pay back loans during residency?

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justin5790

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Does anyone know if you have to start paying back federal loans during residency, or afterward?

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this should go under allo or financial or even residency.
 
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Forebearances are routinely granted for residents. So, you don't have to pay them back (if you receive a forebearance) but the interest is ticking (on BOTH subsidized and unsubsidized loans.)
 
You don't have to pay back loans during residency. It's the equivalent to school. Some loans earn interest, some do not. Most subsidized loans will NOT accrue interest while you are a resident.
 
How is it the equivalent to school? You earn a salary, pay taxes and don't pay tuition. While I believe you can get some kind of forbearance as Jota suggested, you sure aint a student. It is a job.
 
yea you would have to pay during residency. residency = job.

so once you finish med school you'll have the 9 month grace period, and boom you gotta start making payments. i'm hoping i get subsidized loans so i don't get shafted by 4 years of interest at x.xx%.
 
It's amazing how confident some of you are about issues with which you are so poorly acquainted.

When you graduate, you will most likely (if you are smart) consolidate your federal loans into one giant loan to lock in an interest rate. Depending on the current rate and the amount of Perkins Loans you have, you may choose to leave them separate from this consolidated loan. The majority of large loan corporations (i.e. Sallie Mae) have a medical residency forbearance available, which you have to re-apply for each year, and has a maximum of five years of availability. Depending on your living situation, many residents also qualify for economic hardship deferrment, which is a separate application with specific qualifications.

I haven't paid a dime during residency, but my wife (also an MD) is paying interest on her consolidated loan currently.
 
It's amazing how confident some of you are about issues with which you are so poorly acquainted.

When you graduate, you will most likely (if you are smart) consolidate your federal loans into one giant loan to lock in an interest rate. Depending on the current rate and the amount of Perkins Loans you have, you may choose to leave them separate from this consolidated loan. The majority of large loan corporations (i.e. Sallie Mae) have a medical residency forbearance available, which you have to re-apply for each year, and has a maximum of five years of availability. Depending on your living situation, many residents also qualify for economic hardship deferrment, which is a separate application with specific qualifications.

I haven't paid a dime during residency, but my wife (also an MD) is paying interest on her consolidated loan currently.


Interesting that you and the prior poster bbalu both have the same SNL lyric under your screen name and both hail from Boston...
 
yea you would have to pay during residency. residency = job.

so once you finish med school you'll have the 9 month grace period, and boom you gotta start making payments. i'm hoping i get subsidized loans so i don't get shafted by 4 years of interest at x.xx%.

1. You only have to start paying your loans if you don't qualify for economic hardship. The vast majority of residents qualify, so they defer for three years and then enter forbearance for the remainder of residency.

2. Grace periods vary. Mine was 6 months with Direct Loans.

3. I will not pay one dime of my loans prior to having a "real job."
 
1. You only have to start paying your loans if you don't qualify for economic hardship. The vast majority of residents qualify, so they defer for three years and then enter forbearance for the remainder of residency.

2. Grace periods vary. Mine was 6 months with Direct Loans.

3. I will not pay one dime of my loans prior to having a "real job."


Forbearance is a costly option because it'll hike up interest rates and null any subsidized loans (ie they no longer are subsidized) and interest capitalizes at the end of each forbearance period. Try to avoid that if you can. And don't forget Fellowship deferment.
 
Forbearance is a costly option because it'll hike up interest rates and null any subsidized loans (ie they no longer are subsidized) and interest capitalizes at the end of each forbearance period. Try to avoid that if you can. And don't forget Fellowship deferment.

Does anyone qualify for forebearance during res? Even if they make a combined income of ~70K?
 
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Though, once they go into repayment, no loan is subsidized.

Forbearance is a costly option because it'll hike up interest rates and null any subsidized loans (ie they no longer are subsidized) and interest capitalizes at the end of each forbearance period. Try to avoid that if you can. And don't forget Fellowship deferment.
 
Does anyone qualify for forebearance during res? Even if they make a combined income of ~70K?

My understanding is that the new laws state that forbearance has to be given if you're a resident.
 
