Paying back loans during residency

[migraineboy]

I'm coming up on graduation this May, and I was wondering what others out there have done / are planning to do about repaying loans. Is it better to defer until after residency, or bite the bullet right after graduation? On a related topic, anybody know how much a kidney gets on the black market nowadays?

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[Chadleez1]

•••quote:•••Originally posted by migraineboy:
•I'm coming up on graduation this May, and I was wondering what others out there have done / are planning to do about repaying loans. Is it better to defer until after residency, or bite the bullet right after graduation? On a related topic, anybody know how much a kidney gets on the black market nowadays?•••••I think I heard on the news that a kidney can go for 10 or 20 thousand...but you should know Dr. Laura doesn't approve!

 

[lamyers1]

Personally, I'll probably defer. The loan repayment will be about $1500/month and residency pays about 35,000 to 40,000 a year. That would only leave about $1500/month to live on. Not enough. I may however, pay the interest. We'll see. That is too far away; I'm just happy to be accepted and able to go into debt!

 

[LoanGrl]

migraineboy, kudos to you for thinking about how much money you'll save by starting repayment early! That's the first step to wise fiscal management! I work for NOWLoans, and our advice would be for you to first take advantage of your grace period and analyze your situation to see what works best for you. (i.e., will you be making enough money to live and repay your loans, etc.) If you can swing it, by all means, do! If you start repayment, you'll save a lot more money down the road. A few sacrifices now means better living later! You can always defer down the road if it's too tough; the interest will continue to accrue, but you won't have to pay until you are through your residency. PROTECT YOUR CREDIT RATING though; don't get too far behind. And don't let your grace period run out before you make a decision! If you are thinking of consolidating, be sure to read the fine print! Some consolidation plans may throw you into repayment immediately, and you may lose some deferment eligibilities. If you want to be aggressive about repaying your loans, we would advise against consolidation. Good luck to you, and contrats on your achievement!

 

[edmadison]

One thing to check on and I wish I knew the answer. Under the tax law, you get to deduct you student loan interest for the first 5 years of repayment. I'd rather have that deduction when I'm making 250,000 than when I'm making 50,000. My question is how does the deferral work into it.

Ed

 

[squeek]

Having just done my taxes...

There is a cap to the income you can make and still deduct your student loan interest: $55K adjusted gross income if you are single, $75K if married filing jointly. So you'd actually be better off to pay the interest during residency, because as of right now you can't take the deduction later when you're making more money.

 

[kd]

The good news is that the cap is increasing starting this tax year (2002), so this may still help some of the lower-paid PCP's out there. According to IRS publication 553 (Highlights of 2001 Tax changes), you'll still be eligible if you're married and earn less than 130K (only 65K for singles though).

"Beginning in 2002, the amount of your student loan interest deduction will be phased out (gradually reduced) if your modified adjusted gross income (MAGI) is between $50,000 and $65,000 ($100,000 and $130,000 if you file a joint return). You will not be able to take a student loan interest deduction if your MAGI is $65,000 or more ($130,000 or more if you file a joint return). For 2001, the deduction was phased out if your MAGI was between $40,000 and $55,000 ($60,000 and $75,000 if you filed a joint return) and you could not take a student loan interest deduction if your MAGI was $55,000 or more ($75,000 or more if you filed a joint return)."

•••quote:•••Originally posted by squeek:
•Having just done my taxes...

There is a cap to the income you can make and still deduct your student loan interest: $55K adjusted gross income if you are single, $75K if married filing jointly. So you'd actually be better off to pay the interest during residency, because as of right now you can't take the deduction later when you're making more money.•••••