Residency and loan question

Sorry if this has been asked before... I didn't see it in past posts. When your spouse graduates from med school, how soon do their loans have to begin being paid back? Is it like Day 1 of residency? And if they still have some undergrad loans that have been in deferrment throughout med school, do those kick in any differently?

With the almost certain prospect of us moving for residency and me probably being jobless, at least for a little while, the thought of all those loan payments kicking in has me worried! If deferrment is an option, how bad (relatively speaking) is the interest or penalties?

We'll be selling our house when we move, and based on recent sales in our neighborhood, *hopefully* making a very nice profit over what we paid 4 years ago. DH wants to sink almost all the profit into repaying his loans, reserving a bit for a new down payment. I'm not sure if tying up that "extra" money right away is a good idea, especially if I am still looking for a job.

Thanks in advance for any advice you can offer!

[SueC]

Ours are deferred until dh finishes fellowship, thank goodness!

We deferred the loans through residency. All of his loans are through the Dept of Education -- private loans may be different. The only downside, of course, is that the balance of the loans continue to accrue interest. Since he consolidated the loans the interest rate isn't bad at all -- around 3.5 to 4%, I think.

Otherwise, I think you have to start paying back loans 6 months post-graduation. There are lots of different payment options to make the payments fit your life during residency.

[migirl]

DH borrowed just enough that he didn't qualify for deferment, so we are in repayment right now. We borrowed through private lenders and our repayment period began 6 months after graduation. We also consolidated our loans at a very low rate (3.5%), and we had a few different options as to how long we wanted the payback period to be (we opted for 10 years). Our monthly payments are not too bad, and we're actually paying more than the minimum so we'll have them paid off by the time we finish residency.

Jane's post made me realize that I used the wrong terms re: our loans. They are not in deferral -- he also did not qualify because he didn't have enough in loans. I'm not sure of the interest accrual status of deferred loans. My husband's loans are in forebearance status because he is in residency -- the interest is still accruing on the loans (but I'm not sure about that on the few subsidized loans he has).

You can probably defer your husband's loans until the end of residency. Ours were deferred until dh finished residency in June and we had to make our first payment the following month. We had planned on paying off our med school loans as soon as possible after residency, but since we consolidated those loans at such a low interest rate, we figured it would be better to make an extra couple of payments on our mortgage since that interest rate is higher. You may want to talk to a financial advisor to get their opinion.

Hi there!

With any luck, hopefully your DH can negotiate student loan repayment as part of his employment package. My DH's loans (and mine, too!) are deferred on an annual basis. I've been deferring my loans (from undergrad & grad) forever. I'm a SAHM and we can't afford to repay back my loans, which are as equally high as DH's. I hope, hope, hope he can negotiate some sort of student loan repayment (even partial) when he's done with his fellowship. If we only have to pay mine back, we'd be in much better shape! I hate student loans!


-Melanie

We have deferred them for a few years but the interest continues to accrue. I have a girlfriend who just became an attending and was complaining about her loans. Essentially she deferred them all through residency and fellowship because she didn't make enough money to pay on them during that time. The problem hit her when she become an attending, she was no longer in a tax bracket to get that interest on student loans deducted. As a resident making around 30-40K/yr you get that interest back every year on your taxes if you pay on them.
So needless to say, the longer you put them off, more interest continues to accrue. Then when you can finally start paying on them, you can no longer deduct the interest. So you end up paying big-time for all the accrued interest. I feel for the med students who walk away from med school owing 250K and then have to defer during residency. They end up paying so much in the end. We owe a lot but not nearly as much as some. When you think about it, med school can be very risky if you don't have family to foot the bill.
Honestly, I think it would be very valuable for you to speak with a financial advisor.

[DCJenn]

Luckily, your tax dollars paid for my husband's medical school education. So thanks everyone.

But, my student loans payments are on a payment plan with the Gov't. It's an adjustible rate loan which has really worked in my favor over the last few years. I negotiated so that I pay about 100 bucks a month. So, I'll be paying the $100 bucks a month for the rest of my life- at least I don't have to worry about it.

When I was paying back for undergrad and the first masters (the loan I'm paying on now was from a folly of mine that I'd get a second masters- why? I don't know) I was ssooooo poor. But I didn't want to defer everything so I did make the interest payments. It sucked but I was able to climb out of the pit faster.

Jenn

[SueC]

You guys are so right about paying for interest. I so wished we would have sucked it up and done that for the last 7 years!!! At the time it didn't feel like we could have afforded it, but in retrospect we could have made it work.

[Vishenka69]

It all depends on what kind of loans they are. DH's school had scheduled a loan session for all graduates to go over the loans and how to deal with each one. There are specific formulas for different type of loans that determine whether or not you're qualified for defferment. There are also different payment plans, the one we have grants us lower payments for first two years and higher ones for the next 28. You can also consolidate your loans for a lower rate. I would suggest to check what your new mortgage rate will be and compare that to the repayment rate. Put more money toward the higher one. Many doctors and would-be doctors want to repay their loans as soon as possible but that's usually not the best option financially.

Private loans - can most likely be deffered, check with lender
Stafford loans - if your monthly payments would be a significant % of your monthly paycheck, you can deffer by one year (need to reapply each year). Repayment starts 6 months after graduation date.
Perkins loans - same as Stafford but repayment starts 9 months later.