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Managing Student Loans

Today, we're talking about managing student loan debt for medical professionals. We'll discuss what you should know about your loans, income repayment options, national programs for debt forgiveness or repayment, debt consolidation loans, and how to revisit your budget and work towards your savings goals while responsibly paying down debt.

The Supreme Court struck down the Biden Student Loan Relief Forgiveness Plan intended to cancel up to $10,000 of Federal Debt per student borrower plus a more borrower friendly Income-Drive Repayment plan terms. In addition to the Supreme Court decision, the new bipartisan Debt Ceiling bill set in motion the student loan interest to resume on September 1st, 2023 with payments beginning in October officially ending the COVID emergency relief. There are some new plans in the works for relief using a utilizing the Heroes Act of 2003 as justification, but that plan is still yet to be fully determined and could take up to a year to come to fruition.

The Biden Administration announce July 14th that they will cancel $39B in student debt for an estimated 804,000 borrowers. Effected borrowers will be notified in coming weeks if they will qualify for this newest automatic loan forgiveness from Direct Loans or Federal Family Education Loans that for some administration forgiveness failures after the 240-300 qualified months.

So, in the meantime, stay tuned with changing news on this topic, the Biden Administration has launched a regulatory rulemaking process with the Education Department to pursue up to $430B relief plan.

With some of those recent student loan relief changes out of the way - Let’s cover some student loan information you should know for healthcare professionals.

Student loan types

  • Federal student loans are offered by the U.S. government and have a variety of repayment options, including income-driven repayment plans and Public Service Loan Forgiveness (PSLF).

    • Direct Subsidized Loans is a loan the interest is deferred while in school at least part time and up to 6 months after graduation. Then begins a 10 year repayment term.

    • Direct Unsubsidized Loans accrue interest immediately and become the borrowers responsibility from disbursement. You can choose to pay it while in school or allow it to capitalize or accumulate until you graduate.

    • Direct PLUS Loans are available for qualified borrowers but are not need based but may require a co-signor. These tend be higher interest that the Direct Loans.

  • Health professional student loans are a type of need based federal student loan that is specifically designed for students who are pursuing a degree in specific health-related fields such as Allopathic, Osteopathic, Podiatry, Optometry, Pharmacy, Dentistry or Veterinary Medicine. These loans have a fixed interest rate of 5% and no origination fees. Nursing School Loans are similar.

  • Private student loans are offered by banks and other private lenders. They typically have higher interest rates than federal student loans, but they may offer more flexible repayment terms.

What You Should Know About Your Loans

As a medical professional, you likely have a lot of student loan debt. It's important to understand your loans so that you can make the best decisions about how to repay them. Here are some things you should know about your loans:

Who is your loan provider? There are many different loan providers, including the federal government, private lenders, and state governments. It's important to know who your loan provider is so that you can contact them with questions or make payments.

What are your due dates? You need to know when your loan payments are due so that you don't miss a payment. You can find your due dates in your loan agreement or on your loan servicer's website.

What are your interest rates? Your interest rate is the amount of money you pay in interest each year on your loan. The higher your interest rate, the more money you'll pay over the life of your loan.

What is your payoff total? Your payoff total is the total amount of money you need to pay to repay your loan. You can find your payoff total in your loan agreement or on your loan servicer's website.

Know your intended length of term:

a. Standard Repayment – 10 years and has least interest over time –

b. Income Drive Repayment options vary from 10-25 with forgiveness after term.

c. Graduated Repayment – lower monthly payments that increase every 2 years up to 10 years.

d. Extended Repayment – payments are initially low and increase every 2 years up to 25 years. May also choose a fixed version split evenly over 25 years.

NOTE: Consolidated Standard Repayment can have options up to 30 year fixed payment plans.

Income Repayment Options

If you're struggling to repay your student loan debt, there are a number of income repayment options available to you. These options can help you make smaller monthly payments that are more manageable on your budget.

Income-Driven Repayment (IDR) Plans: IDR plans are federal government programs that cap your monthly student loan payments at a percentage of your income. There are four different IDR plans:

Pay As You Earn (PAYE): Your monthly payment will be 10% of your discretionary income. Discretionary income is your income after you subtract 150% of the federal poverty line for your household size. 20 Year length

Saving on A Valuable Education or SAVE Plan is replacing Repayment Income-Based (RePAYE): Your monthly payment will be reduce from 10% of your discretionary income under REPAYE to 5% under SAVE for Undergraduate loans or 10% of Graduate Loans for household adjusted gross income at 225% of Federal Poverty Line. Student who borrowed less than $12,000 will see their balances wiped away after 10 years.

Income-Based Repayment Plan (IBR): Your monthly payment will be either 10 or 15% of discretionary income (depending on when you received your first loan) but no more than you would pay under standard 10 repayment plans. 20-25 year term.

Income-Contingent Repayment (ICR): Your monthly payment will be the lesser of 20% of your discretionary income or what you would pay on a repayment plan with a fixed amount over 12 years adjusted according to your income. 25 year length

Public Service Loan Forgiveness (PSLF): PSLF is a federal program that forgives the remaining balance on your student loans after you have made 120 qualifying payments while working full-time for a qualifying public service employer.

Nurse Corps Loan Repayment Program: This program forgives up to $85,000 of your student loans if you work full-time as a nurse for two years in a designated underserved area.

National Programs for Debt Forgiveness or Repayment

There are a number of national programs that offer debt forgiveness or repayment assistance to healthcare professionals. These programs can help you reduce your student loan debt and save money.

Healthcare Loan Forgiveness Programs: This program forgives up to 85% of your student loans after you have made 10 years of qualifying payments while working full-time in a qualifying healthcare job.

National Health Service Corps (NHSC) Loan Repayment Program: This program forgives up to $50,000 of your student loans after you have comp

leted two years of full-time service in an NHSC-approved site.

National Institutes of Health (NIH) Loan Repayment Program: This program forgives up to $35,000 of your student loans after you have completed two years of full-time service at an NIH-funded research institution.

Military Student Loan Forgiveness Programs: There are multiple programs for physicians, nurses and dental loan repayment programs through active and reserve military offices

Debt Consolidation Loans

Debt consolidation loans can be a way to combine multiple student loans into one loan with a lower interest rate. This can make it easier to manage your payments and save money on interest. However, it's important to compare different debt consolidation loans before you choose one. Make sure you understand the risks and rewards of each option. Because consolidating may make you ineligible for some forgiveness and income-driven repayment plans.

Private Student Loan Consolidation - There are a number of private options including SoFi, LeverageRx,or College Ave that has specific programs for medical professional loans.

Final Tips for healthcare professionals

  • Start by understanding your options. There are a variety of student loan types and repayment options available, so it's important to do your research and understand what your options are.

  • Consider your income and expenses. When choosing a repayment plan, it's important to consider your income and expenses. You want to choose a plan that you can afford to make the monthly payments on.

  • Look for repayment assistance programs. There are a number of repayment assistance programs available for healthcare professionals. These programs can help you reduce your monthly payments or even forgive your student loans altogether.

Thanks for listening! I hope you found this helpful. If you have any questions, please feel free to leave a comment.

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