Does rePAYE essentially guarantee that your loan will be stable throughout residency?

[965978]

I’m having a bit of trouble understanding how this works. I do know that it is income driven and as a resident you pay somewhere around $300-$500 a month. But for many people this seems to be only around $5,000 per year, which is much lower then the interest you would incur per year on a $200,000 loan at a 7% rate (14,000). So does the interest subsidy kick in and pay the remaining $9,000 for you, essentially stabilizing your loan and preventing it from increasing during residency?

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[965978]

CORRECTION: The full difference is subsidized only for the first three years. After that it’s 50%.

 

[slice33]

I highly recommend you read the ebook "Medical Student Loans: A Comprehensive Guide" by Ben White ... should be required reading before you take out your first loan for medical school.

 

[965978]

I highly recommend you read the ebook "Medical Student Loans: A Comprehensive Guide" by Ben White ... should be required reading before you take out your first loan for medical school.

Thanks! Will do!

 

[965978]

Looks like you got your answer, but I would also add that the minimum payment is 300-500 per month. You can always pay more if you can afford it. Depending on your loan burden, income/benefits, and cost of living you may even be able to put a dent in your principal during residency.

In this case it’s harmful to pay more because you’re getting a subsidy on the negative amortized amount

 

[Firkin]

I highly recommend you read the ebook "Medical Student Loans: A Comprehensive Guide" by Ben White ... should be required reading before you take out your first loan for medical school.

Just a note to say that you can pay $9.99 for that book on Amazon, or you can pick it up for free on his website...

Student Loans | Ben White

Student loans are now depressingly the largest category of consumer debt outside of mortgages. In 2017, I published a book about managing student loans for medical students and doctors. In early 2018, I extensively revised that into a new book for a general audience. And they’ve been revised...

www.benwhite.com

 

[RangerBob]

The full unpaid interest is only subsidized for the first three years for subsidized loans.

For unsubsidized loans (I think almost all loans are unsubsidized now), the govt will pay half the unpaid interest.

REPAYE is a good deal and can in some cases effectively halve your interest rate.

 

[965978]

The full unpaid interest is only subsidized for the first three years for subsidized loans.

For unsubsidized loans (I think almost all loans are unsubsidized now), the govt will pay half the unpaid interest.

REPAYE is a good deal and can in some cases effectively halve your interest rate.

Oh so the full first three years doesn’t apply to med students?

Do you know if you can still take advantage of the $2,500 federal tax deduction for student loan interest if you are on rePAYE?

 

[RangerBob]

Oh so the full first three years doesn’t apply to med students?

Do you know if you can still take advantage of the $2,500 federal tax deduction for student loan interest if you are on rePAYE?

Med students are eligible just as everyone else. But only subsidized federal loans are eligible for the full REPAYE subsidy. Most, if not all, federal loans these days are unsubsidized.

Anyone is eligible for the loan interest deduction, but you can only deduct up to the amount of interest you actually pay. And there are income phase-outs (though this doesn’t affect most unless you are an attending or have a high earning spouse while you’re a resident)

 

[965978]

Med students are eligible just as everyone else. But only subsidized federal loans are eligible for the full REPAYE subsidy. Most, if not all, federal loans these days are unsubsidized.

Anyone is eligible for the loan interest deduction, but you can only deduct up to the amount of interest you actually pay. And there are income phase-outs (though this doesn’t affect most unless you are an attending or have a high earning spouse while you’re a resident)

The phase out starts at 65,000 so it’s pretty much useless if you are in a residency program in an expensive area. Columbia is paying their PGY-2 about $73K this year.

Do you also add taxes for daily free lunches and educational expenses that most residents get?

Sorry I’m asking you so many financial questions. Feel free to ignore me!

 

[RangerBob]

The phase out starts at 65,000 so it’s pretty much useless if you are in a residency program in an expensive area. Columbia is paying their PGY-2 about $73K this year.

Do you also add taxes for daily free lunches and educational expenses that most residents get?

Sorry I’m asking you so many financial questions. Feel free to ignore me!

I don't know the single-person phase out (but I'll trust your number), but keep in mind it goes off the AGI. There are things you can do to lower your AGI (like take the student loan interest deduction...). Being married, the phaseout didn't start for us until about $160k.

I haven't heard of adding taxes for free lunches and educational expenses... If it's being paid as salary then it's taxable. But when I was an intern, my free lunches were just that--the hospital didn't charge us. So there was nothing to pay taxes on because they just waved us on by. (Maybe you're technically supposed to declare something, but none of us were ever told to do that if it was the case...). I have no idea if educational reimbursements would be taxable or not--we weren't taxed on any of our education reimbursements. But if it's supposed to be declared then it's not something that was ever mentioned to any of us...