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Income Based Repayment(IBR)....whats the scoop?

Discussion in 'Financial Aid' started by dreambig2night, Oct 18, 2010.

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  1. dpmd

    dpmd Relaxing

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    Hope this helps.
  2. Dermologue

    Dermologue

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    That was helpful, however, the only part where you confused me was,

    "Consolidating will allow you to extend the repayment period (lowering your monthly payments to a level you might be able to afford), or you can do the IBR which will keep payments at a level they feel is affordable"

    I assume we can consolidate AND do IBR.

    Thanks
  3. Dermologue

    Dermologue

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    That was helpful, however, the only part where you confused me was,

    "Consolidating will allow you to extend the repayment period (lowering your monthly payments to a level you might be able to afford), or you can do the IBR which will keep payments at a level they feel is affordable"

    I assume we can consolidate AND do IBR.

    Thanks
  4. DrBender79

    DrBender79

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    Yes, you can consolidate and do IBR. In fact, you'll probably have to consolidate if you plan to do IBR for 10 years for PSLF, because your loans have to be Direct loans for them qualify.
    I have basically same debt scenario as you ($276k principle, $36k interest) and am starting residency at a non-profit hospital this summer.
    I plan to:
    1) consolidate everything into a Direct Loan and do IBR during residency.
    2) Decide whether or not to do fellowship. If yes, do fellowship at non-profit hospital and continue IBR.
    3) During my last year of residency/fellowship I will scope out jobs at public vs. private institutions.
    4) If PSLF is still available to docs at that time, I will be able to calculate based on salary whether it's financially better to take public or private job.
  5. Dermologue

    Dermologue

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    That was helpful, however, the only part where you confused me was,

    "Consolidating will allow you to extend the repayment period (lowering your monthly payments to a level you might be able to afford), or you can do the IBR which will keep payments at a level they feel is affordable"

    I assume we can consolidate AND do IBR.

    Thanks
  6. dpmd

    dpmd Relaxing

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    I meant consolidating afforded you both options (an extended repayment with payments that are the same but less than standard repayment-works for people like me whose loans aren't as much compared to family income but still too much for a standard repayment amount to be feasible, or IBR which still has an extended repayment, but the payments are lower for those whose family incomes aren't enough to make the usual extended repayment payment because their loans are greater or their family income is less-you end up paying more interest since you are paying less money, but if you can't afford anything else it is better than paying nothing).
  7. airportsong

    airportsong

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    I'm planning on consolidating all of my med school loans to direct loans, but as a previous poster alluded to, I want to do it as late as possible so as not to lose out on my grace period. According to the DL website, borrowers receive their first bill within 60 days after consolidation, and they recommend consolidating halfway through the 6 month grace period so as not to forfeit the remaining grace period. But my question is, what if I want to wait until the end of my grace period (late December) to consolidate, will this give me an additional 60 days of grace, or do I risk delinquency this way?
  8. dpmd

    dpmd Relaxing

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    If you wait until the end of your grace, you will have to make payments to the current servicers (which you may not be able to afford). If you don't pay the full amount you will probably get a late notice (with or without some kind of late fee depending on their rules) but wouldn't default or anything. If you don't pay anything you will get late notices in the mail, plus probably calls, and it might get reported to the credit bureaus as past due (not good for your credit score). Still probably wouldn't be long enough to actually default though. You could wait until a month before your grace ends then if they only take a month you are golden, if they take two it isn't that long to be overdue if you don't pay, and if they take three (which they might-you never know) you would still only be 60 days overdue (probably wouldn't get reported, 90 days likely would).
  9. airportsong

    airportsong

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    Thanks for the info! Guess I'll just suck it up and consolidate halfway through the grace period.
  10. rgerwin

    rgerwin Senior Member

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    Question: If I consolidate while in school, how do I report AGI? DO I use my tax return with my spouse's income? Or do I speculate for 2011 as a whole, which would be super difficult bc my spouse freelances? or what?
  11. IMer22

    IMer22 IMer22

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    I am graduating soon with a substantial amount of debt from a private school and likewise have also been thinking a lot about IBR.

