Residents-how long can you defer your loans?

[Littlemantate]

So I am a bit confused when reading my loan info-I used the T.H.E loans and took some private and all the federal-but anyway, in general can you defer your loans until you are done residency or only through 3 years of residency? For example mine is 5 years plus/minus a fellowship-when is payback required-I know this is loan info but nobody posts in the loans forum!

Thanks!

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[VJWDO]

defer for three years and then get economic hardship. They can't expect a resident or fellow to pay back loans until they graduate.

 

[cchoukal]

You can "defer" for up to 3 years, depending upon how much money you make and how much you owe. There is a form to fill out and it helps you calculate your estimated monthly payment and if that is over some percentage of your income, you are eligible for deferral. Since you'll get a small raise each year, some people will no longer qualify for their third year. After 3 years, you can apply for "forebearance," and there are different economic criteria to meet.

The difference between deferment and forebearance is that in deferment, only the unsubsidized portion of your loans accrues interest. In forebearance, both unsubsidized AND subsidized portions of your loans accrue interest.

And, obviously, these classifications apply only to gov't loans. Any private or institutional loans will have different (frequenly worse) terms.

 

[Winged Scapula]

defer for three years and then get economic hardship. They can't expect a resident or fellow to pay back loans until they graduate.

Not quite true. They CAN and they DO.

Government loans are due and payable within 6 months after you finish medical school. However, most residents will qualify for an economic hardship deferment. If you are single, you can generally qualify for economic hardship deferment for 3 years of residency, depending on your pay.

HOWEVER, once you near $45K or so (I admit I do not know the exact amount) in salary, they will expect you to start paying them back. The frustrating part is that it doesn't matter what other bills you may have or that your payment due is 60% of your gross monthly salary (they wanted $1200 a month from me). The salary cut-off for economic hardship is a flat rate - it does not take into account how much you owe, or where you live (ie, the cost of living).

Since I could no longer qualify for economic hardship after 3rd year of residency, I consolidated my loans and asked for forbearance...interest still accrues, but I was allowed to either not make payments, pay interest only (which is what I'm doing - its still $450 a month) or pay less than the interest accruing.

 

[Littlemantate]

So I am still confused, sounds like some of you are saying you can defer throughout and some are saying only 3 years or less however if you ask them they will give you longer Kimberlicox? I am confused!

 

[Winged Scapula]

So I am still confused, sounds like some of you are saying you can defer throughout and some are saying only 3 years or less however if you ask them they will give you longer Kimberlicox? I am confused!

You can defer until such a point when your residency salary exceeds the maximum allowable (this is generally around $45K/year or so). Up until that point you have to apply for economic hardship. Your graduate medical education office should be able to help you with this when the time comes.

Most residents exceed the maximum allowable income by 3rd year of residency. Obviously if you are in a residency which is only 3 years long or is underpaid, you may defer for the entire length of your residency or until you reach the maximum allowance income. If you are married, your spouse's income can be used in the calculations as well.

In other words, once you make more in salary than their limit (which is again usually around $45 K gross per year), then you DO NOT qualify for economic hardship. If you are in a surgical or other lengthy residency, you will generally exceed the max salary by your 3rd or 4th year.

You cannot ask them for more time, but after you have exceeded the max salary and no longer qualify for economic hardship, you can go into forbearance. As noted by cchoukal, the difference is:

in deferment (when you are deferring payment because of economic hardship), only interest from the unsubsidized portions of your Stafford loans accures;

in forebearance, interest accrues during the period of forebearance on BOTH unsub and subsidized portions of the loans.

They will, if you are really having trouble making payments during forebearance, allow you to not make payments at all, but you should try and at least pay off the interest each month, otherwise you are paying interest on the capital AND the interest accruing.

Your private loans are subject to whatever terms the lender has set aside, so the above may not be relevant.

Does that help clarify things?

 

[iatrosB]

You can defer until such a point when your residency salary exceeds the maximum allowable (this is generally around $45K/year or so). Up until that point you have to apply for economic hardship. Your graduate medical education office should be able to help you with this when the time comes.

Most residents exceed the maximum allowable income by 3rd year of residency. Obviously if you are in a residency which is only 3 years long or is underpaid, you may defer for the entire length of your residency or until you reach the maximum allowance income. If you are married, your spouse's income can be used in the calculations as well.

In other words, once you make more in salary than their limit (which is again usually around $45 K gross per year), then you DO NOT qualify for economic hardship. If you are in a surgical or other lengthy residency, you will generally exceed the max salary by your 3rd or 4th year.

