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Medical School Student Loan Repayment Plans
Jonah Moss, MD: [00:00:00] the student loan servicers are sanctioned by the U S government to handle student loans.
Almost every resident focused student loan payment program, whether it's through a refinancing, through a big bank, Or it's through the income driven repayment plans, which is something I'll talk about on the Federal government side is going to offer you a way to pay less or pay nothing throughout your residency and fellowship.
Right now, the big one that just came out over the last year or two years, is the SAVE income driven repayment plan, or you'll frequently see this referred to as the Biden Harris SAVE plan.
The beauty of the current income driven SAVE plan is that any interest that is not covered by your required minimum payment gets forgiven at the end of the month.
For most people, it will be cheaper. To file separately, not everybody, but for most people who are both residents, it will be cheaper.
This is super complicated and I will do another pitch for the FAFSA website.
They actually have a really good calculator
Do not do not do not consolidate your loans until after you have graduated.
Stephanie Moss, MD: Welcome to Life as a Patient Doctor. I'm your host, Stephanie Moss, navigating life as a patient and a future MD. Walk alongside me as I reflect on the challenges and lessons I've learned undergoing medical school with invisible disabilities. Join me as I interview other doctors, students, and health care workers on their own journeys.
Listen to their unique stories on how they have balanced their health while caring for others in the health profession.
Questions Answered:1. I just graduated medical school when do I start having to pay loans? 2. How do I financial afford rent between medical school and residency?3: What is the difference between reconcilation and refinancing?4: When or should I do this?5. Why would you choose between private and public loans?6: How do you pay little or nothing on student loan repayment during residency?7: What does it mean for a student loan to balloon?8: What is the income driven repayment plan?9: What are my options for loan repayment after residency?10: Should you file together or seperate as married residents with loans?11: Can you switch loan programs?12: What is PSLF?13: How do you file as married residents if you both have student loans?
Introduction and Guest Welcome
Stephanie Moss, MD: Welcome everyone. This is Dr. Stephanie Moss.
Today, I have a very special guest. I'm interviewing Dr. Jonah Moss, who is, let me think. Oh yeah, he's my husband. I'm so excited that he agreed to be Today with me.
He is an intern almost a second year resident in neurology He's actually about to start his second year neurology and I don't know. Do you want to I didn't ask you to write a bio I normally ask people to write a bio for me to read But you can introduce yourself and
Jonah Moss, MD: introduce myself. I am, as Dr. Moss astutely pointed out a PGY one transitioning to PGY two in this month grew up in Colorado and met this lovely woman there. And. I am sure that most people probably have an idea of what my history is because it tracked along with hers. But now here we are in Chicago living the dream and living that doctor life,
Stephanie Moss, MD: I love it.
Understanding Medical School Debt
Stephanie Moss, MD: So today we're gonna do something that Dr. Moss is an expert on and it's not medicine. I know, shocker. It's on finances. He is the finance guru that just knows everything about finances. He's done a lot of work on his own time to really understand the complexities because obviously both medical students taking out full student loans means a lot.
A lot of debt. So I'm going to ask him some questions as a recent graduate from medical school to really understand what are we supposed to do with all this debt? I just graduated. What should be the first thing on my radar that I should do?
Jonah Moss, MD: Okay, before I get too into the nitty gritty, as we're being recorded, I want to emphasize that I am not a financial advisor.
I've got no financial advising credentials degrees, nor do I claim that I have any knowledge that you can't gain on the internet. So I'm speaking through my own personal experience, and everything is expressed in my own personal opinion, and you should not take what I say as legal financial advice.
That being said, I have read a lot into this, and I have some strong opinions regarding the way that finances work so I'll do my best to answer your questions in a way that I think can be universally applicable, or at least in a way that allows people to access it online.
So what was your question again?
Stephanie Moss, MD: Yeah and this is actually a question that even my co medical student graduates have been asking me and I'm like, I don't know, ask Jonah, text Jonah.
Stephanie Moss, MD: So the biggest question that I've been asked is, I graduate, do I start having to pay loans? Like right now?
