Scary Debt

[tiders]

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Hey guys, I need some help. Now that the match is over the reality of loan repayment is looming. I was wondering how you all would approach my situation.

EM residency (3 years)
~$400,000 in student loan debt (mix of stafford and gradplus)
~$15,000 in high interest credit card debt (

Now before people start chewing me out this CC debt is not from lavish items or trips to Europe. I had several personal and family emergencies during medical school and I'm lucky that is all I came out with.

I feel lost and afraid on how to tackle this. IBR... forebearance... I just don't know.

Thank you!

 

[deleted480308]

Forebearance during residency (try to pay some during if you can) then when you are making $300k/yr....you live like a resident and pay it back


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[Tenesma]

that is CRAZY student loan debt...

in fact, it is soo much you should seriously consider finding programs that will pay off your student debt - ie: working at an indian reservation for 4 years or other public health in rural/underserved area position. That would be the smartest way to get rid of it.

otherwise that debt will kick your ass.

 

[deleted480308]

that is CRAZY student loan debt...

in fact, it is soo much you should seriously consider finding programs that will pay off your student debt - ie: working at an indian reservation for 4 years or other public health in rural/underserved area position. That would be the smartest way to get rid of it.

otherwise that debt will kick your ass.

those are almost always primary care....go get a high paying EM gig and just spend all your money on loans

 

[Stroganoff]

those are almost always primary care....go get a high paying EM gig and just spend all your money on loans

^ This sounds good vs the underserved/forgiveness option. Rake in the dough and work a ton of extra shifts at places (without burning out of course) and destroy that $400k in the 2-3 first years as an attending. Otherwise that $400K could double to a million bucks in like a decade if you ignore it.

$15K cc debt is primary enemy. I paid off about $33K of cc debt on about a PGY1 income (even less, actually) in about a year, year and a half or so, but I was uber strategic and got a ton of 0% balance transfer offers or 2.99% balance transfer offers that saved me. I bet it's do-able to destroy $15K on PGY-1 year income alone, but just maintain psychological and emotional sanity and happiness in the process and don't let the debt interfere with your work or life. You can do it!

Definitely forbearance during residency. Destroy cc debt. Then make voluntary student loan payments for the rest of residency/fellowship even if you're tempted to otherwise. Treat it like a game if you have to. Attack. Destroy.

I'm still recovering from my $100k+ undergrad debt mistake. Thankfully no other debt after that $33k credit card debt was killed couple years ago.

Edit: I just realized you're doing EM. Shoot, moonlight like crazy during residency and make a huge dent in that. 👍

 

[Postictal Raiden]

Hey guys, I need some help. Now that the match is over the reality of loan repayment is looming. I was wondering how you all would approach my situation.

EM residency (3 years)
~$400,000 in student loan debt (mix of stafford and gradplus)
~$15,000 in high interest credit card debt (

Now before people start chewing me out this CC debt is not from lavish items or trips to Europe. I had several personal and family emergencies during medical school and I'm lucky that is all I came out with.

I feel lost and afraid on how to tackle this. IBR... forebearance... I just don't know.

Thank you!

Definitely enroll in IBR. Then you can make large payments to payoff your debt quickly. There are two benefits for doing IBR. 1) It's a great safety net. Your minimum monthly payments won't exceed a certain percentage of your discretionary income. 2) Your interests won't be accruing interests while in repayment.

 

[thesauce]

I would get a Chase Slate card with 0% balance transfer for the CC debt. Destroy that first.

Then IBR the student loans and make extra payments on top of that toward the higher interest loans.

 

[nogolfinsnow]

Definitely figure a way to get that CC debt gone.

Hopefully you're in a low cost of living area. Make a detailed budget. That 400k will be closer to 500k by the time residency is done, so you have to try to pay some on it now. As was said above, IBR is your safety net, and pay whatever you can on top of that. Hopefully when you graduate you get a high-paying job, can consolidate your debt into lower interest rate loans, and pay them off in 10 years. Don't buy anything foolish!!!!

 

[lrkoehle]

In addition to what others have said, consider the "Pay As You Earn" repayment option for student loans. It is actually better than IBR, but the catch is you cannot have loans from 2007 or earlier.

 

[The White Coat Investor]

Hey guys, I need some help. Now that the match is over the reality of loan repayment is looming. I was wondering how you all would approach my situation.

EM residency (3 years)
~$400,000 in student loan debt (mix of stafford and gradplus)
~$15,000 in high interest credit card debt (

Now before people start chewing me out this CC debt is not from lavish items or trips to Europe. I had several personal and family emergencies during medical school and I'm lucky that is all I came out with.

I feel lost and afraid on how to tackle this. IBR... forebearance... I just don't know.

Thank you!

First of all, you're not alone . I'm running into people every week with $400K in student loans.

