Asses Your Debt -
The most important part of managing your med school debt is knowing three things: how much you owe, what type of loans you have, and who owns your loans.
1) Your Loan Amounts - Visit the National Student Loan Data System to find out how much you have borrowed in Federal loans
2) What Type of Loans You Have Some loans have added benefits, so take advantage!
There are two general types of student loans: Federal and Private. Federal loans are generally more "borrower-friendly" than private loans. Knowing which type of loans you have will help you determine which loans you should focus on paying off first. For example, private loans often have much higher rates than Federal loans. If you have borrowed such loans, it would be a good idea to pay them off early rather than paying off your lower-interest Federal loans early.
There are also different types of loans within the Federal Loan Program. The most common Federal loans for med school students are:
Grad PLUS Loans Grad PLUS loans are new to the Federal loan program and serve as an excellent alternative to private loans. A quick list of the benefits include: lower and fixed interest rates, flexible repayment options, tax deductions, special deferments and borrower benefits such as interest rate discounts for making on-time payments For more on the differences between Grad PLUS and Private loans
Stafford Loans - There are two types of Stafford loans: those subsidized by the government, which pays the interest on the loan while youre in school, and those unsubsidized. Subsidized loans are given out based on demonstrated need, whereas unsubsidized loans are available to all students. The advantages of choosing a Stafford loan are: long repayment periods (allowing for lower monthly payments), low interest rates (currently 6.8% fixed) and special deferments (such as allowing students to defer payments while in school)
Perkins Loans Perkins loans are for borrowers with extreme financial need and have many of the same benefits as the Stafford loans. They also have a borrower-friendly forgiveness provision. A lawyer in public service, such as working as a prosecutor or in a child services agency, can qualify to have a portion of his or her Perkins loan forgiven by the federal government.
3) Who owns your loans - Visit the National Student Loan Data System to find out who owns your Federal loans
The relationship you have with your student loan lenders is an important one (after all it could last up to 30 years!) Things to consider:
Do you have all your loans with one lender or different loans with different lenders?
Does your lender offer any type of discounts for making on-time payments?
Consolidate and Save
Consolidating can help borrowers get fixed interest rates, lower monthly payments and only one bill from one lender. Many consolidation lenders also give borrowers interest rate discounts for making on-time payments.
With consolidation, existing loans are paid off and replaced with one loan at a fixed rate, which is based on a weighted average of the interest rates from your original loans. While, consolidation can stretch out the federal loan repayment term from 10 to 30 years, borrowers can pay the loan off as early as they want without penalty.
Consolidating private loans is also a good option, however, most experts agree that consolidating private and federal loans together is not. You cant forbear payments in cases of economic hardship. If you want to go back to school, you cant defer loan payments as you can with federal loan consolidation, and you cant claim the tax deduction on your loan. Finally, in the event you die, federal loans are forgiven, whereas private ones are not.
Also, something to consider for those thinking of combining their student loan debt with their home mortgages --- DON'T DO IT --- if you miss a payment they can foreclose on your house!
The most important part of managing your med school debt is knowing three things: how much you owe, what type of loans you have, and who owns your loans.
1) Your Loan Amounts - Visit the National Student Loan Data System to find out how much you have borrowed in Federal loans
2) What Type of Loans You Have Some loans have added benefits, so take advantage!
There are two general types of student loans: Federal and Private. Federal loans are generally more "borrower-friendly" than private loans. Knowing which type of loans you have will help you determine which loans you should focus on paying off first. For example, private loans often have much higher rates than Federal loans. If you have borrowed such loans, it would be a good idea to pay them off early rather than paying off your lower-interest Federal loans early.
There are also different types of loans within the Federal Loan Program. The most common Federal loans for med school students are:
Grad PLUS Loans Grad PLUS loans are new to the Federal loan program and serve as an excellent alternative to private loans. A quick list of the benefits include: lower and fixed interest rates, flexible repayment options, tax deductions, special deferments and borrower benefits such as interest rate discounts for making on-time payments For more on the differences between Grad PLUS and Private loans
Stafford Loans - There are two types of Stafford loans: those subsidized by the government, which pays the interest on the loan while youre in school, and those unsubsidized. Subsidized loans are given out based on demonstrated need, whereas unsubsidized loans are available to all students. The advantages of choosing a Stafford loan are: long repayment periods (allowing for lower monthly payments), low interest rates (currently 6.8% fixed) and special deferments (such as allowing students to defer payments while in school)
Perkins Loans Perkins loans are for borrowers with extreme financial need and have many of the same benefits as the Stafford loans. They also have a borrower-friendly forgiveness provision. A lawyer in public service, such as working as a prosecutor or in a child services agency, can qualify to have a portion of his or her Perkins loan forgiven by the federal government.
3) Who owns your loans - Visit the National Student Loan Data System to find out who owns your Federal loans
The relationship you have with your student loan lenders is an important one (after all it could last up to 30 years!) Things to consider:
Do you have all your loans with one lender or different loans with different lenders?
Does your lender offer any type of discounts for making on-time payments?
Consolidate and Save
Consolidating can help borrowers get fixed interest rates, lower monthly payments and only one bill from one lender. Many consolidation lenders also give borrowers interest rate discounts for making on-time payments.
With consolidation, existing loans are paid off and replaced with one loan at a fixed rate, which is based on a weighted average of the interest rates from your original loans. While, consolidation can stretch out the federal loan repayment term from 10 to 30 years, borrowers can pay the loan off as early as they want without penalty.
Consolidating private loans is also a good option, however, most experts agree that consolidating private and federal loans together is not. You cant forbear payments in cases of economic hardship. If you want to go back to school, you cant defer loan payments as you can with federal loan consolidation, and you cant claim the tax deduction on your loan. Finally, in the event you die, federal loans are forgiven, whereas private ones are not.
Also, something to consider for those thinking of combining their student loan debt with their home mortgages --- DON'T DO IT --- if you miss a payment they can foreclose on your house!