Jonah Moss, MD: That's a good question. So first thing, everyone's going to have different levels of indebtedness. And, there are some folks who are very fortunate in that they may not have any student loans right now. And then there are some folks, probably most of the people who are interested in this topic are the ones who used student loans.
A lot of loans, if not a majority of loans to pay for their medical education in addition to living expenses, which means that you're probably living in the ballpark of anywhere between 250 to I've heard all the way up to $450, 000 of student loans. And the 1st thing you're going to notice is that when you log on.
I will also emphasize that I'm also going to assume that all of your loans are from the government. You got them through the FAFSA and you didn't necessarily go through a private loan vendor like Discover or something like that. So all this advice applies mostly to the people who got Grad Plus loans, those types of things.
But if you log on to the FAFSA website, one of the first things you're going to notice is that you've got Dozens and dozens of loans. You're going to see a loan for 4, 000, a loan for $30,000 or a loan for, $20,000. And the reason why is because essentially every single semester, every summer, anytime that you essentially got a disbursement into your account, they took out a new loan.
And so that's important to know is that you don't have a student loan right now. You have probably dozens of student loans. And as far as, what the next steps are. I guess I'll probably get there, but just to ask your specific question. So when do you have to start paying them? All loans will have a grace period on them.
I believe right now it is six months still. And so essentially what will happen is that once. Once you have graduated, your school tells the Federal government they graduated, and then six months down, you will start needing to pay loans. And I don't want to get too much into the weeds because I'm sure we're going to get there, but by default, your student loan payment is going to be very high.
Because the default payment plan is a 10 year repayment plan. And once again, depending on your student loans, that means that your monthly payment will probably end up being in the ballpark of 2,000 to $4,000 a month.
Stephanie Moss, MD: That's a lot of money. That's if we're talking about $4,000 that's more than our rent payment.
Stephanie Moss, MD: Okay, So knowing that right now between medical school and residency I don't have an income. And I know that a lot of people were very confused about that concept. That Our last disbursement was supposed to last us not just for the school, but now we have two to three months between residency that we're not getting paid.
Jonah Moss, MD: Um...May the odds be ever in your favor. They don't really give you a way to make this work. A lot of people will essentially take out loans, you'll actually see a lot of What is the, I won't say the name, but there's a very proliferative company that makes loans for doctors.
And they'll often give out like transition to residency loans. And so you can do something like that. People will live off credit cards. Some people will get a side job if you have the ability to do that. There's a lot of ways that folks will make it work, but you're right. Essentially, when you graduate, assuming you graduate in, April, May, you will have no income until you start your residency program in around June, July.
And another thing that's important to note is that once you transition into residency, you're also working like Most places work on bi weekly paychecks. In other words, you'll start, let's say you start on July 1st, you're not actually getting your first paycheck until two weeks into July. And that's important for folks to know, don't be expecting that you're going to have that first paycheck on the first of July.
Stephanie Moss, MD: That's really helpful. Cause yeah . It reminds me of when we were in medical school, rent is usually due first day of the month, and we would get our loans, not the first day of the month. Usually they would like disperse and then a week later they would be like, okay, it's coming.
And then another week later, it actually ended in our bank account.
Stephanie Moss, MD: So two weeks late, but okay.
Question 1: I just graduated medical school, when do I start having to pay loans?
Question 2: How do I financial afford rent between medical school and residency?
Stephanie Moss, MD: Okay, so what is then you said there are a lot of little tiny loans
Stephanie Moss, MD: I heard something put those loans together called Reconciliation? And then there's these banks that are also telling me that I can refinance through them? What is the difference?
Jonah Moss, MD: That's a good question. So there's a difference between consolidation and refinancing your loan. So let's talk on re consolidation first.
Stephanie Moss, MD: okay,
Jonah Moss, MD: As I mentioned, you probably have dozens and dozens of little loans. Consolidation is the process of essentially taking out a new loan that will cover all of those loans and paying all the little ones off.
it's like a credit card consolidation loan, but for student loans. And so essentially by doing that, you will pay off. You're 30 something loans and just have one giant. The way that this works first is this goes through the Federal government. So this goes through the FAFSA portal. And the way that it ends up working is that they will pay off all of your small loans.
