LOAN Strategy During Residency

[DrTacoElf]

So everyone going into a paid residency, what are your loan strategies going to be?

Here is my student loan info (all federal loans) from dental school

Year 1: Citibank (33K)
Consolidation between Year 1 and Year 2 with Direct Loans
Year 2: THE (33K)
Year 3: Graduate Leverage (33K)
Year 4: THE (33K) + THE Residency and Relocation Loan (12K private loan)

Total is about 145K with variable interest rates (I will post this info up once I sort through my paperwork)

Anyway I will be entering a 6 year residency, years 2 and 3 of which I will have to pay tuition (So I assume I will be taking out federal loans these 2 years). Years 1,4,5,6 are paid salary What is the best strategy for me?

I was thinking I would consolidate my loans after graduation in May 2009 and then defer but I read that you are not able to defer after consolidation possibly, which means I would have to do forbearance. This makes me think that I should jump on the last year of deference allowed (ends July 1st, 2009) and then after that year is up do forbearance. Downside to this is that I will be dealing with 3 separate lenders (direct loans, THE, Graduate leverage) in deference/forbearance because I didn’t consolidate (Is this even possible to do). What do you guys think? Also because of my in school consolidation will this have any effect on my ability to defer once before July 1st, 2009? And lastly, whatever I do still needs to give me the ability to take out federal loans for years 2 and 3 of my residency to pay for medical school tuition.


Thanks for any help

---

Members don't see this ad.

 

[DrTacoElf]

Anyone

 

[Hysteria24]

Maybe no one has taken a stab at this because it is a bit on the complicated side. Have you tried stopping by your finaid office to see what those people have to say?

 

[texas_dds]

i found graduate leverage to be unsurpassed in 'looking out for professional student borrowers' - if I were you, I would call them or email with your questions. I had a ton of questions back in 2005 and they worked it out to a T.

 

[DrTacoElf]

Thanks for your help guys. From what I've learned so far in residency the best bet is always to defer if possible. This is allowed for a maximum of 3 years. Currently new legislation is doing away with deferment during residency. July 2009 will be the last chance. So its a best bet to defer for this 1 year period and then transition to forberence. Forberence is always preferred to a formal repayment schedule during residency becasuse in forberence you CAN make payments but you don't have to. If you are on a formal repayment schedule and miss a payment kiss your credit record goodbye.

The only variable I can't find a good answer to is if it is better to consolidate and forfeit the ability to defer or if I should forget consolidation for 1 year, defer for that year and then consolidate and go into forberence. Not sure if this is even possible and I know consolidation depends on weighted averages of loan percentages so its going to vary on a case by case basis. Basically you have to do some forecasting. I am of the mindset that tailend repayment rewards aren't even worth factoring in as of late they are going away. So I will be focusing on up front incentives in my calculations. I'll post up what I figure out in the next few weeks

I stopped by my financial aide office and as usual they were clueless about the BEST plan. They couldn't accurately forecast my total repayment like I wanted with different scenarios. So I will have to figure it out on my own.

 

[DIRTIE]

where is this new legislation to be found? I would like to read up on it

Thanks

Thanks for your help guys. From what I've learned so far in residency the best bet is always to defer if possible. This is allowed for a maximum of 3 years. Currently new legislation is doing away with deferment during residency. July 2009 will be the last chance. So its a best bet to defer for this 1 year period and then transition to forberence.

 

[DrTacoElf]

http://www.nextstudent.com/student-loan-blog/blogs/sample_weblog/archive/2008/06/10/782.aspx

The new definition of economic hardship, which takes effect July 1, 2009, only considers a borrower's income for qualification, which is limited to $15,600 a year or less. Under the previous criteria, a medical resident making $45,000 and carrying at least $76,000 in debt generally qualified for economic hardship deferment.

An economic hardship deferment allows students with a high debt-to-income ratio to postpone their federal student loans for up to three years, during which time the government pays the interest on any subsidized student loans

 

[Cold Front]

http://www.nextstudent.com/student-loan-blog/blogs/sample_weblog/archive/2008/06/10/782.aspx

The new definition of economic hardship, which takes effect July 1, 2009, only considers a borrower's income for qualification, which is limited to $15,600 a year or less. Under the previous criteria, a medical resident making $45,000 and carrying at least $76,000 in debt generally qualified for economic hardship deferment.

The new criteria is a BS. I am guessing the definition of a "medical resident" = dental resident too?

There is hardly any program that pays $15k a year, lowest I've heard is in the $20k range - so it's almost impossible to meet the criteria.

 

[ktcook83]

BUMP...

I would love to get more information on this if anyone has heard anything from their respective financial aid offices. We haven't heard a thing and those of us doing residencies next year are curious if we will still be able to defer our loans during residency so the gov't can pick up the tab on the subsidized loans...

 

[armorshell]

At least they're going to put a cap on the maximum payments you have to make:

Medical residents, whose income is not over 150 percent above the poverty line for their family size, can have their loan payments capped at 15 percent of their income under the new program.

Once the government's new criteria takes effect, a medical graduate who earns $45,000 — the average salary for first-year residents — would be required to make monthly payments of $365. As residents earn more money each year, their monthly payments would likely increase.