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I looked and looked for specific information regarding the IHS loan repayment and couldn't find the specifics of what I was looking for. So after being in the program 1 year, I thought I would post EXACTLY what to expect for anyone else interested.
So, for the 1st contract, it is a 2-year contract. You need to be aware that there are serious penalties for not completing a contract. I read through all the paperwork and the IHS has a calculation in there of what you would be charged for not completing a contract. (The reason for not completing the contract is inconsequential, unless the reason is that you died). But basically, there is a penalty of approximately 3 times what you received, for not completing a contract. And that could be for any reason - you quit, were fired, replaced by a Native American, etc. This is in their online documentation. There is a formula they post as to how they figure the penalty. But it is a very large penalty. So have a back-up plan. For instance, I know if I am were to ever be fired or replaced, I will immediately notify the IHS repayment center, and immediately get another job ANYWHERE I HAD TO with the IHS to complete my contract. You must get approval from the IHS repayment center BEFORE starting your new job.
Secondly to keep in mind, they require you have no more than 35 days off in a contract year (from the date your contract starts). This includes annual time (vacation), personal time, time off for training (even if it is work required training - anything that takes you away from your "clinical job"), sick time, time off your work for any reason other than holidays. And once a year your HR/personnel, supervisor, and time sheet tracker (so 3 people) must sign a form stating you have worked 40 hours a week for the past 12 months and had 35 or fewer days off in that time frame.
Here is exactly how this is written in the form that needs to be signed by the 3 individuals at your work: "I certify that the above named individual was away from their designated duty station for a total of ____ days during the contract obligation period. This includes but is not limited to: annual leave; sick leave; comp-time/credit hours used; maternity leave; court/jury duty; deployment; training and education; or Family Medical Leave. (*Do not include holidays)."
Also their program states "You must request a suspension of your service commitment if you anticipate an absence from full-time clinical practice longer than the approved 35 workdays. Suspensions are reviewed for medical reasons (including maternity leave), military deployment and urgent personal matters only." So keep in mind you must get approval FIRST, and then your contract will be extended by the amount of time they approve.
So for instance, I have 20 days a year of vacation time and 4 days a year of personal time, so I can take no more than 11 days off a year for ANY OTHER REASON (including sick time, comp-time, etc etc). It is imperative to know this up front!!
Next, in the IHS LRP paperwork (or website) it says something like they only review you for repayment on sites that score a 19 or higher. My site is scored a 13. I applied anyway. I was approved pretty immediately after applying. So that 19 or higher is based on the # of applicants vs the amount of money available. So apply no matter what your site score is.
Also, once you have received approval and had a contract, you are first in line (in front of any new requests) to be funded for future contracts (as long as you reapply). So definitely reapply in time. You need to reapply PRIOR to January of the year you want funding. So for my first contract (which is 2 years, 1st year funding May 1, 2023-April 30, 2024, 2nd year funding May 1, 2024-April 30, 2025) I will re-apply around October-Nov 2024 for the cycle of May 1, 2025-April 30, 2026.
So here is how the funding (money) works: I received approval May 1, 2023 for my first contract (first contract is 2 years, after that it is 1 year for every renewal contract). I signed the contract in April and they signed it May 1st. I received the first $25,000 (for the 1st year) in September 2023. I am responsible for paying my loan payments until the money is received, but then can count that money to any payments I paid starting May 1st. On or before April 30, 2024 I have to submit to them the printout from my loan company showing I paid $25,000 towards my loan in that contract year (from 5/1/23-4/30/24).
Here is what I received from IHS and how it applies to my income taxes:
The deposit I received in September 2023 was for $22,628.50. The W2 I received in January 2024 is as follows: Lines 1,3,& 5 for Wages received amount is: $31,000.00 (this is the amount I will pay taxes on). Line 2 Federal income tax withheld was $6,000.00. Line 4 Social Security Tax Withheld was $1,922.00. Line 6 Medicare Tax withheld was $449.50. No state taxes were withheld (I currently live in a state with state income tax).
So even though the deposit was for $22,628.50 I do need to pay the full contract amount of $25,000 towards my student loans within that contract year. If my income is above the SS threshold, I will receive back the amount they paid towards social security in my taxes (refund from IRS). However, I will possibly owe a little more MC taxes, and I will owe state income taxes. And receiving this loan money from IHS increases my income amount by $31,000 (above what my income from working is). This is treated just like I worked another job and made $31,000 at that other job. Obviously all the tax amount shown on my W2 (from IHS LRP) were paid directly to the IRS, just like it would be at my job.