It takes a little bit of time and then you're going to get a new loan number for the total amount. They will take the average of all of your small loans. So if you have a small loan, that's interest at 5 percent and then at 15 percent they're going to take the average of the two, and then that's going to be the annual percentage rate of your new loan.
And then that is a consolidation. The reason you will do this, and once again I'm sure we'll get into this, one is for simplicity. Instead of needing to, in theory pay all these small loans because you just send a check to your loan servicer, but it's easier to track. You can see one big number versus 30 small numbers slowly being chipped away.
The other benefit is something we'll talk, going into like public student loan forgiveness. There's a few other benefits, but really the key is. It's easier to keep track of one loan versus 30 small loans.
Stephanie Moss, MD: That makes sense.
Jonah Moss, MD: Refinancing is a little bit different. So you could refinance right now.
Instead of doing consolidation, you could use refinancing to consolidate your student loans. Although personally, it's not something that I would advise.
Everyone's gonna have to take it into their own account. Refinancing essentially, instead of right now, And it's a little complicated, but essentially folks the student loan servicers are sanctioned by the US government to handle student loans.
And they're a division of the government, but they're not. And ultimately what ends up happening is.The government has a lot of oversight over the student loan servicers.
Now, if you go to a bank like Discover or SoFi, you can look online and there's dozens and dozens of, folks who will refinance student doctor loans.
And what you'll find typically is like,
When you consolidate your all of your loans into one big loan, maybe that interest rate, it's going to vary for everyone, but let's say it's 7%.
And when you go and you ask a refinancer, like one of these big banks, they might offer you, I've, this was several years ago, but some of the people who were looking at refinancing, they were offering rates of 1%, 2%.
And when you look at the lifetime of the loan, that obviously means less interest. And, at least in theory, and I'll talk, I'm sure we're going to get into it. In theory, that means less interest. You have a lower interest rate. And so that's refinancing.
You're actually taking the loan that was given to you by the government, in air quotes, and refinancing it with a private company in an effort to get a smaller interest rate. Now, everyone has to do their own math and figure out if it makes sense.
Question 3: What is the difference between reconcilation and refinancing?
Question 4: When or should I do this?
Jonah Moss, MD: And I think you need to understand all of the, Programs that come with the government: like the government protected loans versus the private loans. Which we'll talk about in a minute. But one of the things that I would tell anyone who's actually considering refinancing is $100 percent make sure that the rate that you're getting with your refinance is substantially less than what you're going to get with a government loan.
You're talking about. Let's say you get a refinance quote, and it says, "Oh, yeah, we're going to refinance your loans at 8%." But your government rates 6%. It doesn't make sense. Generally speaking, you don't hear a lot of that happening, but every now and again you hear a horror story of somebody who refinanced their loans at a higher rate than what they were getting through the government loans essentially.
Stephanie Moss, MD: And that's what I wanted to talk to you about, because why would you choose a private versus a public? What would make you choose to go one route or the other?
Jonah Moss, MD: That's, that gets really complicated really quick. I will talk a little bit about my thought process versus the private, some of those other things. there's a few ways to look at this, so let's take a step back. You're a doctor now you're starting residency. Your salary is. arbitrarily, let's say your salary is $70,000. Okay. And there's a lot of folks who have probably have a starting salary less than that.
And there's a lot of folks that have a starting salary higher than that. That's a whole nother topic. That's being said, let's say you started 70, 000 and, ignoring taxes let's do some quick math here.
Stephanie Moss, MD: You can also use your phone. I guess so.
Jonah Moss, MD: Or I could just use the computer. So you know, if you're starting a salary of $70,000, your monthly take home without any taxes on that is like $5,800.
Stephanie Moss, MD: A month.
Stephanie Moss, MD: okay.
Jonah Moss, MD: Now, realistically, it's much less than that because of taxes and other things that go into the calculations. That being said. Right now, if you started the standard student loan repayment schedule, more than 50 percent of your salary is likely going to go towards your loans. And that's not sustainable.