    My big debate has been whether or not to consolidate now while still technically in school or wait until half way through the grace period as discussed above. The pro of waiting is of course that the interest on my subsidized loans will be covered for the the duration of the grace period. The big potential con is how waiting may affect my IBR payment, especially since my career plans should qualify for the PSLF program (assuming it is funded 10 years from now . . .).

    I have read various advice encouraging graduating medical students to file 2010 taxes, and I did this. This theoretically should make my IBR payment $0 for the first year due to the very low AGI on my 2010 taxes. The $0/month payment would be better than my grace period, since under IBR any interest on subsidized loans that it not covered by one's monthly payment is payed for by the government for the first 3 years of repayment.

    My question is this -- how does one accurately fill out the "Alternative Documentation of Income form and supporting documentation" given the fact that our income is going to change in a few months once intern year starts?

    If I complete the paperwork now, I can honestly report that I have no income. If I wait till halfway through my grace period, it gets trickier. I think technically one needs to let the IBR folks know when his/her income changes. This goes against the idea that the IBR payment is only determined annually.

    Long story short, as the above poster has mentioned, the year one graduates is tough because our income changes so drastically. Rumor has it that the government will use 2010 income taxes (if available) to determine IBR payments for graduating seniors, but this just doesn't make much sense to me when I read the fine print.

    Another reason I am tempted to skip my grace period is simply to get started on the 120 payments needed to qualify for the PSLF program. The program itself is interesting because it encourages us to pay as little as possible in these 10 years (that is, do things like not pay my interest before capitalization occurs and file 2010 taxes in the hopes of a $0/month payment for the first year).
  12. IMer22

    IMer22 IMer22

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    Bump.

    Any thoughts on what I've posted above?

    Would be helpful to hear from someone who graduated in 2010 and chose IBR.
  13. dpmd

    dpmd Relaxing

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    I think it is risky to take steps that increase the amount you will owe overall simply because you expect the loan to be forgiven. When the first wave of people try to take advantage of this and the huge costs are seen things may rapidly change (or even as the costs become more anticipated-the government can't even pay for all the things it has to pay for now, how are they going to be funding this program?).
  14. trp2006

    trp2006 Member

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    I would like to know the answer to the above question too please?

    Also if someone can answer the question posed by someone else about "***Also, why are some of our loans serviced through GREAT LAKES and some by the dept of education itself? if you click on each of your loans individually, while logged into the NSLDS website (financial aid review option), you will see that not all loans are serviced by Great Lakes...I don't get that..."
    Last edited: May 9, 2011
  15. whitesmoke33

    whitesmoke33

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    So my gf just got a financial planner and now that she is getting her finances in order I realize that I could use some help too.
    I am about to start my second year of a 3 year fellowship. Once I get out I will be making around 200k. I have been oblivious to loans as I try to make it through fellowship but the more I have been looking into my loans and finances the more I am seeing that I am likely doing things wrong/can be doing things better. What are you thoughts on my situation.

    Sallie mae loans...

    Private loan unsub @ 4% ($30k) in repayment at ~ $200 a month
    Stafford Unsub @ 6.8% ($33k) in fellowship deferment
    Stafford Sub @ 6.8% ($8.8k) in fellowship deferment
    Consolidated Sub @ 3.625% ($26k) in fellowship deferment
    Consolidated Unsub @ 3.625% ($105k) in fellowship deferment


    Non sallie mae

    BoA Sub @ 5% ($7k) I am choosing to pay 100 month
    Some other bank unsub @ 5% (11k) payment of 138 (choosing to pay 200)


    Should I try and get any of the above loans in an IBR (esp stafford unsub)? I am assuming I should quit paying more on my loans that are in repayment so I can start pushing the extra money into the stafford unsub loan. I am about to apply for fellowship deferment again for the upcoming year - Any and all suggestions before I move forward with the paperwor is much appreciated. I could prob put another 200-300 a month into loans if I am frugal.

