I need advice

[discombobulous]

Hi all,

I need a little advice. I have finished medical school and I am in total debt of $380k (I also have a master's degree, hence the higher amount).

I applied online to the Dept of Ed to consolidate all my loans under the IBR plan. Some of my loans are in grace and some are in repayment. Unfortunately I had to apply for an economic hardship because I can't afford $1300 monthly payment. I did match into residency which of course doesn't start till July 1.

I called the Dept of Ed to inquire the states my application and they said because some of my loans are on grace, my application is on hold and they will not start processing it until June. Now the problem is, what do I do when I start residency? The Dept of Ed told me the application can take 60 to 90 days to get approved. I do not want to get 7 different bills, all demanding different amounts to pay. As a resident I am unable to pay several different bills at the same time. This is why I am consolidating all in one place under IBR.

Meanwhile when the bills are rolling in and I am waiting for approval, what do I do? Go under residency deferment? Will this deferment affect my application and will make it take longer to get approved?

Or two go under forbearance or another deferment?

Keep in mind if I do residency deferment I do not plan to not make payments for 3 years. I want to hold off the payments until my IBR application is approved and immediately start making payments.

I have called the Dept of Ed and my school and no one could answer my questions. Any help is appreciated!

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[discombobulous]

No one has had a similar situation when transitioning from being a medical student to being a resident?!

 

[Igor4sugry]

Yes, there are people who were in your situation.

I assume all of your loans are government loans and eligible for this consolidation.

1. Consolidation can start only on bills that are out of grace period.
Applying before this will be of no use as they will not process those loans.

2. The kicker is that as soon as your loans come out of grace period you get a bill with a payment due within 30 days of the day they come ouf of grace period.

So you have 30 days to get all this consolidated and into IBR.

3. Application for consolidation can be quick for some people and lengthy for others.
So its possible that they won't consolidate within those 30 days.
The solution then is to call up Dept of Ed closer to end of 30 days (say day 20), and ask to put your loans into forbearance so you make zero payment until you get into IBR.

4. Forbearance stinks because any accumulated interest (and for 380k its a lot) will be immediately added to your total loan amount. Which means you will end up paying more in interest in the long run.

5. There is no easy way around this, you just have to apply as soon as your loans are out of grace period and hope they process things fast. If it is taking them longer than usual then apply for forbearance.

6. Missing a loan payment is much worse than doing forbearance until you get your loans into IBR. The reason for this is you will take a BIG hit on your credit score. Which will then make your future resident life hard.

7. Also, if you are planning to buy a car or a house or both during first year of residency you should consider doing those things before your loans enter repayment. Because once they do it will be difficult to obtain credit. The lender will tell you that you have too many loans out relative to your income, no matter how good your credit is.
-This was my experience when I applied for a used-car loan of about 15k, and was declined by everyone.

 

[Igor4sugry]

Go under residency deferment?

Deferment option no longer exists for residents.

 

[nephappl]

Sorry to hear you owe all this money just from Med School.
I do not have loans as I am an IMG so I do not know the rules.
Based on last post the last thing you want to do is buying a house or getting into more debt.
Housing bubble is bein re-inflated by the Fed's cheap money and should pop once interest rate start rising.
NA

 

[survivordo]

Questions like this are why I used GL Advisor. Sure I could figure it out on my own and save a couple hundred bucks but it is just not worth the time. I had loans from every which way and they have been successfully consolidating them over the course of this year. I am on IBR and so far haven't had to pay a thing. Check them out if you haven't already.

Survivor DO

 

[Igor4sugry]

I would advise against GL Advisor.
Loan consolidation application is easy and anyone can do it. Furthermore, it will allow you to have a better understanding of your debt and have more awareness of why to pay it off.

The next main thing is there have been people who with GL Advisor ended up having their loans go into default as some deadlines were missed. At that point you are on your own with ruined credit and $400+ down the toilet.

Invest that $400 into a RothIRA instead of letting GL Advisor profit off unwillingness of students to understand their finances.

 

[Igor4sugry]

Hi all,

I need a little advice. I have finished medical school and I am in total debt of $380k (I also have a master's degree, hence the higher amount).

I applied online to the Dept of Ed to consolidate all my loans under the IBR plan. Some of my loans are in grace and some are in repayment. Unfortunately I had to apply for an economic hardship because I can't afford $1300 monthly payment. I did match into residency which of course doesn't start till July 1.

I called the Dept of Ed to inquire the states my application and they said because some of my loans are on grace, my application is on hold and they will not start processing it until June. Now the problem is, what do I do when I start residency? The Dept of Ed told me the application can take 60 to 90 days to get approved. I do not want to get 7 different bills, all demanding different amounts to pay. As a resident I am unable to pay several different bills at the same time. This is why I am consolidating all in one place under IBR.

Meanwhile when the bills are rolling in and I am waiting for approval, what do I do? Go under residency deferment? Will this deferment affect my application and will make it take longer to get approved?

Or two go under forbearance or another deferment?

Keep in mind if I do residency deferment I do not plan to not make payments for 3 years. I want to hold off the payments until my IBR application is approved and immediately start making payments.

I have called the Dept of Ed and my school and no one could answer my questions. Any help is appreciated!

One more suggestion:

1. You should apply for IBR with each of your lenders. Again, that application becomes available once loan comes out of grace period.

2. At the same time you can apply for consolidation.

3. Once your loans are consolidated you will have to do the IBR application all over again.

4. This may be another way to avoid forbearance. The fastest are SalieMae and GreatLakes. DeptofEd is the slowest.

Are all your loans with dept of Ed?

 

[dpmd]

Igor makes excellent points. You are smart enough to have graduated medical school, you are smart enough to figure out the rules for your loans and understand how to keep out of trouble with them. I second the recommendation to apply for IBR with any of the lenders who have already sent bills, or where the loan is about to come due. Being late by a little bit will not kill your credit as much as being a lot late will, so you don't have to go into forbearance immediately. Just keep track of the due dates and once it come check on the status of your application, if they say it will be just a couple of days, then you can notify your lender of this. If they can't give you a timeframe, then you can consider forbearance.

One other thing, you applied for consolidation right, not just for IBR. I ask because I wasn't aware they were letting people apply for both at once. It is a logical and streamlined thing to do, but we are talking about the government here so it makes me suspicious. Keep copies of anything you submit, in case they lose it. You could also ask about waiving the grace period on the loans that aren't due yet. It used to be allowed, not sure if it still is but it wouldn't hurt to ask. The best strategy is for you to fully understand what you are doing with your loans, since if a company handling things for you screws up they aren't going to pay any penalties or take the hit to their credit-you are.