Though, once they go into repayment, no loan is subsidized.


That's true, but I'm not sure if they can ever go back to being subsidized, say if you enter fellowship, a year or so after loans went into forbearance vs repayment.
 
Working with many going into their first year of residency - here is some good information (some confirming previous comments, and some new information).

1) Apply for Economic Hardship Deferment - Even though you will be working, your debt to income ratio will approve you (especially for the first couple of years). EHD is given in 1 year increments - and you have 3 years max to use it.

Insider information - the way they determine your debt to income - is based on EITHER your a)Current pay stub OR b) PREVIOUS YEAR'S TAX INFO. Most during medical school aren't working -therefore have ZERO income, making you completely eligible for deferment.

2) If your deferment expires or you are no longer eligible and you are still a Medical resident - you are guaranteed a Mandatory Residency Forbearance. You just need to contact your lender let them know that you are still in residency ... that's it!

Utilize deferment first! During deferment you are only accruing interest on UNSUBSIDIZED loans - but during a forbearance - there is interest accruing on the entire balance!

Hope this helps - I can offer more advise - but I think this is getting a bit long winded!
 
Working with many going into their first year of residency - here is some good information (some confirming previous comments, and some new information).

1) Apply for Economic Hardship Deferment - Even though you will be working, your debt to income ratio will approve you (especially for the first couple of years). EHD is given in 1 year increments - and you have 3 years max to use it.

Insider information - the way they determine your debt to income - is based on EITHER your a)Current pay stub OR b) PREVIOUS YEAR'S TAX INFO. Most during medical school aren't working -therefore have ZERO income, making you completely eligible for deferment.

2) If your deferment expires or you are no longer eligible and you are still a Medical resident - you are guaranteed a Mandatory Residency Forbearance. You just need to contact your lender let them know that you are still in residency ... that's it!

Utilize deferment first! During deferment you are only accruing interest on UNSUBSIDIZED loans - but during a forbearance - there is interest accruing on the entire balance!

Hope this helps - I can offer more advise - but I think this is getting a bit long winded!

:thumbup:
 
Working with many going into their first year of residency - here is some good information (some confirming previous comments, and some new information).

1) Apply for Economic Hardship Deferment - Even though you will be working, your debt to income ratio will approve you (especially for the first couple of years). EHD is given in 1 year increments - and you have 3 years max to use it.

Insider information - the way they determine your debt to income - is based on EITHER your a)Current pay stub OR b) PREVIOUS YEAR'S TAX INFO. Most during medical school aren't working -therefore have ZERO income, making you completely eligible for deferment.

2) If your deferment expires or you are no longer eligible and you are still a Medical resident - you are guaranteed a Mandatory Residency Forbearance. You just need to contact your lender let them know that you are still in residency ... that's it!

Utilize deferment first! During deferment you are only accruing interest on UNSUBSIDIZED loans - but during a forbearance - there is interest accruing on the entire balance!

Hope this helps - I can offer more advise - but I think this is getting a bit long winded!

During this deferment do your subsidized loans continue to be subsidized or are they racking up interest?
 
During this deferment do your subsidized loans continue to be subsidized or are they racking up interest?

While in an authorized deferment - no interest is accruing on the SUBSIDIZED portion of your loans (even the sub portion of your Consolidation loans). The goverment pays that!
 
While in an authorized deferment - no interest is accruing on the SUBSIDIZED portion of your loans (even the sub portion of your Consolidation loans). The goverment pays that!

Is residency an authorized deferment? And if so, can you continue deferment on subsidized loans while paying off unsubsidized loans?
 
There is no such thing as residency deferment - you have to apply for Economic Hardship Deferment, and while you are in a deferment you are only responsible for the unsubsidized interest.
 
I would ask that you read the latter half of this thread as edubbs is correct. I actually went over my lender with this yesterday. DO NOT ask for forbearance. You want economic hardship deferment for the reasons given above.
 
There is no such thing as residency deferment - you have to apply for Economic Hardship Deferment, and while you are in a deferment you are only responsible for the unsubsidized interest.