Second, you CAN overcome this terrible debt. Don't kid yourself that you don't have a monstrous financial problem. You really do. However, as big as your hole is, your shovel will eventually be bigger. Unfortunately, that day is over 3 years away, and your loans will be even larger then than they are now, probably over $500K. That's just the reality that you will need to deal with. The only ways for you to get rid of this debt are # 1) Die, #2) Make 120 IBR payments and pray the PSLF program hasn't been modified or # 3) "live like a resident" for 4-5 years after residency, refinance the loans (currently available at under 3% variable) and make massive loan payments every month until the debt is gone. Get enrolled in IBR/ICR-A/PAYE as soon as possible and make as many tiny IBR payments as you can, just in case PSLF is still around 10 years from now.

This post may help:

http://whitecoatinvestor.com/refinance-and-pay-off-or-go-for-pslf/

Oh, and pay off those CC loans before Christmas. You can do it if you live frugally.

 

[NICUfello]

My student loan comes due in June.
Total loan balance is $210k. Unsubsidized $165k Subsidized $36k
Interest rate at 4.7%

Where are you guys seeing 3%?

 

[mvenus929]

My student loan comes due in June.
Total loan balance is $210k. Unsubsidized $165k Subsidized $36k
Interest rate at 4.7%

Where are you guys seeing 3%?

I'm assuming there are refinance options available to get the 3% interest.

 

[MerickManual]

Definitely enroll in IBR. Then you can make large payments to payoff your debt quickly. There are two benefits for doing IBR. 1) It's a great safety net. Your minimum monthly payments won't exceed a certain percentage of your discretionary income. 2) Your interests won't be accruing interests while in repayment.

I thought once your interest capitalized you payed interest on it no matter what?

 

[Postictal Raiden]

I thought once your interest capitalized you payed interest on it no matter what?

Here's the source http://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn

Scroll down to "Advantages of Pay as You Earn" and read the third bullet point about "capitalization".

 

[RangerBob]

I thought once your interest capitalized you payed interest on it no matter what?

As Ibn Alnafis points out--interest doesn't capitalize while in IBR. It will capitalize at the start (so unfortunately there's no way to avoid capitalization of interest accrued during the four years of medical school). It will also capitalize when you leave IBR--whether because you make too much and are switched to the standard repayment plan, or if you fail to reapply for IBR on time. So it's important to reapply early!

 

[The White Coat Investor]

As Ibn Alnafis points out--interest doesn't capitalize while in IBR. It will capitalize at the start (so unfortunately there's no way to avoid capitalization of interest accrued during the four years of medical school). It will also capitalize when you leave IBR--whether because you make too much and are switched to the standard repayment plan, or if you fail to reapply for IBR on time. So it's important to reapply early!

My understanding is it does capitalize if it is unsubsidized. I'd love to see something definitive that says that isn't true.

 

[RangerBob]

My understanding is it does capitalize if it is unsubsidized. I'd love to see something definitive that says that isn't true.

http://studentaid.ed.gov/sites/default/files/income-based-repayment-q-and-a.pdf

(Last answer for question 3, on page 2)

Unless things have changed... But interest will still capitalize at that start of repayment even if you sign up for IBR or PAYE--the world would be too kind if that didn't happen 🙂

I think what you might be thinking of is the government will pay unpaid interest that accumulates on the subsidized loans, for a max of three years.

 

[tiders]

Thanks for all the help. Unfortunately I do not qualify for PAYE (loans prior to 2007). I recently did my exit interview and was cited an IBR monthly payment of $394 off the federal calculator. I was reading recently the article in ACEP about loans where it was stated the monthly cap IBR payment is $247/month (or so I forget the exact figure) for single people. Can anyone confirm or deny this?

Again thank you for your help.

 

[thesauce]

Thanks for all the help. Unfortunately I do not qualify for PAYE (loans prior to 2007). I recently did my exit interview and was cited an IBR monthly payment of $394 off the federal calculator. I was reading recently the article in ACEP about loans where it was stated the monthly cap IBR payment is $247/month (or so I forget the exact figure) for single people. Can anyone confirm or deny this?

Again thank you for your help.

Wrong. The cap is your 10 year repayment or 15% of your discretionary income, whichever is lower.

 

[tiders]

Hey guys another question. I have the CC debt down to $10,000 from grad presents. Now if I put the loans into forebearance I could pay off the CC debt in 15 months. Otherwise my IBR payment will be $450/month and I will only be able to pay $200-250/month on the cards once grace is over. Do you think forebearance for 15 months and then IBR is smart?

 

[thesauce]

Hey guys another question. I have the CC debt down to $10,000 from grad presents. Now if I put the loans into forebearance I could pay off the CC debt in 15 months. Otherwise my IBR payment will be $450/month and I will only be able to pay $200-250/month on the cards once grace is over. Do you think forebearance for 15 months and then IBR is smart?

You need to sit down and do the math. It depends on a number of things including loan interest, credit card interest, and fraction of your loan balance that is interest (for compounding purposes).