How to Deal With Your Student Loans- Part 2

loansThis is the second or a part blog by Dr. Mary.  Click here to read Part 1.

II. Before Graduating Medical School
After match day, you’ll likely be celebrating and not thinking about your loans. Once you’ve come down from the excitement, it would be a good a idea to start consolidating your loans. The federal non-private loans, including the Federal Perkins Loan, can be consolidated. Your lender for these loans is likely Navient (formerly Sallie Mae). You can visit This Website to download the proper form under How do I apply for a Direct Consolidation. Also, you can call the lender and ask them about the process. I have had a tremendous experience with Navient, and they are patient and helpful.  During this time, you will also need to decide your repayment plan. There are many plans ; the most common plan that medical students choose is the Income Based Repayment (IBR) plan. This plan is based on a percentage of your income. For IBR, after 25 years of payment, your loans will be forgiven.

III. Residency: Deferment v. Forbearance
During Residency, you can either defer your loans or go into a forbearance. Not all residents will qualify for a deferment. Therefore, many may need to apply for a forbearance. Both are plans that allow you to delay your payments; however, they differ in some ways.  During deferment, the government may pay the interest of Federal Perkins Loans, Direct Subsidized Loan and Subsidized Federal Stafford Loan. The interest does accrue on the unsubsidized or any PLUS loans. If you don’t make payments on your interest it will capitalize.  A forbearance is a temporary postponement of loans. You are eligible for a forbearance during residency, hardship such as not matching, or illness. Interest continues to accrue on unsubsidized and subsidized loans. If you don’t pay the interest, it will capitalize. You must re-issue your forbearance on an annual basis. Ask you lender (Navient or your institution) if you can apply for a forbearance for your consolidated loans and private loans.

IV. Beyond Training
This information is very daunting. However, there is a light at the end of the tunnel; well at least a little candle light. There are loan forgiveness options out there (see below for link). Before finishing residency or fellowship, you’ll be deciding on whether you would like to work in the hospital as faculty or in a private practice setting. If you consider the former, you can apply to have your government consolidated loans forgiven. Ask your lender about this option during the consolidation process and inquire about additional required paper work during this time. You will qualify if you work for a nonprofit institution for 10 years while actively paying for your consolidated federal loans. Academic medical institutions are hospitals in which there are residency and fellowship programs. In addition, after training you may want to consider working in an underserved area. A link below describes which areas are included. If you work there for a few years, you will get a substantial scholarship to help pay off your loans. It will not cover all your loans. The NIH also offers forgiveness for health disparities research, a two year research fellowship and more.

It may seem like the American dream is out of reach; however, there are some perks we receive to make this more possible. Bank of America offers physician mortgages called the Bank of America Doctor Loan. This provides feasible attainable loans for Medical Doctors. I have faith that there will be some overall federal forgiveness. This may be a delusion of grandeur, but maybe not. However, at age 30, I have realized that the best things in life truly are free. So, reevaluate your financial American dream and think about what’s most important to you.


Helpful websites:


Physician Mortgages

Financial Advice for Physicians