Loan Repayment

All medical students who have borrowed loans must attend an in-person exit interview prior to graduation or withdrawal.  This comprehensive session will cover loan terms and conditions, repayment plans and strategies, residency information, loan repayment and forgiveness lans, and financial literacy.  In addition, during your exit interview you will receive a flash drive with your personal debt information – including amounts and types of loans, monthly payment options, loan servicer contact information, and a personalized To Do List.

If at any point you have any questions, please feel free to contact your counselor.

 

Federal Student Loans: Repayment plans

Standard: The standard repayment term for federal student loans is 10 years.  If you do not make any other choices, your loan servicer will bill you after your 6 month grace period for the standard 10-year payment.

Extended: Borrowers with over $30,000 in debt may take up to 25 years to repay their loans.  The longer you take to repay your loans, the more interest you will pay.

Graduated Repayment: Under this payment plan, your payments start out low and increase every two years.  Borrowers who select this payment plan must keep careful track of their payments, particularly when the payment changes.  We generally don’t recommend this option for busy medical residents.

Income-Driven Repayment Plans: Particularly useful during residency, these plans base your monthly payment on your income and family size, rather than your debt amount.  There are three primary income-driven plans to consider during residency:

  • Income-Based Repayment: Available on all federal student loans, including old non-Direct FFELP loans, this plan calculates the monthly payment as 15% of the borrower’s “discretionary income,” capped at the 10-year payment amount.  For the average single resident, this results in a payment of about $420/month.  For married borrowers who file joint tax returns, the AGI (which includes both incomes) will be used to do the calculations.  For married borrowers who file separately, only the borrower’s AGI will be used.
  • Pay As You Earn (PAYE): Available only on Direct Loans, and only for borrowers who had no outstanding federal student loans on October 1, 2007, this plan calculates the monthly payment at 10% of the borrower’s “discretionary income,” capped at the 10-year payment amount.  For the average single resident, this results in a payment of about $280/month.  For married borrowers who file joint tax returns, the AGI (which includes both incomes) will be used to do the calculations.  For married borrowers who file separately, only the borrower’s AGI will be used.
  • Revised Pay As You Earn (REPAYE): Available only on Direct Loans, this plan calculates the monthly payment at 10% of the borrower’s “discretionary income,” with no cap on the monthly payment amount.  For the average single resident, this results in a payment of about $280/month.  This plan takes spousal income into account regardless of the tax filing status.  On REPAYE, half of the accruing interest on the loan (the amount not covered by the borrower’s monthly payment) is subsidized for as long as the borrower is in REPAYE.

The above represents a very brief description of each plan and is not comprehensive.  For full details, go to https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven.  You may also find the AAMC information and handouts useful; those can be found here.

 

Public Service Loan Forgiveness

All three income-driven plans above can allow the borrower to qualify for the Public Service Loan Forgiveness program.  This program forgives all remaining Direct Loan debt after 120 required monthly payments (on an income-based plan) made while working in public service.  Most residency programs count as a qualifying employer for public service.

 

Forbearance During Residency

Medical residents who cannot afford even an income-based payment may apply for a residency forbearance.  You cannot request this forbearance over the phone.  You must fill out (and have your Residency Director sign) the “internship/residency” or “internship/service” forbearance form.  This forbearance is good for 12 months at a time, and you may re-apply for the duration of your residency.  Your lender must grant this forbearance if you are in a residency program.

During forbearance, interest accrues on all loans (including subsidized loans), and capitalizes at the end of each forbearance period, but no payments are due.

 

Fellowship

Borrowers in an approved graduate fellowship program are eligible for deferment of their federal loans.  You must apply for this deferment.  During any deferment, you will not accrue interest on your subsidized loans, and interest will not capitalize until the end an uninterrupted period of deferment.

 

Trouble repaying your loans?

If at any point you find that you are having trouble repaying your loans, contact your loan servicer immediately.  There are often deferment and forbearance options for borrowers facing financial difficulties.

 

Loan Repayment Programs

There are a number of programs that offer loan repayment, including the Military and National Health Service Corps loan repayment programs.

The AAMC has a comprehensive listing of other state and federal loan repayment programs on their website: http://services.aamc.org/fed_loan_pub/index.cfm?fuseaction=public.welcome&CFID=1170233&CFTOKEN=95528494