Low IBR payment in intern year?

[NYyanx28]

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I was at a professional IBR/PSLF presentation today and they mentioned that if you work out your AGI correctly, you can end up paying $0 per month as a PGY-1 and <$100 per month as a PGY-2... with the bump to the 400-500 plateau as a PGY-3.

HOW?!

 

[Twitch]

At this "professional" meeting they didn't tell you how?

Well my friend today is your lucky day:
http://www.studentloannetwork.com/repayment/income-based-repayment.php


At the end there is no free lunch. You will still accrue interest which will bite you. Pay as much as you can every month and use the deduction ($2.5k) to lower your tax. In the very least pay the interest that is accruing each month.

 

[alwaysaangel]

I was at a professional IBR/PSLF presentation today and they mentioned that if you work out your AGI correctly, you can end up paying $0 per month as a PGY-1 and <$100 per month as a PGY-2... with the bump to the 400-500 plateau as a PGY-3.

HOW?!

No I don't think thats possible. Without outright lying about your AGI. And generally you give them the paperwork and they tell you your AGI and what you will pay (or thats what we were told at our exit interview).

I mean if you find out by all means share - but most PGY1s will pay about $400/month for IBR (unless you're married with kids, then it will be less).

The link above seems to be outdated - those numbers are considerably lower than everything else I've seen.

 

[Bulldogfan00]

At this "professional" meeting they didn't tell you how?

Well my friend today is your lucky day:
http://www.studentloannetwork.com/repayment/income-based-repayment.php


At the end there is no free lunch. You will still accrue interest which will bite you. Pay as much as you can every month and use the deduction ($2.5k) to lower your tax. In the very least pay the interest that is accruing each month.

Hi all, I wanted to respond because I did get my first year payment to $0 and I certainly didn’t lie about my AGI or other information. There are a number of issues involved, and I probably don’t recall them all correctly, but the lower payment results from the fact that IBR is backward looking and AGI can be annualized. I made ~$20k in my first calendar year as a PGY1 (from July-Dec). There were enough deductions in my salary to get my AGI just under $16k, and the IBR calculation using this AGI is $0. I’m sure I’m missing some other measures taken in the process as there were a number of steps that went into it. I don’t want it to seem as if I knew all this, as well, given I used a group that presented to us called GL Advisor that put it all together for me.

Also, Twitch, you should be aware that it doesn’t make sense to prepay any interest on loans during residency. This wasn’t obvious to me either, but was something they alerted me to. One reason is that the loan doesn’t capitalize, so even if you wanted to prepay it you’d be better off waiting until the end of your residency. Also, since many physicians will be available to participate in the public service loan forgiveness program (the main reason I’m in IBR), if you prepay your loan you are potentially just reducing your forgiveness. Hope this helps.

 

[DrBender79]

... the lower payment results from the fact that IBR is backward looking and AGI can be annualized. I made ~$20k in my first calendar year as a PGY1 (from July-Dec). There were enough deductions in my salary to get my AGI just under $16k, and the IBR calculation using this AGI is $0...

When did you begin IBR? Did you have to wait until you received your tax return for your MSIV-PGY1 year?

 

[Bulldogfan00]

When did you begin IBR? Did you have to wait until you received your tax return for your MSIV-PGY1 year?

I started IBR back in September of my PGY-1 after I consolidated. I didn’t have to wait and use my tax return to apply for IBR, because Direct Loans will accept other forms of documentation for income. I used another document that GL Advisor sent me to show an accurate AGI for 6 months of work.

 

[DrBender79]

Sounds good. Thanks.

 

[trp2006]

Would appreciate if someone can answer these questions for me. I also posted them on the other thread, without any reply:

The thing about the IBR is that the Gov pays any unpaid 'subsidized' interest that accrued in your account. Lets say that you accrue $800 of interest from loans, and $250 of that is from subsidized loans (and $550 from unsubsidized loans). Then say your payment is $400, and $50 goes to pay subsidized interest, while $350 pays unsubsidized interest. Then the Gov will pay the $200 of subsidized interest that you didn't pay.

Now, say you have extra money, and instead of paying $400, you pay $800. I'm not sure if the Gov will still pay the $200 of subsidized interest that it would have paid if you only sent $400. There are two scenarios:

1) $600 goes to pay your sub/unsub interest, the Gov pays $200 for the sub interest, and your extra $200 goes towards your principle

2) $800 goes to pay your interest, and the Gov doesn't pay anything b/c you paid all the $800 interest that accrued for the month

If scenario #1 is true, then it makes sense to pay extra towards your student loans. If scenario #2 is true, then it's foolish to pay extra to your student loans and it makes sense to put the extra money elsewhere, such as retirement funds or a high-interest savings account and then after 3 years when the Gov no longer pays your sub interest, take out the money and pay off the student loans in one lump sum.

If anybody can shed some light on this it would be most appreciated

I would like to know the answer to the above question too please?

Also if someone can answer the question posed by someone else about "***Also, why are some of our loans serviced through GREAT LAKES and some by the dept of education itself? if you click on each of your loans individually, while logged into the NSLDS website (financial aid review option), you will see that not all loans are serviced by Great Lakes...I don't get that..."

 

[montessori2md]

Would appreciate if someone can answer these questions for me. I also posted them on the other thread, without any reply:



I would like to know the answer to the above question too please?

Also if someone can answer the question posed by someone else about "***Also, why are some of our loans serviced through GREAT LAKES and some by the dept of education itself? if you click on each of your loans individually, while logged into the NSLDS website (financial aid review option), you will see that not all loans are serviced by Great Lakes...I don't get that..."

This part of the question I can't answer, it's specific to your school and your loans. You need to contact your lender and ask them.

 

[montessori2md]

Now, say you have extra money, and instead of paying $400, you pay $800. I'm not sure if the Gov will still pay the $200 of subsidized interest that it would have paid if you only sent $400. There are two scenarios:

1) $600 goes to pay your sub/unsub interest, the Gov pays $200 for the sub interest, and your extra $200 goes towards your principle

2) $800 goes to pay your interest, and the Gov doesn't pay anything b/c you paid all the $800 interest that accrued for the month

The easy way to answer this question is to say that IF you choose to pay extra on your loans, you specify to apply it to your principal, thus avoiding the issue entirely. What happens if you just randomly send extra without specifying, I wouldn't care to guess, and I wouldn't even trust what a phone rep of DirectLoans or whoever told me. I'd need to see it in my loan documents to believe it.

 

[dpmd]

They generally specify that all extra payments go toward unpaid fees first, then interest, then toward principal. So an extra payment would go toward the interest that had already accrued. If the government pays the leftover interest at a certain time each month and you send your extra payment in after that happened, then it should go to principal. That would require you know when the government covers the interest (assuming it is handled like that at all)