But can you pay more than that if you choose? Or will paying more take you out of the Economic Hardship Deferment?
 
That is exactly right - choose deferment first. During a deferment no payment is required - but you can always make payments and it doesn't effect your deferment status. You want to use this when you debt to income allows it - because after your residency your income may not allow you the opportunity to get this subsidized benefit.

Remember - there is no prepayment penalty. And when you aren't required to make payments, be sure you are focusing your funds on paying down whatever your HIGHEST interst rate loan debt is - whether it be credit cards, private loans, or just the 6.8% Staffords. Don't look at loan balances - instead be aware of the interest rate you are paying - this is where so much additional cost comes from.

Good luck!
 
That is exactly right - choose deferment first. During a deferment no payment is required - but you can always make payments and it doesn't effect your deferment status. You want to use this when you debt to income allows it - because after your residency your income may not allow you the opportunity to get this subsidized benefit.

Remember - there is no prepayment penalty. And when you aren't required to make payments, be sure you are focusing your funds on paying down whatever your HIGHEST interst rate loan debt is - whether it be credit cards, private loans, or just the 6.8% Staffords. Don't look at loan balances - instead be aware of the interest rate you are paying - this is where so much additional cost comes from.

Good luck!

And I'm assuming marital status would affect the ability to qualify for economic hardship deferment.
 
So during residency when my loans are in deferment, Are we allowed to make payments towards the loan but have the money go toward the principal only (not principal plus interest like the monthly amounts are figured)? I did this once with a car loan....anyone know?
 
So during residency when my loans are in deferment, Are we allowed to make payments towards the loan but have the money go toward the principal only (not principal plus interest like the monthly amounts are figured)? I did this once with a car loan....anyone know?

Because there is never a pre-payment penalty - you can always make payments on your student loans. Things to know...
1) If you make a payment, your deferment stays in place. Economic Hardship is given in one-year increments, and will only stop if you spefically request that it does sooner than the one-year.
2) Be careful about paying down too much - becaue Economic Hardship is based on debt to income ratio - you don't want to pay down too much debt and lose your eligibility.

Hope this helps - I understand that there are a lot of questions and as an educator of these topics, I can always help answer more questions!
 
And I'm assuming marital status would affect the ability to qualify for economic hardship deferment.

I was talking with my lender the other day & they told me they only look at your individual income to determine economic hardship(not your combined income if married).
 
So during residency when my loans are in deferment, Are we allowed to make payments towards the loan but have the money go toward the principal only (not principal plus interest like the monthly amounts are figured)? I did this once with a car loan....anyone know?

Any payments you make towards federal loans go first to any outstanding interest, then any fees/collection costs (shouldn't have any unless you are doing something wrong), then the remaining amount goes to principal. So unless all your loans are subsidized, you will have to pay the interest that accrues if you make any payments (but if you can send enough you will reduce your principal).
 
1. If you consolidate, you could lose your grace period of 6 mo for federal loans or 9 mo for perkins. Not always...but much of the time.

2. If you took out less, got a good interest rate, or go to an expensive city that has better pay then you may not qualify for deferment (subsidized loans stay federally subsidized). You may still file for forebearance (interest accrues on all loans).
 
as an upcoming intern is there ANY reason why you would not apply for economic hardship deferment then?
 
Something that the OP should consider and has not been covered in this thread - you can take upto $2500 student interrest payment deduction. So during residency and even EHD/forebearance, if you can make some payments towards interest, that amount (upto $2500 /yr) can be deducted from taxes.

When we're done with our training and start working on our own, we'll make too much to qualify for this. So I realize money is tight during residency, but if you can pay a little of the interest even put some in a 401k/403b/IRA you'll reduce your tax burden.
 
as an upcoming intern is there ANY reason why you would not apply for economic hardship deferment then?

No real reason not to apply - the only thing to consider is if you are going to be making monthly payments anyway - you shoud get yourself eligible for "repayment incentives" offered by lenders - usually these are only given when you are in a "repayment" status, vs. deferment
 
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