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Oct 22, 2003
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I am a fourth year student who is almost done with med school (yay), and I am sure that we have an exit financial aid lecture scheduled, but I would like to hear from current residents/licensed docs who have been through these next few years (residency) and see if you have any pointers, tips,etc as far as money management goes.

I know my school seems to impress upon students to pay back their loans ASAP, but I hardly ever seem to meet anyone who is actually making the loan repayments while still in residency. What are the pros and cons from your prospective?

Also, what about loan consolidation? I am starting to get more phone calls from these companies touting 2.62% fixed rates, which sounds outstanding, but also hear rumors that these people will not take the whole loan, usually. Thoughts, experiences, etc?

Thank you in advance,
Tim Tye
Texas College of Osteopathic Medicine, D.O. Class of 2004

Jim Picotte

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Nov 7, 2001
Traverse City, Michigan
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Well I'm nearing the 2nd year of residency and have at least 3 and more likely 4 more years of residency/fellowship left. So far I've been able to get hardship deferment for my loans. I owe about $180,000 with med school/undergrad, etc and of that nearly $65,000 is subsidized direct loans and I have about another $20,000 in perkins.

You probably know but if you have enough in loans, you'll want to apply for hardship deferment. You have a maximum of 3 years of this but when you're in deferment, your interest rate on all your subsidized/unsubsidized loans is 0.6% less than when you're in forbearance or repayment. You want to take advantage of this. I'm not paying any interest on the subsidized and perkins loans because I have hardship deferment. My interest rate on my unsubsidized is also lower because of deferment.

Currently I'm paying ONLY the interest on my loans as a resident and the bonus of this is that $2500 of this interest is tax deductible every year. When we're all attendings pulling in the big money, we'll be making too much money to qualify for this deduction so it's a nice bonus. Plus I want to keep my loan amount at the current level.

Ok, so far I haven't consolidated, because one of the bonuses of consolidating is that it's like getting a whole new loan (that's what it really is, putting all that money and making it a whole new loan). So, you RESET the 3 years of hardship deferment. I'm in my 2nd of 3 years of hardship deferment now and I'm hoping to get as much as possible out of it.

The new interest rates for student loans is decided from the 91 day T-bill auction (the last auction in May, which I believe is May 27 this year decides the future rate. Last year, the T-bill rate was 1.12 at this time and then they have formulas to figure out what the loan percentage is. Currently the T-bill rate as of March 18th is 0.92% I know that 0.2% isn't much but over the course of your loan repayment it could amount to a decent chunk of money. I will consolidate next year, likely around May 2005 if the rates go down/stay the same/or don't go up too much. I'm just trying to get the most hardship deferment that I can (6 years).

Even though we have a ton of loans, at least the interest rates are favorable for us. Could be so much worse. Good luck.
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