Once you make it through medical school, you have a lot to celebrate and look forward to. One thing you may not be too excited about is paying back your student loans. Medical school is costly. If you are like a large percentage of students, you took out loans to pay for school, and there comes a day when you have to start repaying your debt. Before you stress out too much, there are repayment options that may work well for your situation.
Variations in Loan Repayment Terms
Many medical students graduate and start sending in the monthly payment listed on their statement. Although there is nothing wrong with that approach, sometimes it can be difficult to keep up with the payments. If you understand the terms of your loan, you may be able to do something about your situation. For example, you may have a grace period after graduation before you have to start repayment, which gives you a little time to figure things out.
There are also variations in the number of years you have to repay the loan. For instance, some loans must be paid back in 10 years, while others allow 20. In other instances, the number of years allowed to repay may change if you consolidate your loans.
There are several different federal student loans from which to choose: Direct Stafford Loans, GradPLUS Loans and Perkins Loans, as well as private loans. The specific terms and repayment options may vary based on the specific loan. Your best bet is to talk with your lender. In general, you may be able to use one of the following options when you repay.
Income Based Repayment: Income based repayment is just what it sounds like. Your payment is based on your family size and income. The amount you are required to pay caps out at 10 percent of your discretionary income. For borrowers after 2014, after repayment for 20 years, any remaining loan amount is forgiven. You will have to provide verification of financial hardship to qualify for this option.
Graduated Repayment: Graduated repayment plans start lower and increase after two years based on your income. Since you may gradually make more as you advance in your career, this may be a good option for some.
Extended Repayment: If you choose an extended repayment plan, you will have a longer time to pay back the loan, possibly up to 25 years, which results in lower monthly payments. However, be aware that with the accumulation of interest, you may be paying more in the long run.
Loan Forgiveness Programs
In addition to various repayment terms, you may have an additional option to pay back your student loans. Imagine having all or part of your loan wiped away. That can be the case if you are accepted into a public loan forgiveness program. There are different loan forgiveness programs that require doctors’ work in certain specialties (usually in an underserved area) in exchange for loan forgiveness. The amount of the loan that is forgiven varies by program and length of service. Two examples of loan forgiveness programs are listed below.
The National Institute of Health: Qualified doctors who agree to conduct research funded by a government entity may be eligible for loan forgiveness through the NIH. Conducting certain types of research, such as infertility or pediatric research funded by a nonprofit organization, may also qualify for loan forgiveness. Currently, doctors receive $35,000 for each year of research they conduct with a minimum of a two-year commitment.
The Health Service Corps: If you plan on being a primary care doctor, you may want to look at loan forgiveness through the Health Service Corps. After completing a residency in family practice, geriatrics, psychiatry, pediatrics or internal medicine, physicians agree to practice in an approved underserved community for two years. In exchange for two years of service, up to $50,000 of your loan will be forgiven. The exact amount varies based on the number of hours you work each week and the health professional shortage area score.
References
The Health Service Corps. Loan Repayment Program. http://nhsc.hrsa.gov/loanrepayment/index.html Accessed March 2015.
The National Institute of Health. Loan Repayment Division. https://www.lrp.nih.gov/about_the_programs/index.aspx Accessed March 2015.
Association of American Medical Colleges. Loan Repayment Choices. https://www.aamc.org/services/first/first_for_students/250450/repaymentoptions2.html Accessed March 2015.