You cannot ask them for more time, but after you have exceeded the max salary and no longer qualify for economic hardship, you can go into forbearance. As noted by cchoukal, the difference is:

in deferment (when you are deferring payment because of economic hardship), only interest from the unsubsidized portions of your Stafford loans accures;

in forebearance, interest accrues during the period of forebearance on BOTH unsub and subsidized portions of the loans.

They will, if you are really having trouble making payments during forebearance, allow you to not make payments at all, but you should try and at least pay off the interest each month, otherwise you are paying interest on the capital AND the interest accruing.

Your private loans are subject to whatever terms the lender has set aside, so the above may not be relevant.

Does that help clarify things?

So can you go into forebearance no matter how much your combined income is (with a spouse)?

 

[Littlemantate]

You can defer until such a point when your residency salary exceeds the maximum allowable (this is generally around $45K/year or so). Up until that point you have to apply for economic hardship. Your graduate medical education office should be able to help you with this when the time comes.

Most residents exceed the maximum allowable income by 3rd year of residency. Obviously if you are in a residency which is only 3 years long or is underpaid, you may defer for the entire length of your residency or until you reach the maximum allowance income. If you are married, your spouse's income can be used in the calculations as well.

In other words, once you make more in salary than their limit (which is again usually around $45 K gross per year), then you DO NOT qualify for economic hardship. If you are in a surgical or other lengthy residency, you will generally exceed the max salary by your 3rd or 4th year.

You cannot ask them for more time, but after you have exceeded the max salary and no longer qualify for economic hardship, you can go into forbearance. As noted by cchoukal, the difference is:

in deferment (when you are deferring payment because of economic hardship), only interest from the unsubsidized portions of your Stafford loans accures;

in forebearance, interest accrues during the period of forebearance on BOTH unsub and subsidized portions of the loans.

They will, if you are really having trouble making payments during forebearance, allow you to not make payments at all, but you should try and at least pay off the interest each month, otherwise you are paying interest on the capital AND the interest accruing.

Your private loans are subject to whatever terms the lender has set aside, so the above may not be relevant.

Does that help clarify things?

muchos

 

[Winged Scapula]

So can you go into forebearance no matter how much your combined income is (with a spouse)?

Not sure - I would think if you have a significant combined income you would WANT to start paying back some of those loans; the interest accrual is pretty eye-opening!

 

[cali-ob]

this is very important inforamation! thank you for telling us this. I was under the impression that you could easily defer loan repayment while in residency! There is at least one program on my list with a starting salary of $45K AND I'm married (with children) so there's a very good chance they'll be expecting me to pay. We're screwed! Let's just hope I can afford the interest!

 

[Winged Scapula]

this is very important inforamation! thank you for telling us this. I was under the impression that you could easily defer loan repayment while in residency! There is at least one program on my list with a starting salary of $45K AND I'm married (with children) so there's a very good chance they'll be expecting me to pay. We're screwed! Let's just hope I can afford the interest!

Make sure you check with the GME office and/or your lender(s), as the max salary required to start maikng payments under economic harship may have changed in the years since.

I don't know if they give any consideration to the fact that you have children, but since they didn't care how much my rent was or other factors, they might not. They actually suggested I turn off my cable tv to save some money!

Perhaps you could put your kids to work!

 

[marshmallows]

Make sure you check with the GME office and/or your lender(s), as the max salary required to start maikng payments under economic harship may have changed in the years since.

I don't know if they give any consideration to the fact that you have children, but since they didn't care how much my rent was or other factors, they might not. They actually suggested I turn off my cable tv to save some money!

Perhaps you could put your kids to work!

they suggested you to turn of your cable?! crazy...

 

[Winged Scapula]

I was just looking at the Department of Education student loan services web site.

They DO take into account adjusted gross income including your spouse's income as well as the size of your family when computing loan repayment requirements.

Now interestingly, I was always under the impression from my GME that deferment was based on salary, but this seems to imply that regardless of income you can get 3 years of deferment...

"Stafford loans:

Principal and interest payments may be deferred while the borrower is:

Attending school at least halftime.
Unemployed (up to three years).
Studying in an approved graduate fellowship or rehabilitation program for the disabled.
Experiencing economic hardship (up to three years). "

Therefore, it may not make a difference what you make in salary but you can defer for up to 3 years, after that you have to go into forbearance. Makes sense since some of the NY programs start out at greater than 45K.

So I'm learning something today as well.

 

[southerndoc]

As long as you are in residency, you can continue to enter into forbearance even if you do not qualify for an economic hardship deferral. When you enter fellowship, you can also get a graduate fellowship deferral. I believe (don't quote me) that the graduate fellowship deferral covers subsidized interest just like an economic hardship.

