until loans are paid off. This plan makes sense for those that expect to make more income as their career progresses and therefore want to save higher payments for later in order to start with lower payments as a new grad.
Extended repayment plan: Payments are spread out over 25 years instead of just 10 as with the options above. You can choose 25 years of equal payments or gradually increasing payments like with the graduated plan. Spreading payments over a longer period of time means lower payments each month, but also means more interest cost over the life of the loans.
Refinancing through a private lender: By refinancing your federal student loans through a private lender, you can often get a lower interest rate on your loans, which will help to lower the total cost you pay back. But, when you refinance, you also lose protections and optionality that you have from federal student loans such as forbearance and forgiveness. Carefully consider this option before refinancing any federal student loans. Once you refinance, you will need to focus on paying down the debt as quickly as possible at your new lower interest rate, as you lose any option to pursue federal forbearance or forgiveness programs.
Income driven repayment (IDR) plans: Monthly payment amounts are determined based on yearly adjusted gross income (AGI). For new or recent graduate therapists (the vast majority of our audience) there are only two IDR options Pay as You Earn (PAYE) and Revised Pay as You Earn (REPAYE). You can read about the differences and intricacies of these plans here. If considering student loan forgiveness as a travel therapist, or any therapist for that matter, you’ll be choosing one of these plans.

Types of Student Loan Forgiveness

In terms of federal student loan forgiveness programs through the Department of Education, there are really only three different types of loan forgiveness. First I’ll start with the two most common types of loan forgiveness that are available to just about all graduate school federal student loan borrowers:

Pay as You Earn (PAYE) 20 year loan forgiveness: forgiveness is achieved after making 240 payments (20 years worth) on this income driven repayment plan. After the repayment period, any remaining federal student loan balance is forgiven. The forgiven amount is taxed as ordinary income in the year that it is forgiven (meaning you will owe a large tax bill that year).
Revised Pay as You Earn (REPAYE) 25 year loan forgiveness: forgiveness is achieved after making 300 payments (25 years worth) for graduate student borrowers on this income driven repayment plan. After the repayment period, any remaining federal student loan balance is forgiven. The forgiven amount is taxed as ordinary income in the year that it is forgiven.

Now when considering student loan forgiveness and choosing between these options, it may seem like an obvious choice since loan forgiveness comes 5 years sooner with PAYE– but not so fast. The REPAYE option includes a monthly interest subsidy for unsubsidized loans that PAYE doesn’t have. For traveler therapists with a lower adjusted gross income due to tax free stipends, that subsidy over time can shift things in favor of forgiveness under REPAYE. I discuss this in depth in this article.

Public Service Loan Forgiveness (PSLF)

The third type of loan forgiveness is Public Service Loan Forgiveness. Under the PSLF program, forgiveness is achieved after making 120 payments (10 years worth) on one of the IDR plans outlined above while working full time at a qualifying government or non-profit employer. The biggest perk of PSLF besides it being only 10 years instead of 20+ like with the other two types of forgiveness, is that when the remaining balance is forgiven, no taxes are owed on the forgiven amount! PSLF is really an amazing program for therapists with large student loan balances. The negative of this program is that your employer options will be very limited during the 10 year period due to the requirement of having to work for a qualifying government or non-profit organization. This is either not possible or very difficult for some therapists.

Public Service Loan Forgiveness (PSLF) for Travel Therapists

At this point, if you have a large federal student loan balance, you’re probably thinking about ways that you could make PSLF work due to the benefits of a shorter time to loan forgiveness and not having to pay taxes on the forgiven amount. I was right there with you when looking into the various options at graduation. The problem was that both Whitney and I knew that we wanted work as travel therapists right away as new grads and that was non-negotiable. That’s when I got the idea that we would work as travel therapists, but only at non-profit hospitals! That way we would get all of the perks of being a traveler, while still making qualifying payments toward PSLF. If we chose to travel for 5 years like that, then we’d only need to work at a non-profit for 5 more years once settling down at a permanent position to reach loan forgiveness!

Unfortunately, I was to find our that it isn’t that easy, and you can’t have your cake and eat it too like I’d envisioned. The reason for this is that even if you were able to find consistent travel contracts at qualifying non-profit employers, which would be very difficult, the payments made during that time still wouldn’t count toward PSLF. You see, when on a travel contract, you aren’t technically an employee of the facility you’re working at even though you’re right there working with all of the permanent staff. You’re actually an employee of the travel company that you take the contract through. All of your pay and benefits are provided by the travel company, and there’s no such thing as a non-profit travel company. So unfortunately, PSLF just isn’t a viable option of student loan forgiveness for travel therapists, as much as I’d love it if it were.

What’s a Traveler to do?

Since PSLF isn’t an option, at least while traveling, your options for loan forgiveness are limited to either the 20 year or 25 year forgiveness through either PAYE or REPAYE respectively. Whitney and I chose to go with working toward forgiveness under REPAYE after running lots of different scenarios, due to the interest subsidy. So far that has worked out really well, and I was ahead by over $20,000 after 3.5 years of repayment by heavily investing extra money instead of putting it toward my student debt.

That certainly won’t be the best choice for all travelers though, since it involves additional risk. Many travel therapists choose to just forget about potential student loan forgiveness altogether and just pay off their loans as quickly as possible, putting all of their extra money earned as a traveler toward them.

No matter what you choose to do about your student loans as a travel therapist, it’s important to consider all of the options and make an informed decision that fits your risk tolerance and lifestyle. Remember that switching between repayment options is allowed, and sometimes what you choose while traveling won’t make sense once you settle down in a permanent position. If that’s the case, then re-evaluate all the options once you stop traveling!

