Loans for Disadvantage Students (LDS); Reconsolidate?

[Juan Solo]

Hi,

Does anyone have any experience with Loans for Disadvantage Students (LDS)?

I have 110K in LDS (which is subsidized throughout med school, residency and fellowship and fixed at 5%). I also have 24K in Perkins and about 20K in Direct unsubsidized.

I recently meet with my FAO counselor and their advice for me was to NOT reconsolidate all of my loans with hopes of getting PSLF in 10 years. They stated that keeping my LDS as is and in deferment until I am done with fellowship and then begin making payments once I am an attending.

They did mention to reconsolidate the 24K Perkins with the 20K Direct unsubsidized into a Direct Consolidation Loan and make payments while I am training.

Any thoughts on LDS and or this scenario would be helpful. There is not a lot of info out there on LDS.

Thanks Team!

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[RangerBob]

I've never heard of LDS. However, If you only owe ~$150k, you're going to be able to pay that off very quickly once you're an attending unless you take a very low job. You should be able to pay that off easily in 2-5 years depending on your specialty and how much lifestyle hit you're willing to take. I don't think it's worth aiming for PSLF since for one thing, we have no idea if it's going to stick around.

Even if you do decide to consolidate, there's not point to doing that until you graduate if your interest is all subsidized while in-school.

 

[Juan Solo]

I've never heard of LDS. However, If you only owe ~$150k, you're going to be able to pay that off very quickly once you're an attending unless you take a very low job. You should be able to pay that off easily in 2-5 years depending on your specialty and how much lifestyle hit you're willing to take. I don't think it's worth aiming for PSLF since for one thing, we have no idea if it's going to stick around.

Even if you do decide to consolidate, there's not point to doing that until you graduate if your interest is all subsidized while in-school.

Thank you for thoughts! Yeah it is not exactly clear which way I should go but so far the consensus is to keep that 110K in the LDS format until I am done with residency/fellowship since it will be subsidized.

 

[fetorius]

I think there are two aspects to think about here. If you consolidate the LDS, you will lose the subsidy but your payments will start counting toward PSLF right away.

If you don't consolidate, which means no repayment plan (e.g., PAYE, REPAYE), your time in residency/fellowship won't count towards PSLF. So, you would have to wait until after fellowship to consolidate and will need to make 10 years worth of payments to qualify for PSLF on the 110K. Personally, with such a small amount, I say leave it alone so that the subsidy is covered and then just pay it all off once you finish fellowship.

 

[Juan Solo]

I think there are two aspects to think about here. If you consolidate the LDS, you will lose the subsidy but your payments will start counting toward PSLF right away.

If you don't consolidate, which means no repayment plan (e.g., PAYE, REPAYE), your time in residency/fellowship won't count towards PSLF. So, you would have to wait until after fellowship to consolidate and will need to make 10 years worth of payments to qualify for PSLF on the 110K. Personally, with such a small amount, I say leave it alone so that the subsidy is covered and then just pay it all off once you finish fellowship.

Thank you for your opinion! It sounds like the general consensus is to keep my LDS loans in subsidized deferment until I finish fellowship and then begin to repay them when I am an attending. Thanks again for your input. I appreciate it.

 

[mostwanted]

Don't consolidate, I'm aware of LDS, some of the best loans you can have.


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[mostwanted]

Remember to submit deferment forms on time and regularly.


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[Juan Solo]

Don't consolidate, I'm aware of LDS, some of the best loans you can have.


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After much math, consultation, reading payment loan and forgiveness fine print I've concluded that consolidating and hoping for PSLF is actually better.

Scenario 1: 110K of subsidized for 5+ years of training = 30K interest savings
(I'd also be making payments on 45K of perkins/direct over 5 years = 22K, 12K of which went to interest)
Total debit: 145K balance. Now beginning paying heavily as attending ~ 35-40k/Yr over 4-5 yeas.

Assuming PSLF is still around.
Scenario 2: Now, consolidate 110K + 45K in perkins/direct = 155K total. Payments under REPAYE = 118K worth of payments over 10 YR (90K worth going to interest) and 134K worth potential forgiven (provided PSFL is still around).

 

[mostwanted]

After much math, consultation, reading payment loan and forgiveness fine print I've concluded that consolidating and hoping for PSLF is actually better.

Scenario 1: 110K of subsidized for 5+ years of training = 30K interest savings
(I'd also be making payments on 45K of perkins/direct over 5 years = 22K, 12K of which went to interest)
Total debit: 145K balance. Now beginning paying heavily as attending ~ 35-40k/Yr over 4-5 yeas.

Assuming PSLF is still around.
Scenario 2: Now, consolidate 110K + 45K in perkins/direct = 155K total. Payments under REPAYE = 118K worth of payments over 10 YR (90K worth going to interest) and 134K worth potential forgiven (provided PSFL is still around).

I think non guaranteed savings of around 25k while possibly getting stuck with 100k more is not worth it. Also, remember you might have to pay taxes on that 134k. I was in a similar situation, went with something closer to scenario 1, and less than 1 yr out, I was done with all loans.

 

[Juan Solo]

I think non guaranteed savings of around 25k while possibly getting stuck with 100k more is not worth it. Also, remember you might have to pay taxes on that 134k. I was in a similar situation, went with something closer to scenario 1, and less than 1 yr out, I was done with all loans.

Thanks for replying and your input. I agree that I would be risking getting stuck with paying off more in the long run is PSLF doesn't end up sticking around. However, I will need to make income based payments ($300-400/month) on the 45K (perkins/unsub) loans regardless while the 110K of LDS sits in a subsidized account during residency. I guess I figured if I am going to make income based payments I might as well make it count to the total balance ($155K) since the monthly payment will be the same. And yes I will definitely be incurring interest during this time (over 5 years ~ 30K) but I would have made 5 years of payments towards PSLF.

I will say though overall, whichever choice I go with I am fortunate to have a "smaller" balance than other individuals and whichever choice I make probably wont destroy me financially in the long run.

 

[kemchon]

I think non guaranteed savings of around 25k while possibly getting stuck with 100k more is not worth it. Also, remember you might have to pay taxes on that 134k. I was in a similar situation, went with something closer to scenario 1, and less than 1 yr out, I was done with all loans.

I am thinking about this loan. That means you are telling scenario 1 is better?(According to your experience)

 

[mostwanted]

I am thinking about this loan. That means you are telling scenario 1 is better?(According to your experience)

Yes Scenario 1 is better. LDS is one of the few loans that is interest free during residency and fellowship and even after you finish rate is 5%. Just remember to submit the deferral form every year, very easy to do.

 

[fetorius]

Yes Scenario 1 is better. LDS is one of the few loans that is interest free during residency and fellowship and even after you finish rate is 5%. Just remember to submit the deferral form every year, very easy to do.

I've been trying to read up on how to submit deferral forms but can't seem to find them. Do you remember how you did it?

 

[mostwanted]

I've been trying to read up on how to submit deferral forms but can't seem to find them. Do you remember how you did it?

It used to be this link
mycampusloan manage all your education loans online