 

[Winged Scapula]

As long as you are in residency, you can continue to enter into forbearance even if you do not qualify for an economic hardship deferral. When you enter fellowship, you can also get a graduate fellowship deferral. I believe (don't quote me) that the graduate fellowship deferral covers subsidized interest just like an economic hardship.

Forebearance doesn't require economic hardship, although the payback arrangements (if any) may.

However, once in forebearance I don't believe you can go back to deferral, although if you make less during fellowship you can ask for lower payments (although, as always in forebearance, interest on both sub and unsub will continue to accrue).

 

[Winged Scapula]

they suggested you to turn of your cable?! crazy...

Exactly! Especially without cable I got NO tv reception at all.

 

[Littlemantate]

ok I am just confused again-forbearence, deferment, econ hardship-ok whatever-someone tell me how many damn years I can go without having to cut a check to my loan company-that is all I care about-Do not care if interest acrues upon interest or whatever-bottom line is I aint gonna have the cash to make paytments on residents salary-It will be 5 years total-can I get that long without a damn paymen?

 

[Winged Scapula]

ok I am just confused again-forbearence, deferment, econ hardship-ok whatever-someone tell me how many damn years I can go without having to cut a check to my loan company-that is all I care about-Do not care if interest acrues upon interest or whatever-bottom line is I aint gonna have the cash to make paytments on residents salary-It will be 5 years total-can I get that long without a damn paymen?

There is no hard answer. It will depend on how much you make, if you are married and if you have children.

But in general, you can defer for 3 years max.

After your 3 years is up, you go into forebearance.

Forebearance requires "proof" that you cannot pay - ie, tax returns, paystubs, etc. They calculate a minimum payment based on those. But in general, once in forebearance you are expected to make some payments, although it is stated that if you have extreme economic hardship and you have tried to reduce your bills, they may allow you to go without making payments. These are handled on a case by case basis.

It was fairly easy for me to get reduced payments once I entered fellowship because I explained that although I was making more, my cost of living was much more here. They told me that that doesn't really factor into repayment plans, (the Income Contingent Payment Plan had calculated a payment of nearly $800/month for me...which would have been a hardship for me; my rent is nearly 45% of my take home - their "scale" assumes no more than 30%. I'm not living it up - but in a small studio without a W/D or dishwasher, so I can hardly economize more there). At any rate, they approved me to make much smaller payments - I think as long as you are making some attempt they will work with you.

You might be able to get away with not making any payments during residency while in forebearance but it really hurts to see the hundreds of dollars in interest only debt accruing each MONTH on a $100K loan. Hurts a little less if I'm paying the interest back.

Besides, if you're making $50K or more (which you should be by your Chief year at least) why wouldn't you have $$ to pay back some?

 

[iatrosB]

There is no hard answer. It will depend on how much you make, if you are married and if you have children.

But in general, you can defer for 3 years max.

After your 3 years is up, you go into forebearance.

Forebearance requires "proof" that you cannot pay - ie, tax returns, paystubs, etc. They calculate a minimum payment based on those. But in general, once in forebearance you are expected to make some payments, although it is stated that if you have extreme economic hardship and you have tried to reduce your bills, they may allow you to go without making payments. These are handled on a case by case basis.

It was fairly easy for me to get reduced payments once I entered fellowship because I explained that although I was making more, my cost of living was much more here. They told me that that doesn't really factor into repayment plans, (the Income Contingent Payment Plan had calculated a payment of nearly $800/month for me...which would have been a hardship for me; my rent is nearly 45% of my take home - their "scale" assumes no more than 30%. I'm not living it up - but in a small studio without a W/D or dishwasher, so I can hardly economize more there). At any rate, they approved me to make much smaller payments - I think as long as you are making some attempt they will work with you.

You might be able to get away with not making any payments during residency while in forebearance but it really hurts to see the hundreds of dollars in interest only debt accruing each MONTH on a $100K loan. Hurts a little less if I'm paying the interest back.

Besides, if you're making $50K or more (which you should be by your Chief year at least) why wouldn't you have $$ to pay back some?

Sorry to hear about your living arrangements. That sucks! Coming from a VERY cheap midwest area, I can't imagine a cost of living that high.

 

[Winged Scapula]

Sorry to hear about your living arrangements. That sucks! Coming from a VERY cheap midwest area, I can't imagine a cost of living that high.

It is a bit depressing paying $1200 for my place, but residents in Manhattan have it worse...so its all relative, right? The place is clean and secure and in a nice neighborbood so its not all bad.

Besides, its only for 5 more months and then a real salary and REAL loan payments!