Questions about economic deferment for residency

[devildoc2]

I downloaded a form, and it wants documentation of my income.

Well I just graduated med school, so I dont have any income. What do they want from me? Just a letter stating that i'm not working and dont have any income?

Or am I supposed to give them a copy of my residency contract with the income figures listed on it?

Does the lender care that I wont be making any money until mid July? Do I have to wait until then to apply for deferment? If that happens I'll have to start makin payments because my graduation date is today (5/22) and thats listed on the lenders website as the end of the deferment period.

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[devildoc2]

Oh man I just looked at the form, and there's no 20/220 option on there! Its based on income only, relative to the poverty level.

I thought the 20/220 rule was extended until fall 2008 or 2009? Is my lender just not familiar with that or what?

Damn I might have to do forbearance.

Has any incoming intern been successful in applying for a deferment?

 

[akpete]

Don't know about the paperwork but the 20/220 should be in place until 2009.

 

[devildoc2]

Don't know about the paperwork but the 20/220 should be in place until 2009.

Thats what I thought too, but the FDLP (federal direct loan program) economic deferment form doesnt have the 20/220 stuff on it anymore. This is a federal form used by a huge chunk of people for economic deferment, so if its not on there then something is very very wrong.

 

[randomedstudent]

Thats what I thought too, but the FDLP (federal direct loan program) economic deferment form doesnt have the 20/220 stuff on it anymore. This is a federal form used by a huge chunk of people for economic deferment, so if its not on there then something is very very wrong.

I have no idea exactly what form you're talking about, but when we (my husband and I are both residents) applied for deferment last year and then again a few months ago when 4th year grace period ended we just applied using the regular "economic hardship" option. If you have over, say, $100k in loans (pretty likely) you will qualify based on a resident's salary.

The form we filled out for our lender didn't have anything specifically called "20/220" - we just filled out the economic hardship one. You just put in the monthly payment based on a 10-yr payoff (careful here, not 30 yr or it may be too low - don't worry, there's nothing unethical going on here, you are supposed to use the 10-yr figure) and then put in your monthly income and trust me, you'll qualify (unless you have under $100k in loans).

 

[devildoc2]

I have no idea exactly what form you're talking about, but when we (my husband and I are both residents) applied for deferment last year and then again a few months ago when 4th year grace period ended we just applied using the regular "economic hardship" option. If you have over, say, $100k in loans (pretty likely) you will qualify based on a resident's salary.

The form we filled out for our lender didn't have anything specifically called "20/220" - we just filled out the economic hardship one. You just put in the monthly payment based on a 10-yr payoff (careful here, not 30 yr or it may be too low - don't worry, there's nothing unethical going on here, you are supposed to use the 10-yr figure) and then put in your monthly income and trust me, you'll qualify (unless you have under $100k in loans).

Thats using the 20/220 rule. The new rules dont take debt into account at all, and you qualify based SOLELY on income level. You have to make below 150% poverty level for a family of 2 to qualify. That translates to about 25k per year, which is below the resident threshold.

Can I ask which lender you use, and when you requalified?

 

[mshheaddoc]

They will want your contract income. That is what my husband used last year with no problem, OR You can use your tax return (if filed) which shows $0 income (most likely) for the past year.

 

[mshheaddoc]

The 20/220 rule is still in effect until Oct I believe. I'll have to do some more research because I haven't heard anythign about it in a while. There have been quite a few threads on this and I'll try to bring them (well link them) for reference.

New Legislation and Deferment

Economic Hardship Deferment Update

 

[randomedstudent]

Thats using the 20/220 rule. The new rules dont take debt into account at all, and you qualify based SOLELY on income level. You have to make below 150% poverty level for a family of 2 to qualify. That translates to about 25k per year, which is below the resident threshold.

Can I ask which lender you use, and when you requalified?

The Student Loan People (they may only be in KY, I think they are a pretty small company). We most recently did this back in Dec. or Jan. - can't recall exactly, but it was soon after the grace period ended on our 4th year loans. We had no problem at all getting this to work.

 

[zeloc]

I downloaded a form, and it wants documentation of my income.

Well I just graduated med school, so I dont have any income. What do they want from me? Just a letter stating that i'm not working and dont have any income?

Or am I supposed to give them a copy of my residency contract with the income figures listed on it?