It's just, unless you want to live with your parents for the next four years or some other, which some people do that. I actually do have a resident, a colleague who's living with his parents and he's making good money because he doesn't have a housing expense that being said
Stephanie Moss, MD: or a partner
Jonah Moss, MD: or a partner
Stephanie Moss, MD: that works
Jonah Moss, MD: exactly, exactly.
So there, there's a lot of, and this is why everything is not going to be cut and clean for everybody. Everyone's going to have their own calculations, but 10 year repayment loan schedule isn't going to work for a resident.
You couldn't make it work and honestly the 5,800 a month isn't very fair because realistically once you cut away taxes, you're probably closer to $3,000 - $4,000 a month And then all of a sudden your student loan payment is closing near getting there maybe 50 to 60 percent of your income.
So That's the side trail to say Almost every resident focused student loan payment program, whether it's through a refinancing, through a big bank, Or it's through the income driven repayment plans, which is something I'll talk about on the Federal government side is going to offer you a way to pay less or pay nothing throughout your residency and fellowship.
Question 5: Why would you choose between private and public loans?
How to pay little or nothing
Stephanie Moss, MD: Pay nothing. Wait, pay nothing. Wait, I'm interested. What should we go into that?
Let's talk refinancing companies first, because I think you're the ones who are going to see this the most.
Stephanie Moss, MD: Like the smaller percentage, or 2%, 3%?
Jonah Moss, MD: Yeah, so you'll go to refinance your student loan, and they'll throw in these kind of, on top of the fact that maybe you get a 2 percent or 3 percent interest rate, they'll say no payments whatsoever while you're in residency.
Some programs will even knock compound interest. And what compounded interest is essentially if I give you $100 and I charge you an interest rate, and let's say your interest is 10 a year, I take the interest that you don't pay and I put it onto the loan. Now that's a problem when you have a loan that's so large that you can't pay.
I'm getting into the weeds here, but essentially they may not compound the interest while you're in residency and that leads to ultimately a smaller balloon payment where your student loans go from 300,000 to 600,000. Instead, maybe they go to 300,000 to like 400 or 500,000 because the interest is still accruing typically.
I've honestly never seen a refinancing place that offers zero interest during residency, you're accruing interest, but it's not adding that interest to your loan and then charging you interest on that interest.
That's what compounding is.
Stephanie Moss, MD: You just said balloon. What does that mean?
Jonah Moss, MD: You know, ballooning is something you'll see on all the forums. It's you know, this idea that you start with a very large debt bubble and As interest keeps adding to it and then you get charged on the interest that was added to your loan that loan just gets bigger.
And you can actually look at some very interesting graphs, which I won't bore you with showing that , this is the whole idea of why you invest early.
As you charge interest on interest. It's this exponential growth curve.
And so you see all of a sudden, yeah, you might only come out with 300,000, but if you're compounding your interest over, let's say you're a neurosurgeon and you've got a seven year residency, and then maybe even a year of fellowship, over the course of almost a decade.
That $300,000 can easily get up into $600,000- 700,000.
But that's where refinancing comes in and lets you get a lower interest rate, or maybe not compound the interest, but still charges interest. And these can essentially lower what that load looks like when you get at the end of your residency.
Question 6: How do you pay little or nothing on student loan repayment during residency?
Question 7: What does it mean for a student loan to balloon?
Jonah Moss, MD: The other option is going towards the Federal government route and they have a bunch of different repayment plans.
Essentially there's the standard 10 year repayment plan. Really the big ones are the income driven repayment plans and these change all the time. They changed this year. They'll probably change again.
They're always evolving. But essentially what an income driven repayment plan is, it says, Okay, you make this amount of money based off of the calculations and an equation that the government has.
This is how much money is disposable income, and we're going to essentially cap your monthly loan payment to a percentage of disposable income. Right now, the big one that just came out over the last year or two years, is the SAVE income driven repayment plan, or you'll frequently see this referred to as the Biden Harris SAVE plan.
Stephanie Moss, MD: Okay.
