MS4 here trying to figure out what month I need to submit paperwork so that REPAYE goes into effect the moment I receive my first residency paycheck (i.e., August). My goal here is to receive the interest subsidy ASAP but I don't want payments to start in June or July when I won't have a paycheck. Thanks!
When to sign up for REPAYE
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I second sigmafs. Consolidate the day after med school and make sure you check 'waive the grace period.' Select REPAYE and as long as the loan servicers don't screw up the paperwork you'll be set.
One caveat. There's a chance PSLF gets altered with the new administration. Consolidating creates a new loan, which could potentially remove the language of PSLF from the promissory note. Low probability but something worth considering.
One caveat. There's a chance PSLF gets altered with the new administration. Consolidating creates a new loan, which could potentially remove the language of PSLF from the promissory note. Low probability but something worth considering.
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Even if you had no income this year, mail in your taxes so that you will owe $0 for the next 12 months of payment
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That doesn't work because the OP can't apply for repayment until a few months prior to the end of the grace period. By that time they'd have an income and would need to submit proof of their current income. The application specifically asks if your prior year's tax return is reflective of your current income, and $0 is pretty darn different than $50-60k. I've never gotten a straight answer from a customer service rep on how different your tax return and income can be to still be able to answer "yes" to that question, but it'd be hard to argue answering yes when you went from nothing to almost 60k.
The only way to legally/ethically answer "yes" to that question and use your prior tax return is to consolidate as the above posters mention, as you apply for REPAYE at the same time you consolidate (it's all in the same application). As long as the OP applied prior to starting internship, they could use their prior year's tax return. They would then start repayment probably in Aug/Sept (it takes about two months to consolidate) and would have $0 payments for one year, as long as the lender doesn't ask for proof of their current income (they can, but they typically don't).
The downside of consolidating now is being unable to selectively pay off higher interest loans, like any GradPlus loans. I only consolidated my M1 loans as they were FEFLP loans and I wanted to bring them into the Direct Loan program so they'd be PSLF-eligible. I didn't consolidate my other loans because then I'd be averaging Stafford loans with a large M1 GradPlus FFELP loan at 8.5%. They came down to 7.9% after they became direct loans, but that's still higher than my 6.8% Staffords.
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False, that does work because many of my co-interns have $0 payments from doing as I already explained.
By the time you sign up for end of grace repayment (in October/November) you would have likely received less than ~$15000 in income. Which is much closer to 0 income than the 50-60k that is projected for the residency year but not tax year. Really for the tax year we make half our salary and they use our pay stub to see how often and how much we make to extrapolate how much we will make for 2016 (or 2017 if you will be an intern in July).
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You co-interns are lucky their lender isn't asking for updated salary information--I hadn't heard of any current interns still being able to get $0 payments. Still, to me it seems pretty clear their current salary is very different than their taxes. It doesn't really matter that the ~$15,000 they've made to date is closer to $0 than to their $50,000 salary. They still have the same take-home salary each month and the exact same ability to pay the monthly payment--that's how the lenders see it (I asked them about this specifically).
Now, when they reapply in winter of PGY2, we get into the issue of our prior year's tax return was only ~$25k, whereas we're making ~$50k/yr. While every customer service rep told me I would need to submit proof of my current income when I applied for IBR my intern year (since I paid $0 taxes in M4), they differed on whether I needed to do so the following year, and they differed on how I answer the question on the application of whether my tax return accurately reflects my current income. Quite a few reps (I called multiple times due to their inconsistencies--it didn't help a whole lot) told me it's basically up to me to determine if my current income is reflected on my taxes. I tried to get a straight answer--is a $2k difference ok, what about $10k, $15k etc.? They wouldn't give me a number. So I suppose that's possibly a defense your co-interns could use, though I still personally would always submit my current income when applying as an intern.