    Thanks in advance!
  16. Twitch

    Twitch

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    Do not speculate. There are penalties for misrepresentation which can include fines or imprisonment. Not a good way to start off residency.

    Report AGI as shown on line 37 of form 1040. Also probably not a good idea to take advice from a (semi) anonymous internet forum but perhaps a good starting point which you should verify by reading the fine print that is included with the forms you're filing.

    Most graduating medical students do not have a large income to report on their 1040 (from the prior year) but if married their spouses may. The next year you file your 1040 consider if it's worth it to file as married filing separately. This allows you to have the IBR folks look at just your income not your spouses. If you don't like messing with 1040's find the accountant who did yours last year and ask them to re-run the numbers as married filing sepeartely and see how much they differ. Alternatively if you still have your turbotax (or anyother software), just change the filing status and see how much things change. For folks filing with standard deduction and personal exemption, it may not be as drastically different.

    Just to add, for folks who are graduating this year and you're loans are currently in grace period: You can file the consolidation paperwork now but set the processing to start 45 days prior to when you loans are due.
  17. dpmd

    dpmd Relaxing

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    I would quit paying extra on the low rate loans and send that money to the unsub loan that is at 6.8%. You don't have to go into repayment to do this if you don't want. Just look up the payment address if you don't have it already and specify that you want everything possible to go to the specific loan you want (they should have an account number or letter designation to make it clear which you are talking about). Because you haven't been paying anything (I assume) on the staffords you may only be hitting the interest on it at this point, so your balance may not move (it has likely increased due to capitalization of unpaid interest thus far). If you can afford to send a lump sum right now that would help. Otherwise just send what you can.
  18. clement

    clement

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    so if we consolidate and sign up for IBR half-way through the grace period and did not file a 2010 tax report, this is problematic?? Don't you just report your income as of Jan 2011? confused

    Also, if I have one grad plus loan disbursed before 08 and the rest after 08, payment for that one will be due immediately upon graduation? not sure how to approach
  19. nogolfinsnow

    nogolfinsnow

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    On loanconsolidation.ed.gov under the FAQ #20 it says all borrowers in their 1st year of repayment must submit the alternative documentation of income. Looks like you use paystubs to calculate payment.

    I just called my lender and asked for a 6 month forebearance. They had no problem with it, so I can just consolidate it when I consolidate the rest of my loans.
  20. MrCheetah

    MrCheetah

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    **** it, I'm planning on going into the most amount of debt I possibly can to take advantage of this.
  21. future_dr_house

    future_dr_house .

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    Sometimes it helps to read the actual Alternative Documentation of Income Form: https://www.dl.ed.gov/borrower/PDFFrames.jsp?PDF=othf_altd_auto.pdf

    The form states, "When submitting your Alternative Documentation of Income form, we recommend that you provide a copy of your most recently filed Federal Tax Return as proof of adjusted gross income (AGI) for the Income Contingent Repayment Plan or Income-Based Repayment Plan."

    Later, it states, "Paystubs and supporting documentation such as the self-certifying letter are still acceptable forms of proof of income. However, these are required only if AGI is unavailable or if your income has recently changed." Which makes the situation more confusing.

    Reading further on Great Lakes guide to IBR approval here: https://www.mygreatlakes.org/mglstatic/sharedcontent/forms/ibr_imp_guide.pdf
    It states,
    "Q28. Does the loan holder need to request the borrower/taxpayer’s W-2 information via IRS Form 4506-T?
    A28. §682.215(e)(1) states that the loan holder is to obtain the borrower’s AGI and/or other tax return information from the IRS. The IRS Form 4506-T provides the borrower/taxpayer’s consent for the loan holder to receive an IRS transcript of the borrower/taxpayer’s completed tax return information for the most recent tax filing period of record. This transcript includes the AGI information necessary to determine IBR eligibility using the PFH eligibility guidelines. If the loan holder has reason to believe, or the borrower indicates, that the reported AGI is not accurate or if the IRS indicates that the transcript is not available, then the loan holder may request alternative documentation from the borrower.