I hope this helps clear up some of the options that you have for student loan repayment as a travel therapist. You can read more of my posts about student loans and finances as a travel therapist here and here.

Send us a message if you have any questions!

Additional Resources:

Written by Jared Casazza, PT, DPT — Jared has been a traveling physical therapist since 2015. He is a personal finance enthusiast and has written extensively about student loans and finance topics for therapists over the last several years.

Jared wrote an article in 2019 for Covalent Careers (New Grad Physical Therapy) website, which provides resources for PT, OT, and SLP. The title of the article is “Travel PT: The Path to Financial Freedom,” and Jared discusses how he has used Travel PT as a means to improve his financial future.

You can read the full article below to learn more!

Increasing Student Debt

With tuition prices continuing to increase each year, it’s no surprise that the amount of student debt that therapists are graduating with continues to rise as well. I talk to students and new grads every day through my site that are upset about the logistics involved with paying off six-figure student loan debt, while also doing their best to build a life after grad school. Some services, such as Fitbux, offer assistance with determining a plan to handle this debt as a new grad. Fitbux is a wonderful resource for developing the most optimal plan for getting to the zero debt finish line, and having a plan is a vital part of the process. But besides having a sound financial plan, another vital aspect is optimizing income. There are many ways to increase your income when coming out of school, including working multiple jobs or opening your own cash-based practice, but in my opinion, the easiest (and most fun) path to financial freedom is pursuing travel therapy contracts.

Financial Power of Travel PT

I began my travel therapy career directly out of school as a new grad three years ago, and this decision has provided me an immense amount of financial flexibility as well as an exciting lifestyle! As a new grad travel therapist, I was able to make twice as much starting out as some of my classmates taking permanent positions. The extra money earned from travel contracts, combined with keeping my expenses low while traveling around the country, led to me being able to save over $100,000 in 1.5 years after graduation. With this amount of savings, my student loans could have been completely eliminated during that time. Keep reading to find out what I did instead.

Flexibility in Student Loan Repayment

In addition to earning extra income, an often overlooked benefit of travel therapy is that it gives you more flexibility with the inevitable student loan payments. Many travelers choose to aggressively pay off their loans in the first couple of years out of school, like I could have done, which puts them in a great financial position. Others choose to go on the standard 10-year repayment plan while saving the additional money earned for other endeavors such as a downpayment on a home or for personal and family expenses. More may take a completely different route, like I’ve done, which is to choose an income-driven repayment option. With this option, I pay the minimum required each month on my income-driven repayment plan, while investing all leftover money each month into more profitable assets. I believe this is the best option since a big benefit of being a traveler is the tax-free stipend involved with maintaining a tax home and taking travel assignments. The stipends, in essence, increase your total yearly compensation while not increasing your taxable income, and therefore increasing your Adjusted Gross Income (AGI), which is what is used to determine your monthly income driven payment.

This already low payment can be reduced even further if the traveler is taking advantage of investing money in their traditional retirement account options, which also reduce your AGI. I have talked to fellow travelers who have been able to achieve a $0 monthly student loan payment this way. Currently under the REPAYE plan (one of the income-driven repayment options) half of each month’s accrued interest is forgiven, and this is a very powerful thing for someone with a high student loan balance and a very low (or $0) monthly payment. With this plan, the “effective interest rate” is basically cut in half, meaning that if your average interest rate is 6%, interest is now only accruing at around 3% each month. Therefore, if you are investing the extra money that you’re saving in retirement and taxable accounts with smart allocation, your returns from the stock market will almost certainly exceed the student loan interest rate over the long term.

Financial Freedom Equals Lifestyle Freedom

Having a low monthly student loan payment, combined with invested money earning consistent returns in the form of dividends and appreciation, is a recipe for financial and lifestyle freedom. In my first three years out of school working hard as a traveling therapist and investing heavily, I now have the financial stability and security to pursue other interests in addition to working as a PT. For me, this is expressed as working only three months per year for the foreseeable future, while spending the other nine months traveling both internationally and domestically. Travel therapy and generally managing my personal finances have certainly been the keystone in achieving this “semi-retirement” so early in my career. You can check out CovalentCareers Resources’s Ultimate Guide to Personal Finance for some extra tips! However, for others, it could be expressed in a variety of ways, whether that’s having more time to spend with their family by working part-time or PRN, being able to take more vacation time intermittently, or being able to retire earlier than traditional “retirement age.”

Travel PT: The Path to Financial Freedom

Travel therapy is a powerful way for new grad physical therapists to make significant progress toward paying down debt and getting on the path to financial freedom in a short amount of time. This independence can be used to reduce stress and potential burnout by working fewer hours per week or fewer weeks per year, which I have been able to take advantage of while going this route. Having a lower taxable income as a travel therapist also allows for flexibility with how you choose to pay off your student debt, which can lead to further financial freedom early in your career. This can be infinitely valuable depending on your situation. Traveling as a new grad physical therapist isn’t for everyone, but I believe that for the majority it can be a viable option with proper planning and professional growth prior to graduation.

You can check out the original published article at: https://covalentcareers.com/resources/travel-pt-path-financial-freedom/

A big thanks to Covalent Careers for featuring Jared on their site!

If you have questions about getting started on your career in travel therapy, please send us a message and we will be happy to help you along the way!

Tag: student loans

Travel Therapist Student Loan Forgiveness