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Loan Repayment Plans

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deyerlba

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Hello All! I am a 4th year medical student graduating in May and am now starting to look into the different repayment plans for my loans. I was directed by the financial aid office at my school to a repayment calculator at studentloans.gov (https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action) I noticed that there is a column for Project Loan Forgiveness. What is that exactly? It seems to good to be true that by doing IBR or one of the pay as you earn plans, that you would be "forgiven" for so much money! For IBR, it even had my total amount paid being less than I currently owe! Is that right??
 

mvenus929

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Hello All! I am a 4th year medical student graduating in May and am now starting to look into the different repayment plans for my loans. I was directed by the financial aid office at my school to a repayment calculator at studentloans.gov (https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action) I noticed that there is a column for Project Loan Forgiveness. What is that exactly? It seems to good to be true that by doing IBR or one of the pay as you earn plans, that you would be "forgiven" for so much money! For IBR, it even had my total amount paid being less than I currently owe! Is that right??

There is currently a program called Public Service Loan Forgiveness that if you participate in an income based repayment plan for 10 years while working for a nonprofit, supposedly you will get the remainder of your loans forgiven. This rule does not go into effect until October 2017 at the earliest, and may change in any number of ways before then (they could reduce the types of employers qualifying, put a cap on the amount to be forgiven, etc).

As I understand it, under IBR and PAYE, if you have a balance remaining after 25 years (20 years for PAYE, 25 years for REPAYE) of payments, this amount will be foregiven. However, these are income based repayment plans, and if your income goes up enough, you will be back to paying the same amount you would've on a standard 10 year repayment plan and may not have any loans left after 25 years.

The calculators do not take into account the dramatic increase in pay you will get when you become an attending, and so calculate repayment based on whatever initial income you put in (which for most, will be the PGY1 salary of roughly 50k). So, take the website calculations with a grain of salt.
 
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jonb12997

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Not to go political but I'm worried about what will happen to PSLF if a certain person/party is elected to the White House... Cough cough you're fired cough cough.
 

sharkbaitwhohaha

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I'm curious about what others think about refinancing student loans (be it SoFi/DRB/other) in light of presidential candidates ideas to refinance student loans.
 
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You shouldn't count on PSLF. The odds are heavily stacked against you. Your income will rise after residency to a point where you will be paying a lot toward your loans, probably in a 10 year repayment plan and end up paying off the vast majority or all of the loans before the PSLF would kick in. Also attending jobs may be part of a private group or private practice and not the non-profit hospital which contracts groups to cover their ERs, ORs (anesthesia), ICUs, hospitalist shifts, etc.
 
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deleted718115

As I understand it, under IBR and PAYE, if you have a balance remaining after 25 years (20 years for PAYE, 25 years for REPAYE) of payments, this amount will be foregiven.
No. As I understand it, under IBR and PAYE, any amount remained after 20-25 years will be taxed as taxable income.

Also note that you're only eligible for PAYE if you are a NEW borrower since 2007.
 
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deleted718115

Not to go political but I'm worried about what will happen to PSLF if a certain person/party is elected to the White House... Cough cough you're fired cough cough.
The candidate who will most likely keep PSLF in place is Bernie Sanders.
 

user3

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Not to go political but I'm worried about what will happen to PSLF if a certain person/party is elected to the White House... Cough cough you're fired cough cough.
the new REPAYE plan only charges borrowers 50% of whatever interest that their income-based payment amounts don't cover. So if your interest rate is 7%, the most the balance would grow is 3.5% per year-- and as long as you have a "partial financial hardship", interest will not capitalize. This will make relying on PSLF less risky.
 

Merely

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I don't want to have this become a political debate or anything but I'm genuinely wondering does anyone know which candidate will be better from the perspective of physicians? Not in the sense of like more healthcare to more people but just a salary perspective like who will raise physician salaries or supports policies that don't lower them all that much? (not saying I endorse this position I'm just wondering)
 
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PatsyStone

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the new REPAYE plan only charges borrowers 50% of whatever interest that their income-based payment amounts don't cover. So if your interest rate is 7%, the most the balance would grow is 3.5% per year-- and as long as you have a "partial financial hardship", interest will not capitalize. This will make relying on PSLF less risky.

Actually, RePAYE--unlike IBR and PAYE--does not require a financial hardship to enter, which means interest will NOT capitalize when your income increase above a certain threshold (this in contrast to when your monthly payment surpasses what it would have been had you entered a 10-year repayment plan when you started IBR/PAYE). Interest will only capitalize if you leave RePAYE or switch replayment plans
 

asdf123g

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Where does one go to learn about all of these repayment programs and plans? I am completely clueless and lost :(
 

TooMuchResearch

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I don't want to have this become a political debate or anything but I'm genuinely wondering does anyone know which candidate will be better from the perspective of physicians? Not in the sense of like more healthcare to more people but just a salary perspective like who will raise physician salaries or supports policies that don't lower them all that much? (not saying I endorse this position I'm just wondering)

Not the party that wants single payer government healthcare.
 
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mvenus929

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Actually, RePAYE--unlike IBR and PAYE--does not require a financial hardship to enter, which means interest will NOT capitalize when your income increase above a certain threshold (this in contrast to when your monthly payment surpasses what it would have been had you entered a 10-year repayment plan when you started IBR/PAYE). Interest will only capitalize if you leave RePAYE or switch replayment plans

My understanding is that you stay in IBR/PAYE regardless of the amount you can pay, and your payments just can't go over the 10 year standard repayment. I don't recall reading anything about interest capitalizing when you got to that point.

Where does one go to learn about all of these repayment programs and plans? I am completely clueless and lost :(

The federal student loans website is a good place to start. https://studentloans.gov/myDirectLoan/index.action
You also have to do exit counseling on the website before graduation, which is where most people pick it up. But some financial aid departments are better at explaining it than others.
 
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RangerBob

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My understanding is that you stay in IBR/PAYE regardless of the amount you can pay, and your payments just can't go over the 10 year standard repayment. I don't recall reading anything about interest capitalizing when you got to that point.

I thought that you do switch over to the 10 year plan if you no longer have a partial hardship forbearance, but per the Dept of Ed website (studentaid.ed.gov):

"If your income ever increases to the point that your calculated monthly payment amount would be more than what you would have to pay under the 10-year Standard Repayment Plan, you’ll remain on the PAYE or IBR plan, but your payment will no longer be based on your income. Instead, your required monthly payment will be the amount you would pay under the 10-year Standard Repayment Plan, based on the loan amount you owed when you first began repayment under the PAYE or IBR plan. Even if your income continues to increase, your monthly payment will never be more than the 10-year Standard Repayment Plan amount."


In that case, I imagine your interest does not capitalize since it says you continue making the 10-year payment amount while under PAYE/IBR. If you actually switched from IBR to the standard plan (which happens if you forget to re-certify...), then your interest would capitalize.
 
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