psychMDhopefully

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Of course the smartest thing to do would be to pay off loans asap, but is anybody else content with just making smaller payments? Of course you pay more in the end but for those of us who are money starved and want more money in the bank earlier, I don't see the issue.
 

theWUbear

EM PGY2
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why would the smartest thing to do be pay the loans of asap? if you declare an income of zero after graduating medical school, and get payments of $0 in REPAYE, and your effective interest rate is ~3.5% (7% divided by two for the half of the interest subsidized by the government) and you can make 10% in the market (minus 10% of that for tax, so 9.9%) on relatively safe investments, it would be foolish to pay off loans asap and make a 6% loss
 
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psychMDhopefully

2+ Year Member
Jan 1, 2016
664
773
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Medical Student
why would the smartest thing to do be pay the loans of asap? if you declare an income of zero after graduating medical school, and get payments of $0 in REPAYE, and your effective interest rate is ~3.5% (7% divided by two for the half of the interest subsidized by the government) and you can make 10% in the market (minus 10% of that for tax, so 9.9%) on relatively safe investments, it would be foolish to pay off loans asap and make a 6% loss
How could you claim zero amount if you will get a residency salary that year?
 
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mvenus929

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How could you claim zero amount if you will get a residency salary that year?
Technically speaking, they ask for your last years tax return, which is from when you were a student and not earning any money. Of course, they ask if your income is significantly changed, so you risk committing fraud by saying 'no', but many people still do it.
 

theWUbear

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How could you claim zero amount if you will get a residency salary that year?
They don't ask you for your future salary. They ask you what your current salary is. On June 1st, you are unemployed with no salary and a contract to begin working in late June. Mvenus929 is incorrect; for those who have no salary/no income at the time of application (e.g. you on June 1st), they do not ask for tax returns, pay stubs, anything. People with no income are taken at their word. To remain compliant, 12 months later the government will ask you if you are employed. Of course, the answer will be yes then.
 

mvenus929

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They don't ask you for your future salary. They ask you what your current salary is. On June 1st, you are unemployed with no salary and a contract to begin working in late June. Mvenus929 is incorrect; for those who have no salary/no income at the time of application (e.g. you on June 1st), they do not ask for tax returns, pay stubs, anything. People with no income are taken at their word. To remain compliant, 12 months later the government will ask you if you are employed. Of course, the answer will be yes then.
Having done this multiple times, I can tell you that if you check that your income has significantly changed, they will ask for paystubs. And the easiest way to demonstrate income in any situation is to provide a tax return (hence a lot of fourth years send in a tax return even though they don't make anything).

Also, most people don't apply June 1. I know I didn't, and neither did most of my friends. We applied towards the end of our grace period. September-Novemberish.
 

theWUbear

EM PGY2
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Your income has not significantly changed if your income is 0 and you have always had an income of 0. The question asked on the form is not, "will your income be changing in the future if you begin a job for which you have a contract?". The question is, "has your income changed?".

You are welcome to start paying Uncle Sam based on a $55000 salary in Sept as you say "most people do" - as this is a financial advice forum and my method of reconsolidating and going into repayment while you have an income of $0 and therefore paying $0 over the next year is more financially advisable I opted to post
 
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abolt18

I regret nothing. The end.
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Having done this multiple times, I can tell you that if you check that your income has significantly changed, they will ask for paystubs. And the easiest way to demonstrate income in any situation is to provide a tax return (hence a lot of fourth years send in a tax return even though they don't make anything).

Also, most people don't apply June 1. I know I didn't, and neither did most of my friends. We applied towards the end of our grace period. September-Novemberish.
TheWUBear is correct.

I consolidated my loans at the end of May, right after graduation. At the same time, I applied for RePAYE. At the precise moment in time of my application, my income was still $0, as I wouldn't start work for another 4 weeks. I provided my tax documents from the previous year, and indicated that my income had not changed. (Though, contrary to what the bear guy said, you should file your taxes in the spring that you are approaching graduation, then you can provide one simple document showing that you earned no money).
 
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