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RoyalCrownChinpokoMaster
10+ Year Member
Feb 12, 2007
414
15
Status
Attending Physician
A question for the practicing people or anyone who's knowledgeable...

As I understand the current Income Based Repayment (IBR) plan as an option for residents not wanting to rack up the loads of debt from forbearance but now unable to defer, your monthly payment is relatively affordable (more so than standard 10 yr repayment) but becomes complicated if you have dual incomes (in which case single filing may be better depending on your tax liability situation).

My question is regarding the 10-yr loan forgiveness option in which graduating residents working for the state or federal govt, OR, any NFP 501.3.c organization (hospital), OR private organization that fits the bill (see below, underlined)… Anyone understand this?

I'm not sure which is more common in the non-academic setting: private groups, or employees of hospitals, and how often they are 501.3.c...

If you get a private gig, you're out of the program (though I understand the 10-yr timeframe is not required to be continuous), so you simply revert to your standard repayment schedule
From the AAMC:

Income-based Repayment
Effective July 1, 2009, a new income-based repayment program will allow medical residents to cap their monthly repayments at 15 percent of their income that exceeds 150 percent of the poverty line for the borrower's family size ($15,315 for an individual). With an average first year resident stipend of $44,753, the monthly payment would be $368 compared to a typical 10-year repayment of $2,025 a month.
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All residents will qualify for this program regardless of income or debt levels. Similar to the economic hardship deferment, the federal government will continue to pay interest on the subsidized portion of the loan during the first 3 years of income-based repayment; interest will continue to accrue on the unsubsidized portions. After 3 years, interest will begin to accrue on the subsidized portion of the loan as well. After 25 years of income-based repayment, remaining federal educational debt if forgiven; however, physicians are unlikely to benefit from this provision.
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A participant can elect to leave the income-based repayment program at any time. After leaving
the program, the borrower can cap his or her monthly repayments at the 10-year repayment schedule the borrower would have held immediately before entering the income-based repayment program. Interest on the loans is capitalized at the time the participant elects to leave the income-based repayment program, most likely at the end of a physician's residency.
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Public Service Loan Forgiveness Program
P.L. 110-84 also authorizes a new "public service" loan forgiveness program, effective July 1, 2009. Physicians will be eligible for the program after 10 years of loan repayment while practicing in a "public service" job. The definition of "public service" includes 501(c)(3) non-profit organizations, faculty in "high-needs areas (as determined by the Secretary of Education), and service at private organizations providing "public health" or "emergency management" services. P.L. 110-315 clarifies the definition of public health to include "full-time professionals engaged in health care practitioner occupations and health care support occupations, as such terms are defined by the Bureau of Labor Statistics." Only Direct Loans are eligible for forgiveness, but borrowers may consolidate other federal loans under a single Direct Consolidation Loan. Physicians that participate in the income-based repayment program could save over $75,000 on their total loan repayment.<O:p</O:p<O:p</O:p
 

pathologic

5+ Year Member
Jul 5, 2009
32
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Resident [Any Field]
I crunched the numbers for myself and found that if I got a VA or ME job starting at 140k I would make too much to benefit at all. My income based payments would be high enough to pay it all back within the 10 yrs.
 
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RoyalCrownChinpokoMaster
10+ Year Member
Feb 12, 2007
414
15
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Attending Physician
I crunched the numbers for myself and found that if I got a VA or ME job starting at 140k I would make too much to benefit at all. My income based payments would be high enough to pay it all back within the 10 yrs.
But if you start paying back as a resident, those yrs count toward your 10, so with 3 or 4 yrs of residency and fellowship payments, you'd only be paying 6 to 7 yrs at full 10-yr-standard levels.

Which also isn't factoring in interest.

I guess I just don't know what the likelihood of landing a job for a 501.3.c hospital, VA, etc, would be...or if the possible tradeoff in lower salary would be worth it.
 

TMZ2007

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7+ Year Member
Oct 18, 2007
317
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Post Doc
This new policy is pretty annoying since I was planning to use the Economic Hardship deferment (basically $0 out of pocket) and will now be forced to use the Income-Based Repayment (significantly >$0 out of pocket).

When you consider that the majority (if not the entirety) of resident salary is through CMS, it basically means that the Feds are just taking back their own money. I'm sure they're really dying for my four grand a year. :rolleyes:
 
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RoyalCrownChinpokoMaster
10+ Year Member
Feb 12, 2007
414
15
Status
Attending Physician
This new policy is pretty annoying since I was planning to use the Economic Hardship deferment (basically $0 out of pocket) and will now be forced to use the Income-Based Repayment (significantly >$0 out of pocket).

When you consider that the majority (if not the entirety) of resident salary is through CMS, it basically means that the Feds are just taking back their own money. I'm sure they're really dying for my four grand a year. :rolleyes:
The IBR was somewhat of a middleground between non-payment loan deferment and forebearance, since Congress refused to extend the legislation that allowed the deferments (it expires this year).

Either way, it's just an option. You can always just go into forbearance and rack up tons of interest, and pay it back when you're better able to absorb the financial impact.