Jonah Moss, MD: And what this did is it actually replaced the REPAY repayment plans. And these are all the acronyms and there's a ton of them and it gets really confusing. They're like are you SAVE? Are you REPAY? Are you REPAY? Whatever. And there's like a bunch of different ones, but really what you need to know is that there's income driven and standard essentially takes your loan puts the interest in there and says you have to make a payment of $2,000 a month for 10 years, and then you're done.
Stephanie Moss, MD: No matter how much you make?
Jonah Moss, MD: Exactly. And after 10 years, you will have paid off your loan.
Stephanie Moss, MD: Even when you're an attending and you're making like over 200,000?
Jonah Moss, MD: Yeah, and that's a key thing too, because essentially it says,, that is your payment.
Jonah Moss, MD: Now, if you're on an income driven repayment every year, when you submit your taxes, they essentially calculate based off of whatever the rule is, how much your maximum payment is. And so right now I can only speak to myself. My current maximum payment is like $$90. So even though I have taken loans out throughout my entire residency, throughout my entire medical school, I only pay $90 a month.
Now here's the catch. That is not enough to cover the interest on my loan. So essentially if I take my loan, which let's just for this theoretical, say I have a 300,000 loan and I am on the income driven SAVE plan,
Jonah Moss, MD: I'm making $90 a month, but my interest on that loan might be a thousand.
Okay. So then this goes into that whole compounding thing.
So essentially, if I make $90
let's say I've got a $300,000 loan, my payment, my interest on that loan every month is $1,000, but I pay $90.
That means that essentially $910 of interest is forgiven every single month. Now, ultimately, it's not as satisfying as it sounds because you see your student loan balance just stays the same.
Stephanie Moss, MD: But it's not growing.
Jonah Moss, MD: Exactly. You're not seeing it balloon. You're not seeing it grow, but essentially you're throwing $90 into an infinite well, but it's preventing it from ballooning.
Question 8: What is the income driven repayment plan?
Jonah Moss, MD: And the beauty of that, and this is getting into more details, which I'm sure we're going to go over, is that essentially when I finish residency and I,
Get my first job as an attending. I will have the option to choose.
Okay, do I want to now transition to a standard repayment plan? Or do I want to pursue something like student loan forgiveness? Or do I want to stay in my current repayment plan, knowing that essentially my payments are going to get much higher at that point, because it's based off of my income.
Stephanie Moss, MD: And interest is now?
Jonah Moss, MD: The interest is going to stay the same So the interest is always there But once I become an attending now all of a sudden when they calculate how much spare income I have more than enough to cover both the interest and the loan payment.
Jonah Moss, MD: So now all of a sudden I go from a payment of $90 dollars to let's arbitrarily say my payment becomes $2,000 or $3,000.
Now all of a sudden i'm making enough that i'm not just covering the $1,000 of interest But slowly chipping away at the total debt as well.
Jonah Moss, MD: And so then you just go on and theoretically Pay off your loan that way. Which Ibelieve will typically it's supposed to take 10 to 15 years
Stephanie Moss, MD: And you said it's new. Is this something that it can go away?
Jonah Moss, MD: It's a good question, and your guess is as good as mine.
Jonah Moss, MD: And that's what's weird about and , I want to talk about this fear of programs going away, specifically when we talk about, which I'm sure we're going to.
Stephanie Moss, MD: We keep pushing it off.
Jonah Moss, MD: It's because it's so cyclical, and so much of this, it's like a snake eating its own tail, and it's easy to get into a rabbit hole. That said, ultimately, could these programs change? Yes, 100%. So the repayee plan was the old income driven replacement plan, and it still was the same idea.
It would have made it to where I only pay maybe a little bit more. Maybe it was $100 a month instead of $90 a month. But the catch with that one was that the interest that I didn't paste that $900 of interest got added to my loans every month. So then, by the time I had graduated, or, finished residency and fellowship my [00:23:00] loan has ballooned.
So I've got compounded interest. So all of a sudden my $300,000 loan becomes $500,000 by the end of residency, even though I was paying $100 a month into it.
