OKAY, after talking to an actual Wells Fargo representative, I guess both my assumptions were incorrect. Here's what they told me:
You don't have to make any payments if you're in school. There is a 36-month grace period after you graduate. If you are in a residency longer than 36 months, you can apply for forbearance on a case-by-case basis. Interest accrues daily from the moment you take out the loan. The accrued interest is capitalized onto the principle when you begin repayment.
If you borrow 65k per year at an interest rate of 7.24%, interest accrues based on the principle borrowed amount daily:
Therefore, at the end of PGY-3 (i.e. end of residency):
65k borrowed at OMS-1 would accrue $32,942.00 interest
65k borrowed at OMS-2 would accrue $28,236.00 interest
65k borrowed at OMS-3 would accrue $23,530.00 interest
65k borrowed at OMS-4 would accrue $18,824.00 interest
The interest accrued is capitalized onto the principle of 260k (65k x 4), and the new principle is $363,532.
10-year repayment: $4,266.02 monthly ($51,192.22 annually)
15-year repayment: $3,316.50 monthly ($39,798.00 annually)
20-year repayment: $2,871.07 monthly ($34,452.81 annually)
If you compare this to federal loans, the total debt will be about the same, maybe even less for private due to the origination fee of the federal loan. And some of you with cosigners may actually get very competitive interest rates.
If you compare this to IBR, PAYE, and REPAYE which have an average repayment period of 20 years and 10% of income, it doesn't matter what type of loan (private or federal) you take if you're a high paying specialty (>340k). However, with lower paying specialties like FM, which probably half of us will go into, a federal loan is probably the better option.
. Good luck to the inaugural class here though! I'm rooting for you!