I hope this helps people more understand this program. Here are some side notes related to how this works alongside Public Service Loan Forgiveness. So for the PSLF I have to be in an income-driven repayment program that is approved for PSLF (not all repayment options are approved for PSLF). Currently I am in the SAVE repayment plan. (SAVE is the acronym for the program). Each year I have to re-certify my income. Each person has a different re-certify date depending on the date you first enter the program. My date is December each year. I re-certify by giving them one-time access to my IRS filings (giving them permission to access the IRS on my behalf). So my payment is adjusted based on my "Adjusted Gross Income" (Line 11 of the 1040). So receiving the IHS LRP money increases that amount, and increases my payment up accordingly. I do not have my student loans set to auto-deduct monthly. If you do have them set for that, and you pay a lump sum towards your student loans, it does not change the next date they auto-deduct a payment.
For the past year my student loan payment has been right at $1,300/mo. So I'm only paying $15,600/year in student loans. However, I MUST pay $25,000/year. So before my contract year was up, I had to pay an additional $9,400 towards my student loan. If they are set up to auto-deduct, they will still take the $1,300 out of my checking account every month even after I pay a one-time payment of $9,400. However, by removing it from auto-deduct, I lose the small amount of % they reduce my student loan interest by (0.25% I think). But then when I pay a large payment it rolls forward my student loan. So right now, after paying the $25,000 total for the last contract year, my payment is not due again until January 2025. This gives me a buffer so I don't have to pay my next payment until I receive the next money from IHS (will receive it sometime between now and the end of September).
What it also does for me, is when my payment increases in December (because of the added money from IHS on my income), I will have plenty of money to pay that increase. If I read their info correctly, when they re-certify my payment in December, that starts a new cycle, so if my payment goes up, it might actually reset that my payment is paid ahead. Additionally, I keep my money in a SOFI savings account which currently pays me 4.6% interest per year. So that interest more than compensates for any amount I am losing with not having my payments auto-deducted.
Additionally, when I hit my 10 years and my student loans are forgiven under the PSLF, they are forgiven tax-free. I do not owe taxes on the amount forgiven. So I don't care that I am accruing a little more interest by not having my payments auto-deducted.
I hope this thoroughly explains this and gives some information that I have not been able to find elsewhere, but wish I had known ahead of time.
So, for the 1st contract, it is a 2-year contract. You need to be aware that there are serious penalties for not completing a contract. I read through all the paperwork and the IHS has a calculation in there of what you would be charged for not completing a contract. (The reason for not completing the contract is inconsequential, unless the reason is that you died). But basically, there is a penalty of approximately 3 times what you received, for not completing a contract. And that could be for any reason - you quit, were fired, replaced by a Native American, etc. This is in their online documentation. There is a formula they post as to how they figure the penalty. But it is a very large penalty. So have a back-up plan. For instance, I know if I am were to ever be fired or replaced, I will immediately notify the IHS repayment center, and immediately get another job ANYWHERE I HAD TO with the IHS to complete my contract. You must get approval from the IHS repayment center BEFORE starting your new job.
Secondly to keep in mind, they require you have no more than 35 days off in a contract year (from the date your contract starts). This includes annual time (vacation), personal time, time off for training (even if it is work required training - anything that takes you away from your "clinical job"), sick time, time off your work for any reason other than holidays. And once a year your HR/personnel, supervisor, and time sheet tracker (so 3 people) must sign a form stating you have worked 40 hours a week for the past 12 months and had 35 or fewer days off in that time frame.
Here is exactly how this is written in the form that needs to be signed by the 3 individuals at your work: "I certify that the above named individual was away from their designated duty station for a total of ____ days during the contract obligation period. This includes but is not limited to: annual leave; sick leave; comp-time/credit hours used; maternity leave; court/jury duty; deployment; training and education; or Family Medical Leave. (*Do not include holidays)."
Also their program states "You must request a suspension of your service commitment if you anticipate an absence from full-time clinical practice longer than the approved 35 workdays. Suspensions are reviewed for medical reasons (including maternity leave), military deployment and urgent personal matters only." So keep in mind you must get approval FIRST, and then your contract will be extended by the amount of time they approve.
So for instance, I have 20 days a year of vacation time and 4 days a year of personal time, so I can take no more than 11 days off a year for ANY OTHER REASON (including sick time, comp-time, etc etc). It is imperative to know this up front!!
