IBR and 1st year of residency

[kindasorta]

Presuming you have $0 income from your last year of med school, does that mean your IBR for your first year of residency is also $0/mo?

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[iheartsharks]

It uses the last half of 4th year 0$ income plus income from july through December of intern year. So it will be slightly more than 0$.

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[DrBowtie]

File taxes this spring of fourth year. It buys you about 6 months of zero payment until you recert income again. Of course the interest is still churning but it gives you some breathing time to get your apt or house settled.

 

[kindasorta]

File taxes this spring of fourth year. It buys you about 6 months of zero payment until you recert income again. Of course the interest is still churning but it gives you some breathing time to get your apt or house settled.

PSLF for the win.

 

[nogolfinsnow]

When you apply for IBR, you will be given an "anniversary date," the date each year when your lender will look at your most recent tax information and decide 1) if you still qualify for IBR and 2) how much you need to pay. Most students consolidate loans and apply for IBR in fall of their intern year after their grace period expires. So the first time you apply, your lender will look at your 4th year med school tax return (probably $0). The next fall, as you're now in 2nd year of residency, they will look at your tax return that only captured a half year of work (July-Dec of intern year), which will probably keep your payment pretty low as well. The fall of your 3rd yer of residency they'll finally capture a full year of salary so you'll have a bit of a jump in payment. Lots of variables to take into account, including marital status, filing jointly vs. separately, contributing to retirement plans, etc. I suggest spending a lot of time on the financial aid websites trying to get a good handle on this. Their are also companies that will help you with this process (for a fee, of course). There are several threads relating to IBR in the Financial Aid forum

 

[Impromptu]

When you apply for IBR, you will be given an "anniversary date," the date each year when your lender will look at your most recent tax information and decide 1) if you still qualify for IBR and 2) how much you need to pay. Most students consolidate loans and apply for IBR in fall of their intern year after their grace period expires. So the first time you apply, your lender will look at your 4th year med school tax return (probably $0). The next fall, as you're now in 2nd year of residency, they will look at your tax return that only captured a half year of work (July-Dec of intern year), which will probably keep your payment pretty low as well. The fall of your 3rd yer of residency they'll finally capture a full year of salary so you'll have a bit of a jump in payment. Lots of variables to take into account, including marital status, filing jointly vs. separately, contributing to retirement plans, etc. I suggest spending a lot of time on the financial aid websites trying to get a good handle on this. Their are also companies that will help you with this process (for a fee, of course). There are several threads relating to IBR in the Financial Aid forum

Exactly how it happened for me. Just be sure to keep up to date with your refiling every year for IBR, otherwise you may have a month with a big payment, which sort of spoils the idea. Money is worth more to you as a resident than the interest will be when repaying it later.

 

[snoggy6]

My experience for applying for IBR this year was different from what others are saying here. I was told that for your first year of residency, you have to file the "Alternative Documentation of Income" form. The form instructions say you are required to use this form if you are in your first year of repayment. Basically they just look at how much money you are currently making in residency and assume you are going to be making that much for the upcoming year, and they base your payment off of that. So you don't get the smaller payment for your first year.

 

[DrBowtie]

My experience for applying for IBR this year was different from what others are saying here. I was told that for your first year of residency, you have to file the "Alternative Documentation of Income" form. The form instructions say you are required to use this form if you are in your first year of repayment. Basically they just look at how much money you are currently making in residency and assume you are going to be making that much for the upcoming year, and they base your payment off of that. So you don't get the smaller payment for your first year.

Did you file a tax return the previous year? If not, then the ADI form is required.

 

[snoggy6]

Did you file a tax return the previous year? If not, then the ADI form is required.

Yes, I did file a tax return. However, they didn't care about that. The form instructions state:

"YOU ARE REQUIRED to complete this form if you are repaying your Direct Loans under the Income Contingent Repayment (ICR) or the Income-Based Repayment (IBR) Plan and:
•You are in your first year of repayment;
•You are in your second year of repayment and have been notified that alternative documentation of your income is required; or
•You have been notified that the Internal Revenue Service (IRS) is unable to provide the U.S. Department of Education (the Department) with your Adjusted Gross Income (AGI) or that of your spouse (if applicable)."

 

[SB100]

Pardon my ignorance, but when do you apply to use the IBR plan and PSLF? During the first couple months of residency?

 

[snoggy6]

Pardon my ignorance, but when do you apply to use the IBR plan and PSLF? During the first couple months of residency?

I was told you can't sign up for IBR until your grace period has ended, typically 6 months or so after you graduate. You don't apply for PSLF until you've fulfilled the requirements of making 120 qualifying payments on your loan. But while you are working, you should keep track of your eligible employment by filling out the form explained here:

http://www.studentaid.ed.gov/repay-...ellation/charts/public-service#how-can-i-keep

 

[RangerBob]

I was told you can't sign up for IBR until your grace period has ended, typically 6 months or so after you graduate. You don't apply for PSLF until you've fulfilled the requirements of making 120 qualifying payments on your loan. But while you are working, you should keep track of your eligible employment by filling out the form explained here:

http://www.studentaid.ed.gov/repay-...ellation/charts/public-service#how-can-i-keep

My wife applied before the end of her grace period (right after she graduated, and used our tax forms for the prior year)--$0 payments for her first six months of payments (since payments don't start until the grace period ends, and you aren't allowed to "make payments" so that your grace period counts towards the 10-year PSLF requirement). Although, for her undergrad loans that had already exhausted their grace period, she does get a full year of $0 for those.

