FAP benefit disbursement

[starbuck2]

Anyone with financial assistance program experience want to clarify something for me? The program offers a ~$2k monthly stipend during residency and annual $45k “loan repayment” bonus. Is this $45k a taxable cash payment to be used for loan repayment or whatever else, or is it one of those deals where they pay your loan provider directly? (Which would be similar to HPSP where they pay the school directly).

To be honest I’d rather just have the money. Also curious how this would work if it was a direct payment… but the person graduated debt free from med school or only had a small debt that would get paid off like first year of FAP.

---

Members don't see this ad.

 

[TheEarDoc]

Anyone with financial assistance program experience want to clarify something for me? The program offers a ~$2k monthly stipend during residency and annual $45k “loan repayment” bonus. Is this $45k a taxable cash payment to be used for loan repayment or whatever else, or is it one of those deals where they pay your loan provider directly? (Which would be similar to HPSP where they pay the school directly).

To be honest I’d rather just have the money. Also curious how this would work if it was a direct payment… but the person graduated debt free from med school or only had a small debt that would get paid off like first year of FAP.

If it's the normal student loan repayment like most contracts then it's paid directly to the lender who holds the loan and they take the federal and state taxes out prior to sending a payment to the loan lender. So basically you get a nice big tax amount and increased income for the government to basically pay itself back. Kind of crap if you ask me.

Now where it works out well is if you plan on doing the public student loan forgiveness program. Each of those yearly lump sum payments count as 12 individual payments towards the 120 required payments for loan forgiveness. You will also complete a military forebearance form to stop being charged a student loan payment each month (if you pay it those payments do not count on top of the 12 the military is already paying for the year. You can't double dip).