Versus the current income driven repayment plan, the SAVE plan, which essentially, as long as I'm paying my $100 or $90 a month into it, when I graduate, my student loan will be at $300,000.
Question 9: What are my options for loan repayment after residency?
Stephanie Moss, MD: Now something you just said of income,
Jonah Moss, MD: So talking about how things can change, This is something that changed this last year.
In that, traditionally, the way that it would work is that, yes, if you and I are married, once I go into an income driven repayment plan, and it's only those income driven repayment plans.
So just to simplify it, because already it can probably feel like your head's exploding.
We have refinanced, where a big bank has taken over your loan.
We have a consolidated single Federal loan as an option. And then once you have that Federal loan, you can either go through an income driven repayment or a traditional payment.
Stephanie Moss, MD: That makes more sense. Okay.
Jonah Moss, MD: If you do the big bank, you can only do the traditional payment.
A Big bank --> traditional payment.
or Federal government --> traditional payment or
Income driven repayment payment,
but that's only with the Federal option.
If you're on the Traditional payment where it's a set amount every month for 10 years. It's arbitrary. It doesn't matter what you make.
But once you go to the income driven or payment, that's where things start to get convoluted because you start talking about yes It's based off of how much your income is. How does it work?
It used to be that regardless of How you filed your taxes or anything like that, that essentially you had to take both partners as long as you're legally married. You had to take both partners, combine the income, and that was used to calculate how much you had to pay on your loans. So whether you were, if you both have loans, if just one of you had loans, that's what's calculated.
And this got sticky when folks, for example, had a high income partner. Because all of a sudden, even though they're on income driven repayment, they're like wait, my payment's the same whether I do the 10 year standard repayment or income driven repayment.
File Together or Seperate?
Stephanie Moss, MD: So you've been talking a lot like if you're one person. What if you have someone else like me? Let's pretend i'm not in medicine, and I work my own job. Does that mean my income then can impact your income?
Jonah Moss, MD: Really good question. So the new program that was announced the SAVE- the Biden Harris SAVE program.
That one, essentially what it lets you do is if you file your taxes as married filed separately, you can essentially just use your income. So if you're a high earner and let's say you're making $300,000 a year, but I'm a resident only making $70,000 a year. If we file separately, I can just use my income to calculate my income driven repayment plan.
Stephanie Moss, MD: But if we file together, then it does matter.
Jonah Moss, MD: Then you have to essentially, at least from my understanding, once you're filing together, you do need to essentially report the combined (income).
And, when you actually go through the FAFSA website as you're going through and consolidating your many loans into one loan, they'll ask you questions about this and essentially give you hypotheticals of like, how much does your partner make?
How much does this make? And it'll give you an idea of what the different payments look like for you.
But you can follow that and do math on your own. But , as it stands right now, as long as you file separately, you can just use your own income as your income driven repayment option.
Stephanie Moss, MD: When you say file separately, do you mean that we're right now in, what is it? May? Are you talking about the taxes that we just filed a couple months ago?
Stephanie Moss, MD: Or the ones that we filed last year in 2023?
Jonah Moss, MD: No, so essentially if right now is 2024, it is your 2023 taxes, which were filed in January.
Jonah Moss, MD: So essentially they use your most recent tax records to do the calculations. If you call your Federal student loan servicer there's a bunch of 'em. You've got Great Lakes, you've got Mohela. If you call them and ask them the nuances to your specific situation.
Hey, I filed my taxes jointly with my partner who makes a bunch of money.
Believe it or not, the Federal student loan service, customer service folks are actually there to help you figure out the best deal.
That's one of the big benefits, in my opinion, about using the Federal student loan services. They're not there to make money off of you. There's no incentive. In fact, There was, without getting into the nitty and gritty, there was, this whole concept of, are we going to forgive any loans?
And, went all the way up to the Supreme Court, Can the president just unilaterally forgive a portion of student debt? And the only thing that's important about this in relation to what we're talking about is Mohela, which is one of the biggest Federal student loan servicers, literally got up and testified and essentially said, " we're not trying to make money off of this."
