Loan Deferment for Research Year

[odyssey2]

I was recently offered a research year working with a PI between my M3 and M4 year. I am being offered a grant stipend, however this apparently doesn't qualify as a graduate fellowship, which means I am unable to apply for a graduate fellowship deferment request.

What have other students done with their loans in this situation?

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[RangerBob]

You use up 6 months of your grace period, and then apply for REPAYE. Your interest will capitalize, but you have an income of $0 (presumably--it depends how your stipend is paid) and will have no (or minimal) monthly payments and your interest rate will effectively be halved by the interest subsidy.

Then when you graduate you enter repayment immediately (no grace period left over), so you can legitimately say you have no income when you re-certify your income (because you won't have started internship yet) and will have $0 payments for your first year of internship, along with the huge interest subsidy.

I would avoid putting your loans in forbearance--your interest capitalizes and will grow at the normal rate. Unless your entire stipend is taxable and considered income, then you save a whole lot of money by using REPAYE.

 

[odyssey2]

Thank you so much, this is hugely helpful. I will be paid in monthly increments for a total stipend of 16,000. How will I know if this is taxable?

 

[deleted480308]

Thank you so much, this is hugely helpful. I will be paid in monthly increments for a total stipend of 16,000. How will I know if this is taxable?

ask your accountant to look at the structure of the pay

 

[RangerBob]

Thank you so much, this is hugely helpful. I will be paid in monthly increments for a total stipend of 16,000. How will I know if this is taxable?

It probably doesn’t matter for IBR/REPAYE purposes (it does for federal tax purposes obviously). I am pretty sure $16k is low enough you’d qualify for $0 payments.

I would hope it’s not taxable-$16k for one year isn’t much to live on!