So as an intern, I estimate I'll be making around $2600-2900/mo takehome. I have 200k in debt, around 5%. Do "deferring repayment" I've heard tossed around just pile up the interest? Do most residents/interns start repaying once july comes around?
Bulldog your questions are the same ones my wife and I are asking!!!
the other thread what's typical takehome pay for interns after taxes/deductions/etc per month? was good.
If you start chipping away at the principle early it does help...at
5% for 200 000 you will pay 833.33 per month in interest (=200 000 *0.05/12) so if you make 2600, minus 1100 in living expenses a month you have 1500$ to pay interest and principle You would pay off approximatly $7000 of your priniciple in the first year of residency
The faster you start paying off the principle the faster you become free from debt...I miss those days.
I deferred my loans until after residency. My wife insisted that we have money for, like, groceries and stuff.
so how much is deferring adding up to ur loans vs if u paid interest during the same amount of time (i.e. 3 years)? i don't know much about financial math/compound interests/etc.
i.e. for 200k in loans at 5%, how much loans will u have in 3 years to pay off if u deferred vs. if u paid the $833/mo in interest?
Federal student loans are simple interest (interest is based on loan balance X days since last payment X interest rate factor-your interest rate divided by 365.25 days). The amount of interest that accrues doesn't get added to the principal (except at the end of a forbearance or deferment). This means that at the end of three years you would owe 200K if you paid all the interest as it accrued, or you would owe 200K plus the interest that accrued (about 30K). The problem is that if you defer the loans for that time (assuming it is all unsub, subsidized loans don't accrue interest on deferment) that 30K would capitalize (be added to the loan principal), so now the interest you accrue will be on 230K.
I'm confused.... are you saying that if you defer loans during residency the interest does or does not capitalize? Above you say "
Don't forget that if you do your taxes correctly during your first year, you may get anohter $2k+ back in a tax return (different conversation)
Consolidate for 30 years, apply for economic hardship deferment, and capitalize your interest during residency. This will only add a small amount of interest to your debt (it only accrues on the unsub portion of your loans). In the end, this will only be a difference of $30-40 per month after you finish residency. Don't kill yourself to pay loans during residency.
My consolidated payment will be around $550 per month for 30 years. This is a drop in the bucket compared to my post-residency salary and investment potential. Plus, think about how much $550 will actually be worth in even 15 years...