Does the lender care that I wont be making any money until mid July? Do I have to wait until then to apply for deferment? If that happens I'll have to start makin payments because my graduation date is today (5/22) and thats listed on the lenders website as the end of the deferment period.

How it works is that you can qualify for an economic hardship deferment based upon both your monthly income and the amount of your loan payment that you would have to make each month. There should be calculators on your lender's website for you to figure this out. I would go through the calculations and understand how they calculate whether you are eligible before you do anything else.

Now it gets tricky for those who consolidated their loans 2 years ago, because these loans start in repayment right away but the non-consolidated loans have a 6 month grace period after graduation. For my situation, I would NOT qualify based on my consolidated loans alone, but I would with the rest of the loans that will come due in 6 months. So what I did is apply for and receive an economic hardship deferment for my current situation.

How it works is that your lender will have a specific form on their website that you have to fill out. Just fill it out completely and then fax it to them. The form will ask for your INCOME. Since you have no income yet, you can report it as $0 and you will receive a deferment. Now, once your residency starts and you receive a salary, you will have to report this change to your lender and you will be taken out of deferment. At that point, if you wouldn't qualify for a deferment you can get a forbearance or pay your payments until 6 months down the road when they will have to factor in ALL your loans and you can get an economic hardship deferment.

The 20/200 pathway is still in existence for this year, so we can all use it for our intern year of residency. It is unclear whether it will continue for NEXT year (this is why it is important to contact our legislators), but if it is not, we can all get the mandatory forbearance, which isn't as good as getting an economic hardship deferment.

 

[Dunce]

Now it gets tricky for those who consolidated their loans 2 years ago, because these loans start in repayment right away but the non-consolidated loans have a 6 month grace period after graduation. For my situation, I would NOT qualify based on my consolidated loans alone, but I would with the rest of the loans that will come due in 6 months. So what I did is apply for and receive an economic hardship deferment for my current situation.

How it works is that your lender will have a specific form on their website that you have to fill out. Just fill it out completely and then fax it to them. The form will ask for your INCOME. Since you have no income yet, you can report it as $0 and you will receive a deferment. Now, once your residency starts and you receive a salary, you will have to report this change to your lender and you will be taken out of deferment. At that point, if you wouldn't qualify for a deferment you can get a forbearance or pay your payments until 6 months down the road when they will have to factor in ALL your loans and you can get an economic hardship deferment.

Thatis something to pay attention to.

I have a few loans that include a college loan, small Grad Plus, and consolidated med school loans from 2 years ago that all go into repayment now. The bulk of my other loan debt is in the form of Staffords that still have a 6 month grace period.

For some reason I just got denied deferment from one lender who tried to start automatic account drafts for the monthly payment. However, the second lender approved me for forbearance starting with the next scheduled monthly payment then economic hardship deferment beginning in November.
I am sure that the grace period issue was to blame.

If you run into trouble the advice from the previous poster can be used to clear things up with your lenders.

 

[bacillus1]

So wait, if you are a resident, you are STILL expected to pay off your loans during your residency?

 

[mshheaddoc]

So wait, if you are a resident, you are STILL expected to pay off your loans during your residency?

No, payment is from 10-25 years, well after residency.

 

[207344]

Hello all,
I put together a detailed how-to on completing economic hardship deferment paperwork... It's amateur advice, but I've had feedback from several who successfully deferred after following the instructions.

It's on an ad-hoc blog at:

http://www.noacutedistress.com/2008/05/what-follows-is-bit-of-step-by-step.html

Good luck, please feel free to share with your classmates, and don't let the man get you down.
-mca

 

[tennispro]

let me get this straight.. before now, you could defer your loans through residency..(ie. not make any payments and interest would continue to accrue on your original uncapitalized unsub stafford principal from school) but with the expiration of this 20/220 rule, new residents will have to start repayment in residency while interest accrues on the new Capitalized balance? if that's true, I doubt many med students realize how much they will pay extra.. just myself.. it will cause the capitalization 22k in interest..my sub staffords would start to accrue interest..which will be 34k at 6.8..in total, I could be accruing near 4k more in interest per year if I am correct.. that's crazy.. I don't care how much i'll make.. i'd still be furious with letting 4k go per year as a billionaire just because I was ignorant during school..if I am wrong, please educate me.. I feel like I'm stupid for not being aware of these changes going on behind my back or maybe I don't understand this exactly and it won't affect me much