    Q29. How does the borrower/taxpayer renew the required written consent for income verification?
    A29. Since IRS Form 4506-T is only valid for 60 days after the date borrower/taxpayer signs the form and the borrower/taxpayer must submit the form on an annual basis, the loan holder should notify the borrower on an annual basis that he or she must submit a new IRS Form 4506-T so that his or her income can be verified."​

    Here's form 4506-T: http://www.irs.gov/pub/irs-pdf/f4506t.pdf

    Putting it all together...I think I will submit my AGI from my income tax return (0) and fill out 4506-T to allow the loan servicers access to my tax return.

    If they require further information, then I will not just give them pay stubs because the period that servicers use for income is Jan-Dec. If you just put your pay stub amount they will calculate it out to your total salary from july '11 to june '12, when in fact you are earning only from July-Dec for that period of interest. This was the advice our school received from GL Advisors. I have been unable to find the period of consideration for our AGI calculation using pay stubs though.
  22. goodoldalky

    goodoldalky Member

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    I will be stunned if this program is still around and intact in 10 years. Stunned.
  23. Kimka83

    Kimka83 SDN Donor

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    I posted this on the other IBR thread but wanted to put it here just as an FYI. It is my understanding that if we sign up for IBR now, when we no longer qualify for partial financial hardship we will be switched into the standard 10 year repayment plan permanently - i.e. we won't subsequently be able to change into the 30 year plan. Would getting locked into standard repayment as an attending be problematic?
  24. Dirt

    Dirt From the earth.

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    Just to clarify a statement made earlier, I was under the impression that interest only capitalized with forbearance, not with IBR. Is this accurate?

    Also, has anyone come across a list of residency programs/hospital systems that qualify under the PSLF?

    I found an IRS website that allowed one to search for organizations that met the tax exempt status but it was quite tedious to go through and search for each place I will be applying to, and often they are listed in many different ways making it difficult to determine if indeed they qualify.

    Frankly, PSLF status will be a major factor in deciding where to go.

    As with the above posters, I am hesitant to think that PSLF will be around in its current incarnation when my 10 years rolls around. It is simply too good to be true. I do foresee something related springing up in its place however, maybe forgiving like 10-20% of your loan balance per year after the 10 with public service instead of just dismissing the entire balance. I can't imagine (or would just be really, really pissed) the government just completely doing away with it altogether.

    It kind of sucks to base such major decisions on something that has no promise of being around in 10 years, but what other choice to I have. If it is around it will be sooooooooooo amazing. I mean 5-7 years of residency, 2 of fellowship, a job at a qualifying employer for a couple years and poof, hundreds of thousands of dollars disappears in an instant.
  25. Monsterdaddy

    Monsterdaddy Pharmacy Student

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    All interest is capitalized under IBR except subsidized Stafford Loans and that exception only last 3 years.
    You can call the HR dept of the hospital. 83% of hospitals in the US are public or 501(c).
    I doubt they will reduce the % of forgiveness. I do think they will tighten up the list of qualifying employers and the paperwork needed. For example, hospital pay for 501(c) and for profit for doctors and pharmacists are not significantly different whereas uniformed services vs. private is very large.
    Last edited: Jun 16, 2011
  26. TMP-SMX

    TMP-SMX Senior Member Moderator Emeritus

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    If your IBR payments match the standard repayment plan at 15% of your income, you can afford to make the standard rate 10 year payments.
  27. clement

    clement

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    Guys I only have like 2 grand in perkins loans with like a rate of 5% or something...I added it to my consolidation list but I got a letter saying I can opt out. Did you guys include your perkins loans while consolidating?
  28. TMP-SMX

    TMP-SMX Senior Member Moderator Emeritus

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    I kept my Perkins in it. I have 5k in Perkins. If you are paying back your Perkins separately from your IBR you are going to be adding a good chunk to your monthly payments.
  29. dpmd

    dpmd Relaxing

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    Yeah, I think there is a minimum payment of $40. I kept mine out but that was because I had already qualified for a partial cancellation and wanted to keep it out in case I did some more that qualified.
  30. Lesley

    Lesley Member

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    "Direct Loan offers an up-front interest rate rebate as long as you make your first 12 payments on time once you're in the repayment period. If not all payments are made on time, the rebate amount will be added back to the principal loan balance and will have to be repaid." dpmd



    Pretty sure the repayment incentive is being eliminated in 2012.


