Lots of loans!

[nimboo]

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Ok guys, I need your advice. I have just finished med school and have a buttload of loans AND interest. I took out loans in college and never paid a cent back in interest. Well it turns out that I owe 11K in interest alone and my total loans add up to like 172,000. I am going to consolidate the loans one I find out the interest for next year. In terms of interest, I really want to pay all of it back. I've read a couple of posts saying that one shouldn't pay back the interest and put that money in a 403b? (don't know what that is).

so my questions are:
1. should I try to pay all the interest back this year
2. if i consolidate, does the interest get included in the total sum and then interest builds on that?

thanks.

 

[southerndoc]

1. should I try to pay all the interest back this year

No. I wouldn't. Can you actually afford it?

2. if i consolidate, does the interest get included in the total sum and then interest builds on that?

Your interest will become principal when your grace period ends (6 months after you graduate). So you have 6 months to pay back all your interest before it capitalizes.

Your interest will also capitalize when you consolidate.

Any chance you might be going to a place that will repay your loans after you finish your residency? Many townships, hospitals, etc. will repay your loans.

Regarding 403(b) plans, I would recommend you visit the Motley Fool's website (www.fool.com) to get a good overview of them. Basically they are the same thing as 401(k) retirement plans, but 403(b)'s are designed specifically for non-profit organizations and universities.

Congrats on graduating! It feels good doesn't it? I'm a new graduate myself.