IBR/REPAYE and $0 payments/month

[Pomacentridae]

Hi,

I'm a current intern and I submitted my application for REPAYE a few weeks ago and it is currently in processing. I submitted an online tax return back in April showing that I had not earned any income for the 2015- April 2016 tax year. I was under the impression that this would allow for my monthly loan payments to be a minimum of $0. When I spoke with the representative at Nelnet, they estimated that my monthly loan payments based on my current resident salary would be around >$300. How is it that others are able to have $0 monthly loan payments for that first year of residency?

---

Members don't see this ad.

 

[sazerac]

Because they changed the rules (recently). The same way some people on this forum got federal student loans for medical school at 3%.

Let's face it, the 6 months of $0 payments was always kind of a loophole and should have been closed.

 

[SigmaFS]

I'm not aware of rule changes, but it may be related to your timing. Medical students who are considering REPAYE should consolidate immediately upon graduation (and before starting residency) to report $0 current income. This should produce a zero payment for the period July-June. If you delay until the end of your grace period, you will be asked to report your current income resulting in a monthly payment.

 

[Pomacentridae]

I'm not aware of rule changes, but it may be related to your timing. Medical students who are considering REPAYE should consolidate immediately upon graduation (and before starting residency) to report $0 current income. This should produce a zero payment for the period July-June. If you delay until the end of your grace period, you will be asked to report your current income resulting in a monthly payment.

Technically my grace period doesn't end until February. One of the representatives at my student loan servicer had also told me that I wouldn't be able to apply for any income-driven repayment plans until near the end of 2016(as in now) for it to count. I wonder if that was just a strategy for them to ensure I would have actual monetary payments due when my grace period ends.

 

[SigmaFS]

Technically my grace period doesn't end until February. One of the representatives at my student loan servicer had also told me that I wouldn't be able to apply for any income-driven repayment plans until near the end of 2016(as in now) for it to count. I wonder if that was just a strategy for them to ensure I would have actual monetary payments due when my grace period ends.

Yes, you're not allowed to enter an IDR while in grace. That's why it's recommended you consolidate immediately after graduation to waive grace period, enter REPAYE and benefit from the 50% interest subsidy ASAP.

 

[Student Loan Planner]

Also avoid using forbearance or deferment at all costs. REPAYE is almost always the right choice for repayment during residency. The only exception being if you're positive you're going for PSLF and your spouse makes very substantial income. Then it might make sense to check with your accountant to see if filing separately and going with IBR is a better option to keep your payments low. Depends on each individual situation. But a great general rule is on the day after you graduate, submit the consolidation paperwork and waive the grace period to shave 4 months of payments off as an attending for PSLF, which could amount to $15,000 or more depending on how much you've borrowed

 

[ERRES2288]

So is it still possible to file a tax return during 4th year of Med school and then immediately consolidate with REPAYE after graduation locking in a $0/monthly payment until the next tax return is filed a year later?

 

[SigmaFS]

So is it still possible to file a tax return during 4th year of Med school and then immediately consolidate with REPAYE after graduation locking in a $0/monthly payment until the next tax return is filed a year later?

There's no longer a need to file a tax return, but, yes consolidate immediately after graduation to enter REPAYE ASAP.

 

[ERRES2288]

There's no longer a need to file a tax return, but, yes consolidate immediately after graduation to enter REPAYE ASAP.

Will I then be able to have a $0/month payment for my first year?

 

[SigmaFS]

Yes, if your income was zero in the prior year. Also, the following YouTube video might be helpful:

 

[Student Loan Planner]

Will I then be able to have a $0/month payment for my first year?

If you do that make sure you are saving in your 403b. I think they let you get away with it still if you consolidate immediately at graduation and then let them know your current income is zero. When they ask for a confirmation of your income it'll change obviously.