    September 20, 2011 News

    Federal Graduate Student Loans to Cost More

    by Neil Snyder

    Some graduate and professional students will pay more interest on their federal student loans under the debt-ceiling agreement reached by Congress and the Obama administration in August.

    Under current law, the federal government pays the interest on Stafford loans—subsidized, low-interest loans based on financial need—while the student is in school and during certain grace and deferment periods. The new agreement (Public Law 112-25), which takes effect July 1, 2012, eliminates this provision as well as repayment incentives for students who repay their loans on time.

    However, according to the new law, students enrolled or accepted for enrollment in a program "at an eligible [college or university] necessary for a professional credential or certification from a state that is required for employment as a teacher in an elementary or secondary school in that state" are exempt.

    Eliminating these two financial aid supports would save the federal government an estimated $21.6 billion over 10 years. Of this total, $17 billion would go to shore up Pell grants—need-based grants to low-income undergraduate and certain post-baccalaureate students to "promote access to postsecondary education"—and $4.6 billion would go toward deficit reduction.

    The concept of eliminating the subsidy was first proposed in a report by the College Board, "Fulfilling the Commitment: Recommendations for Reforming Federal Student Aid," published in September 2008. The concept was included in and then taken out of 2009 legislation to reform the federal student loan programs. In 2010, the National Commission of Fiscal Responsibility and Reform (known as "The Debt Commission") also recommended the subsidy elimination. Subsequently, President Obama included it in his fiscal year 2012 budget request; Speaker of the House John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.) included the provision in their debt-ceiling bills.

    Despite efforts by groups such as the Council of Graduate Schools, of which ASHA is a member, and Student Advocates for Graduate Education (SAGE), the concept was incorporated in the final bipartisan agreement. The administration justifies the inclusion because of "reduced repayment burden resulting from previous action taken by Congress—such as the new Income-Based Repayment program, and the Public Sector Loan Forgiveness and other loan forgiveness programs. In addition, graduate students often study in specialized, higher-paying fields and thus are less in need of subsidized loans. Moreover, student aid experts have repeatedly noted that providing these subsidies has no effect on encouraging students to pursue graduate education."

    However, according to SAGE, the program elimination equals a 22% increase in cost for a five-year degree, compounding to an additional $17,400 under a standard repayment plan for the maximum loans, which many students choose (Table 1 [PDF]). SAGE claims that keeping the subsidy will significantly benefit low-income students, especially those with undergraduate loans to repay.

    Neil Snyder, director of federal advocacy, can be reached at 800-498-2071, ext. 5614, or [email protected].
  31. clement

    clement

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    no my perkins loan is billed quarterly and it's like 120 bucks or smthg.
  32. digitlnoize

    digitlnoize Rock God

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  33. Asianboy

    Asianboy

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    Would it be smart to do IBR during medical school? Am I allowed to do IBR while borrowing student loan? Based on IBR calculation, my spouse and I will pay $0 for IBR. Would it still count toward 20 yrs loan cancellation? If so, we can save 4 yrs (in medical school) and 1 yr (in residency) with $0 payment.

    Thanks for any advice
  34. Dirt

    Dirt From the earth.

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    I assume you are referring to undergrad loans.

    While in medical school you will qualify for deferment and have to pay nothing.

    I get what you are asking, you basically want to work it out such that your years in medical school will count in that 25 year period. My guess is that your loan servicer or the federal government will not let you "be" under IBR and pay nothing when you qualify for deferment.

