Loan Repayment During Residency

[GreenBean79]

I was wondering if any residents in cities like Boston, Philly, San Francisco, etc. could comment about whether they are able to make any substantial loan payments during residency. I know that some of these programs pay higher salaries, but it doesn't seem to compensate for the difference in cost of living (say compared with some midwestern cities).

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[colbgw02]

Sorry if you already know this, but most people get a deferment or forbearance for the first 3 years of residency (assuming your loans are with the federal government). You still have to pay the interest on the unsubsidized loans, but not the subsidized ones. If you're living in one of those cities, you would almost certainly qualify for the economic hardship deferment based on the cost of living. When it comes time to apply, make sure you call them, because the criteria for qualification on the website aren't up to date.

 

[GreenBean79]

Yup, I know that. I'm just asking whether anyone in those cities is actually able to pay off a portion of their loans if they want to (ie do they have much $$ left after living expenses). Where I am right now, I could definitely make loan payments while living comfortably on a resident's salary.

 

[f_w]

The 'advantage' of paying back (or at least paying interest) is that you can actually deduct the interest from your income during taxes. The moment you make more than 110k, the student interest deduction falls away. Now, that doesn't help you if don't have enough money to put food on the table, but it is a factor to consider.
I have lived on a residents salary in one of those cities, and it is not easy to spare substantial amounts of money for payments. The main factor is the cost of a place to live and if you have a car the cost to park and insure the car. Depending on where you go, not keeping a car might be a way to have the money to pay loan interest. The frustrating thing about deferment/forbearance is that with the extra debt you accumulate, you end up with a couple of extra years of payback.

 

[Winged Scapula]

An interesting thing I found is that if you do not qualify for financial hardship (which is based on salary, and nothing more), the programs do not include cost of living in their payment plan. They simply have a formula based on your salary from which they calculate your payment; mine came out to be 60% of my take home salary.

Seems like a better deal if I lived somewhere where a tiny studio apartment wasn't $1200/month. They don't really care if you live somewhere expensive; that is not included in the "formula".