Whether or not that's how she was supposed to do it, I don't know, but she spoke with the Dept of Education or FedLoan or whoever it is you contact regarding repayment (the number on all those statements).

But yes, you're right that you don't apply to PSLF until you've fulfilled the requirements.

 

[snoggy6]

My wife applied before the end of her grace period (right after she graduated, and used our tax forms for the prior year)--$0 payments for her first six months of payments (since payments don't start until the grace period ends, and you aren't allowed to "make payments" so that your grace period counts towards the 10-year PSLF requirement). Although, for her undergrad loans that had already exhausted their grace period, she does get a full year of $0 for those.

Whether or not that's how she was supposed to do it, I don't know, but she spoke with the Dept of Education or FedLoan or whoever it is you contact regarding repayment (the number on all those statements).

But yes, you're right that you don't apply to PSLF until you've fulfilled the requirements.

Maybe you get different answers from different loan servicers. The information I have is from Nelnet.

 

[kindasorta]

Isn't is better to consolidate as soon as you graduate, therefore you can hop onto IBR right away, and not waste 6 months of potential PSLF payments? It seems more financially prudent to pay 6 months of resident IBR than attending IBR, even with the added interest.

 

[Impromptu]

IBR is still a new program. When I first started many things were in flux and most banks and lenders couldn't answer my questions beyond the basics. They simply told me to send in the paperwork and it would be figured out. The lenders that are requiring the alternate income documentation have likely learned and modified their policies since the early phases.

 

[thesauce]

Isn't is better to consolidate as soon as you graduate, therefore you can hop onto IBR right away, and not waste 6 months of potential PSLF payments? It seems more financially prudent to pay 6 months of resident IBR than attending IBR, even with the added interest.

Absolutely. Although not everyone is destined for PSLF, it still gives the benefit of forgiveness of the interest on the subsidized portion of your loans.

 

[thesauce]

IBR is still a new program. When I first started many things were in flux and most banks and lenders couldn't answer my questions beyond the basics. They simply told me to send in the paperwork and it would be figured out. The lenders that are requiring the alternate income documentation have likely learned and modified their policies since the early phases.

Sallie Mae can't even answer any of those questions now. Worst company that I've ever worked with. They consistently rank among the worst financial companies in customer service surveys.

 

[FON86]

Anyone has any idea how being claimed as a dependent would affect first year payment options?

 

[Miss Alyssa]

We had our financial aid/loan repayment talk yesterday and the person from AAMC described a new plan - Pay As You Earn. Apparently it's only been around since December 2012. The eligibility criteria is stricter than IBR, but the benefits seem to be slightly greater.

http://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn

 

[ChiDO]

It uses the last half of 4th year 0$ income plus income from july through December of intern year. So it will be slightly more than 0$.

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Incorrect.

My loans came into repayment recently; signed up for IBR and PSLF. Based on my 2011 Tax data (ie. 4th year medical school), my income was $0; thus my IBR payments are $0 for 1 year. After 1 year passes, I will have to renew my IBR based on my last tax return (ie. 2012 - the one we are filing now); since I was a resident for half a year, my income is $25k; thus IBR payments will increase to like $70ish. Not until my 3rd year of residency will I officially have a years worth of salary.

 

[yossarian444]

Incorrect.

My loans came into repayment recently; signed up for IBR and PSLF. Based on my 2011 Tax data (ie. 4th year medical school), my income was $0; thus my IBR payments are $0 for 1 year. After 1 year passes, I will have to renew my IBR based on my last tax return (ie. 2012 - the one we are filing now); since I was a resident for half a year, my income is $25k; thus IBR payments will increase to like $70ish. Not until my 3rd year of residency will I officially have a years worth of salary.

If you read the fine print on some of the loan companies, it says something to the line of: "If your tax return is no longer reflective of your current income, please submit alternative documentation such as pay stubs."

Assuming the loan companies enforced that clause, per your plan, you're committing something between outright fraud and a well-intentioned mistake. Either could probably delay PSLF 1.5 years in your case IF the gov't choose to be strict (doubtful, in my opinion, too hard to follow)

I called Sallie Mae (my loan-holder) a while back regaring their policy of tax return vs pay stub. The person on the phone told me that technically they'd prefer both if they are dissimilar, but at this time they are probably ok with just tax return data and they probably won't actually investigate any individual's case. Probably.

Long story short: In my opinion, tax data is probably fine for now, but I suspect in the near future the loan companies will figure it out.

 

[gurudoc]

And you should make sure you work at a non profit hospital for residency and fellowship because working at a for profit residency and fellowship like Drexel will cost you big time when those 3-7 years don't count one iota towards the 10 year PSLF.