    Basically, you won't have to pay in med school, but I doubt you could swing it so those years count towards either the 25 year IBR term, or the 10 year PSLF program.
  35. Ibn Alnafis MD

    Ibn Alnafis MD

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    I am estimating to graduate with somewhere north of 300k. During residency, as most of the residents, I'll be paying portions of my interests. Will the remaining unpaid interest accumulate and compound while I'm still in residency? or is it similar to how it was in the pass when deferment was still in effect?
  36. freaker

    freaker Senior Member

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    My understanding is that this is not correct.

    From FinAid.org:

    http://www.finaid.org/loans/ibr.phtml

    At least this site indicates that you're not having capitalizing interest until after a status change. I've found several other sites that indicate as much.

    It's made it easier for me to go ahead and have a family now knowing that the larger family size has kept my payments at zero dollars. Thus, as 1/3 of my loans are subsidized, at least I've getting 1/3 of my interest paid for over the first 3-years.

    This educational loan bubble is bound to pop. There's no way colleges and universities can continue to rip off students with ever-expanding tuition rates when they're sitting on massive endowments and building elaborate marble buildings surrounded by excessively expensie landscaping. Something has to give. But heaven forbid someone would suggest the ivory tower elite aren't operating in reality.... :laugh:
  37. toothless rufus

    toothless rufus

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    But not if you are doing residency at a for-profit hospital, correct?
  38. toothless rufus

    toothless rufus

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    So after a status change do they retroactively apply all of the interest accrued that was not capitalize and capitalize it in one fell swoop?
  39. Ibn Alnafis MD

    Ibn Alnafis MD

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    Interested in knowing the answer for this too.
  40. Green Grass

    Green Grass

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    Can any current interns report if they are paying $0 for IBR this year (based on a $0 AGI from last year's tax return)?
  41. surfdr

    surfdr

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    For anyone currently on IBR, do assets ever factor into the equation, or is your monthly payment strictly based on monthly/annual income? For example, if you had $50k in a savings account, would this affect your monthly IBR payment?
  42. MT Headed

    MT Headed snow, PBR, and bears Lifetime Donor

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    From http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp where they even have a nifty table to show you exactly what your payments would be:

    How is the IBR amount determined?

    Under IBR, the amount you are required to repay each month is based on your Adjusted Gross Income (AGI) and family size...

    After the initial determination of your eligibility for IBR, your payment may be adjusted each year based on changes in your income and family size...
  43. gasblaster

    gasblaster ASA Member

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    How come no one ever does/discusses the Income-Contingent Repayment (ICR) or Income-Sensitive Repayment (ISR)?
  44. DrBender79

    DrBender79

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    Yup :D
  45. Green Grass

    Green Grass

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    Perfect. Thanks.
  46. saqrfaraj

    saqrfaraj PGY-2

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    ...AND these monthly payments of zero dollars count towards your 120 payments if you're doing PSLF. Very nice.
  47. TMP-SMX

    TMP-SMX Senior Member Moderator Emeritus

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    Yes they do. $0 payments on IBR. Only issue was that I had to reapply for IBR after consolidation and the servicer told me it was already done. (So I ended up going into repayment two months after because of administrative deferment).
  48. Green Grass

    Green Grass

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    So after you consolidated you still had a zero dollar payment correct?
  49. TMP-SMX

    TMP-SMX Senior Member Moderator Emeritus

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    Correct. $0 on IBR for family of 3.
  50. ampDO

    ampDO New Member

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    Hey all, was wondering if I could get advice on my situation. I will be completing my training this July and have been in forbearance or deferring my loans for the past 5 years. I have accrued over 250K in debt and am expected to make less than that coming out of residency. Is IBR a good choice for me? I have heard mixed things about it. And what happens after the 25 years are up, are we completely forgiven of our loans? I have read different things about it and I honestly haven't done that much research into it. Any help would be appreciated. Thanks!

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