The way I see it is it's best to play it safe if you have any interest in PSLF, in the event your lenders/US Gov't really scrutinize your tax returns and IBR/REPAYE applications. If you're not aiming for that, then it's unlikely to cause any trouble. Since I'm interested in PSLF (in the unlikely event it survives intact), and I felt I could afford the 15% IBR payments in my intern year (now 10% for REPAYE), I did everything by the book.
If I'm reading everything correctly and I'm okay with consolidating all of my student loans (they all have remarkably similar interest rates), I should file my taxes this year and apply for REPAYE/consolidate the moment I graduate? Graduation is in May and Internship starts in July, so I should begin my paperwork the day after graduation in May? I think officially, graduation is in June.
Also, thanks for all the replies everyone!
Also, thanks for all the replies everyone!
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You can't actually consolidate until you graduate and your loans are no longer listed as in-school. To be nice, your financial aid department may not report you as graduated until June--it may be worth talking to them about when they update the student loan clearinghouse. It can sometimes be a very small window where you only have a week or two to file, since if you wait until you start internship, you now have a salary (though per the poster above their co-interns did not update their salary information when applying for their repayment plans, but I would recommend against this, especially if you can do it the kosher way and apply for consolidation and REPAYE when you actually have $0 income.
As for taxes, definitely file. Also, keep track of any tuition you paid this year--if you didn't pay your spring tuition until after the new year, you can get a nice tax deduction/credit for next years taxes. Same goes for moving expenses--hold onto all those receipts!
Thanks for the info and I definitely will! On a similar topic, has anyone here attempted to refinance with DRB or SoFi right after graduation with contract in hand? I've read a few threads that seemed a few years old but I'm starting to get some pre-approved mail from them. I'm not planning on PSLF but obviously would only consider it if I could get a rate lower than REPAYE.
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There's no scenario where you'll be able to get a lower rate than with REPAYE as a resident
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I refinanced my private loans with DRB when they started refinancing resident loans. I took out a 5-year loan at a fixed 4.25% (my private loans averaged about the same rate but were variable, so I saw it as a win). Rates have gone up quite a bit since then--I tried to re-consolidate with them this fall (I decided to do a fellowship and didn't want to start $1000/month payments halfway through it), but their rates were generally ~2% higher and now you only get 1 month of grace period (as opposed to 6). I didn't think it was worth increasing my interest rate 2% and only getting another 6 months before full repayment started. I'm told their era of low rates is done, as I haven't heard of anyone getting the really low rates (other than attendings). So we just budgeted to save an extra $6-7k this year.
To RangerBob's point about low rates are done, most refi lenders base their rates on the 1-month LIBOR:
'http://www.macrotrends.net/2518/1-month-libor-rate-historical-chart'>1
Month LIBOR Rate - 30 Year Historical Chart
'http://www.macrotrends.net/2518/1-month-libor-rate-historical-chart'>1
Month LIBOR Rate - 30 Year Historical Chart
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The low rates may just be done for DRB--they aren't basing resident consolidation loans off just the LIBOR--they increased them quite a bit. I'm sure attendings can get great rates, but there's a running thread in the WCI blog where multiple others have confirmed they were also offered rates significantly higher than what we could get years ago. If anyone lately has gotten good rates then hopefully they can chime in, but as a general rule, I don't think there are many situations it is worth consolidating into a private loan as a resident unless you are consolidating private loans.
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I second this. There's almost 0 situations where it makes sense to refinance as a resident. Possibly if you have a spouse with a high income and no debt, then it might make sense to look into adding them as a cosigner
DRB uses the 3 month LIBOR. At their lowest points, there was a gap of about 10 basis points between the 1-month vs. 3-month LIBOR. Now that gap is about 26 basis points. But the real culprit (speculation on my part) might be tightening underwriting standards resulting in fewer borrower securing top tier rates.
Thanks for the updates on DRB. Has anyone had any experience with this? https://www.ama-assn.org/life-career/refinancing-medical-student-loans. Seems like there is an a special relationship between AMA and Credible although I haven't heard much about Credible on the med student loan refinancing front.