We're just trying to, get Americans educated and then hopefully have them repay their loans. But the money made is just like a cherry on the top. So in other words, when you call and talk to these [00:28:00] service reps, they're actually there to help you. They're not trying to pull wool over your eyes or anything.
Stephanie Moss, MD: I know i've talked on the podcast about before medical school as a case manager So working for the government I can definitely attest to getting people on medicaid and food stamps. Government workers aren't paid based on how they serve.
Jonah Moss, MD: They don't have quotas. They don't get graded on how many people they get into certain plans or anything like that. I don't know what they're graded on, but the point is that when they give you advice,
Stephanie Moss, MD: They're not like a company.
Jonah Moss, MD: Yeah, and so if you like, you have a specific question that you're like, I don't know, this is so nuanced. You can try calling them and Probably nine out of ten times they're going to be able to give you like some very specific advice to your situation.
Stephanie Moss, MD: That's really helpful to know. Okay, so we you alluded it a little bit regarding getting money Forgiven.
Question 10: Should you file together or seperate as married residents with loans?
Stephanie Moss, MD: Have we talked about everything up to this point? I guess one of the things Right now when i'm deciding between public, all the public plans and private, If I ever do one, can I always switch to another?
Jonah Moss, MD: That's a good question, too. I like to look at it this way, that the Federal programs are a one way street.When you have your dozens of little loans, and you consolidate them into one, that's done. You can never go back.
When you go to repayment on that one certain loan, you can change your repayment. You can be on income driven repayment for a year, decide it's not right for you, and then switch to the standard repayment or something like that.
When you switch and you refinance, so let's use the example of somebody who consolidates their loans.
They take their 30 something little loans, make it one big loan. They make payments on it for six months, and then they get a really good deal from a refinancing company of 1 percent interest and no payments while they're in residency, and they decide, wow, this is a good option for me. And then they take that deal.
The way it works is essentially the big bank Pays off your student loan. So that loan is actually paid off and then they just give you a new loan with whatever agreement you've agreed to, you cannot go back.
So once you've gotten rid of your Federal loans, you can't decide, Oh, I want to go back to Federal loans. And so that's the big catch there is you need to be, if you're making the decision to refinance,
Stephanie Moss, MD: yeah the one way street.
Jonah Moss, MD: Yeah. So essentially, you need to make a call based off of: yes, if you're getting that refinance option and you look forward and you say, based off of what I'm pretty sure I'm going to do for fellowship, what I'm going to do as an attending, what I think the job market's going to look like, if that really makes sense and it's that much of a better deal, take it.
But be aware that you give up any of the potential benefits that come with the Federal programs.
So for example, I had a good friend who refinanced their loans when they were a PGY 4, or no, maybe a 3, it's probably not that important. Either way, they refinanced their loans as a PGY 3 or 4, and this was back when, if you were on the Income Driven Repayment Plan, Interest was still accruing.
So in other words, their loans were still ballooning at I think their interest rate was probably closer to 8 percent as I think what they said.
Stephanie Moss, MD: Oh wow.
Jonah Moss, MD: So essentially they were getting 8 percent every year added onto their loans, give or take. They got a really good deal on the refinance option of essentially, I think it was like 1.9 percent or something. And when you look at that math, 8% versus 1.9%, the 1.9 percent was a no brainer.
Now, unfortunately for them, four months after they refinanced COVID happened and all student loan interest and payments were paused they were making payments and accruing interest while essentially everyone else in the country was paying no interest and no payments.
So in the long run, that may have actually hurt them. To add on a second part, and this was part of the conversation, we're going to get into this. Yeah. Let me know if we can do it. No, I think that's a good idea.
Sneak Peak of Part 2: PSLF
The other component was, if you have the Federal Student Loan Payment Program, you can take part of what's called Public Student Loan Forgiveness. And you know the nuances
Stephanie Moss, MD: it's not called public student loans. It's public service. They have a public
Jonah Moss, MD: Yeah, you're right public service loan forgiveness. It's not
Stephanie Moss, MD: we always call it public student PSLF service
Jonah Moss, MD: PSLF if you google PSLF, you'll see so many topics on the map
Stephanie Moss, MD: And i'll put the links to the Directly to the studentaid. gov PSLF FAQ like that has been helpful at least for me for not knowing finances. It's been helpful
Jonah Moss, MD: I'm not a big proponent of saying, use finances to choose what you want to do with your life or your career. I think it's really, negative to do that. You should do what you want to do. If that's academics, if that's private practice, you should do what you want to do. But let's be real.
