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Lives of Doctor Wives: Student Loans

Monday, February 8, 2010

Student Loans

I am wondering what the rules are as far as student loan pay back after medical school graduation. I heard that it used to be you could defer payments in residency, but now you cannot do that. Is it true that you have to go into forbearance? What is the difference?

Can anyone help me understand what we'll be facing in about a year?


Blogger Stephanie said...

last year we were able to defer... then the laws changed and i just about fell over when they said that as a family of 3 with my husband's {low} salary we made WAY too much money to defer. Like $15K too much or something hilarious like that. So we are now in forbearance...which means that interest is still accruing on the loans {interest doesn't accrue if you are in deferment} but that we don't have to pay them back yet. Apparently, we can keep on with this until we are finished with residency and then fellowship. And who knows, maybe he will sign on someplace that does loan forgiveness. I am not worried about it... {way more worried about making ends meet each month!}

February 8, 2010 at 4:40 PM  
Blogger Elle said...

During deferment the interest doesn't build up, but during forbearance the interest does build.

I also know that they are now creating income related payback levels while you are in residency. Meaning if you were a full fledged Dr. your student loan payments would be $3,400 a month, but since you're only a resident and therefor earning 25% of what a Dr. out of residency earns, then your student loan payments might only be $400 a month.

February 8, 2010 at 4:41 PM  
Blogger Melisa said...

My only tip is to make sure you get stuff turned in on time. My DrH turned in the papers late, so he had to make a payment. But that isn't the worst of it. Because he made a payment, he can't apply for forbearance anymore and we are stuck making payments on a resident's salary. SUCKS!!! I detest the company we have the loan with and can hardly wait to be done with them.

February 8, 2010 at 6:32 PM  
Blogger Married to a med student - Marissa Nicole said...

As already mentioned Medical Residents USED to qualify for medical deferment for the first three years of residency. (Meaning NO interest accrued). In Summer of 2009 they changed the law and made it harder to qualify for economic hardship deferment but instead offer IBR (income based repayment). Unfortunately IBR wasn't really designed with residents in mind - it allows you to limit student loan payments to 15% of your income, but this may still be too high for many residents and there are also some glitches if the spouse has student loans you could end up paying 30% of both of your salaries!
You can still forbear as long as you are in residency or fellowship but interest DOES accrue. But you can make payments without being penalized.
Because we do not anticipate being able to payback during residency we will forbear the entire time and just make payments when we can to minimize interest.

Also deferrment and forbear are often used in the opposite definition and I often get confused!

One more thing - an accountant offered to write a post for my blog explaining all the loan stuff, so I'll post the article here when I get it!

February 8, 2010 at 9:41 PM  
Blogger Sarah Weiss said...

We just went through this process. If you have federal loans then you may qualify for Economic Hardship for up to 3 years. We just qualified as a family of 4 and a first year intern's salary. During that time interest accrues on your unsubsidized loans, but the government pays for the interest on your subsidized loans. Unfortunately the only option with private loans is forbearanace. We are doing IBR on one of our small loans held by a different lender because they wouldn't take into consideration our total debt, only the debt we had with them. Hope this helps!

February 9, 2010 at 3:40 PM  
Blogger Timani said...

Smart to get it all figured out now. We had it all figured out and then the rules changed right after graduation and I freaked! (our payments will be apx $3500/mo). Loans are automatically deferred for the 6 months following graduation. To get an economic deferment for my family of 10 wasn't too tough, except with a few loans (I don't remember which ones they were right now) it didn't matter how many children we had, the calculation would only allow him to count a spouse and he made $40 too much to qualify for deferment. But we would qualified if received State benefits, so we applied and all they needed was a faxed statement. We now have all of them in deferment or forbearance.

February 10, 2010 at 4:46 AM  
Blogger Kathi the wingspouse said...

Times hav definitely changed since M was a resident. I can't imagine. We had to put everything into forbearance - even the 16% HEAL loans (ouch!).

As soon as M got his MD, we shopped for a bank that would give us a personal loan (and eventually a 2nd equity loan) to pay off the highest rates for a lower one. I don't know if they will still do that, but at the time we were told a physician was considered a "no risk" loan.If you want to try that, look for a bank that offers "personal banking" or if yo're in OH they call it "private banking" because that is a special service that gives all kinds of perks in return for passing higher amts of money thru the bank.

It still took us 15 years to pay off, but we had a lot of debt accrue just over those education years.

February 10, 2010 at 6:14 PM  
Blogger JLee said...

Thanks so much for all of your answers. It really does help a lot!

February 11, 2010 at 1:56 PM  
Blogger bookpenporch said...

does forbearance hurt your credit score?

March 22, 2010 at 2:02 PM  

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