Next, in the IHS LRP paperwork (or website) it says something like they only review you for repayment on sites that score a 19 or higher. My site is scored a 13. I applied anyway. I was approved pretty immediately after applying. So that 19 or higher is based on the # of applicants vs the amount of money available. So apply no matter what your site score is.
Also, once you have received approval and had a contract, you are first in line (in front of any new requests) to be funded for future contracts (as long as you reapply). So definitely reapply in time. You need to reapply PRIOR to January of the year you want funding. So for my first contract (which is 2 years, 1st year funding May 1, 2023-April 30, 2024, 2nd year funding May 1, 2024-April 30, 2025) I will re-apply around October-Nov 2024 for the cycle of May 1, 2025-April 30, 2026.
So here is how the funding (money) works: I received approval May 1, 2023 for my first contract (first contract is 2 years, after that it is 1 year for every renewal contract). I signed the contract in April and they signed it May 1st. I received the first $25,000 (for the 1st year) in September 2023. I am responsible for paying my loan payments until the money is received, but then can count that money to any payments I paid starting May 1st. On or before April 30, 2024 I have to submit to them the printout from my loan company showing I paid $25,000 towards my loan in that contract year (from 5/1/23-4/30/24).
Here is what I received from IHS and how it applies to my income taxes:
The deposit I received in September 2023 was for $22,628.50. The W2 I received in January 2024 is as follows: Lines 1,3,& 5 for Wages received amount is: $31,000.00 (this is the amount I will pay taxes on). Line 2 Federal income tax withheld was $6,000.00. Line 4 Social Security Tax Withheld was $1,922.00. Line 6 Medicare Tax withheld was $449.50. No state taxes were withheld (I currently live in a state with state income tax).
So even though the deposit was for $22,628.50 I do need to pay the full contract amount of $25,000 towards my student loans within that contract year. If my income is above the SS threshold, I will receive back the amount they paid towards social security in my taxes (refund from IRS). However, I will possibly owe a little more MC taxes, and I will owe state income taxes. And receiving this loan money from IHS increases my income amount by $31,000 (above what my income from working is). This is treated just like I worked another job and made $31,000 at that other job. Obviously all the tax amount shown on my W2 (from IHS LRP) were paid directly to the IRS, just like it would be at my job.
I hope this helps people more understand this program. Here are some side notes related to how this works alongside Public Service Loan Forgiveness. So for the PSLF I have to be in an income-driven repayment program that is approved for PSLF (not all repayment options are approved for PSLF). Currently I am in the SAVE repayment plan. (SAVE is the acronym for the program). Each year I have to re-certify my income. Each person has a different re-certify date depending on the date you first enter the program. My date is December each year. I re-certify by giving them one-time access to my IRS filings (giving them permission to access the IRS on my behalf). So my payment is adjusted based on my "Adjusted Gross Income" (Line 11 of the 1040). So receiving the IHS LRP money increases that amount, and increases my payment up accordingly. I do not have my student loans set to auto-deduct monthly. If you do have them set for that, and you pay a lump sum towards your student loans, it does not change the next date they auto-deduct a payment.
For the past year my student loan payment has been right at $1,300/mo. So I'm only paying $15,600/year in student loans. However, I MUST pay $25,000/year. So before my contract year was up, I had to pay an additional $9,400 towards my student loan. If they are set up to auto-deduct, they will still take the $1,300 out of my checking account every month even after I pay a one-time payment of $9,400. However, by removing it from auto-deduct, I lose the small amount of % they reduce my student loan interest by (0.25% I think). But then when I pay a large payment it rolls forward my student loan. So right now, after paying the $25,000 total for the last contract year, my payment is not due again until January 2025. This gives me a buffer so I don't have to pay my next payment until I receive the next money from IHS (will receive it sometime between now and the end of September).
What it also does for me, is when my payment increases in December (because of the added money from IHS on my income), I will have plenty of money to pay that increase. If I read their info correctly, when they re-certify my payment in December, that starts a new cycle, so if my payment goes up, it might actually reset that my payment is paid ahead. Additionally, I keep my money in a SOFI savings account which currently pays me 4.6% interest per year. So that interest more than compensates for any amount I am losing with not having my payments auto-deducted.
Additionally, when I hit my 10 years and my student loans are forgiven under the PSLF, they are forgiven tax-free. I do not owe taxes on the amount forgiven. So I don't care that I am accruing a little more interest by not having my payments auto-deducted.
I hope this thoroughly explains this and gives some information that I have not been able to find elsewhere, but wish I had known ahead of time.
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