Finances play a role in our day to day life. And so I think that these are all things that you should be able to have a conversation with your partner. And just because one partner is pursuing student loan forgiveness versus a partner that refinances, that can be a viable option too. And this is where you just have to look at your own specific situation.
Everything's going to be unique. Now, what I would say, And once again, I'm not a financial expert, is that I can't think of very many situations where there's two partners who are both residents, where it doesn't make sense to do these Federal loans, consolidate your loans, so get all your like 30 loans into one.
Now each partner will have one loan, so like you have one giga lone, I have one giga lone and do the income driven repayment plan, the SAVE plan, because There's not really another, like you said, it's essentially 0 percent interest. It's not quite, but it is essentially 0 percent interest, at least how it stands right now, and there's no refinancing plan on the planet.
Question 11: Can you switch loan programs?
Question 12: What is PSLF?
Question 13: How do you file as married residents if you both have student loans?
That really will make that will look, that will be better than that. And at the minimum, it gives you options. Once you and your partner finish your training, sit down and decide, okay, what's our first attending job. What's our first, what's the next step after this. So it keeps your options open, I think is the biggest thing.
That's good to know. I was wondering if it had to be, if one partner does one option, the other partner has to like, like finance, not financially, but like for the loans. I didn't know if let's say you go, if like I go private, suddenly your loans, they're like, wait I don't know if I didn't know if it affected, if one affected the other.
Not at all. So it's, they're two separate things. At least right now when you file separately, a lot of it is separated. So even though. You do share that responsibility with your partner. At least some people will, depending on how you manage your finances with your partner. The reality is that in the government's eyes, you're two separate individuals and two separate loans, and one person can do whatever they want with their loans and the other person can do the other.
Filing Status and Loan Repayment
Jonah Moss, MD: And that's only if you file separately, or even if you file together.
It is if you file separately. Okay as of right now
Stephanie Moss, MD: So if you if we file together then they would look at both our loans or at least both of our incomes Because i'm thinking like we've said it like
Jonah Moss, MD: a hundred times now. I feel like I know it's
Stephanie Moss, MD: because yeah maybe it's just me that doesn't get it.
That I if I make seventy thousand dollars as a resident and he makes Seventy thousand dollars as a resident put it together. That's a hundred and forty thousand dollars. So we'll One will now on this faith plan. I don't know whether
Jonah Moss, MD: whether you include this part in your final podcast or not I literally googled it and it came up to the student aid gov website
Stephanie Moss, MD: I will include that link
Jonah Moss, MD: and so I would say, One of the things is you can trust the student aid gov website, be hesitant when you're reading anything else on there But, literally, the second thing is you can, that yes, ultimately, if you have the SAVE plan, that it uses your individual income, if you file separately.
Stephanie Moss, MD: But then file jointly, then it is joint income. When
Jonah Moss, MD: you're filing jointly, it is both. So yes. If you and your partner. Are filing jointly or let's say you file a jointly this year next year. If you file separately, then it will use just your income.
Stephanie Moss, MD: Okay. So it'll go let's say if we're filing together, we're both residents. We both make 70, 000. Now, when they look at it, we make 140, 000 for that safe plan. It will go. The amount you pay every single month will look at from 140, 000, not just 70, 000.
Jonah Moss, MD: If you file jointly.
Jonah Moss, MD: But if you file this married, but separately, it's, it just looks at your loan and says you make 70, 000 and it calculates your payment based off of that.And for most people, it will be cheaper. To file separately, not everybody, but for most people who are both residents, it will be cheaper. Like you will have a lower monthly payment on both of your loans. If you file separately. Now here's the good news. This is super complicated and I will do another pitch for the FAFSA website.
They actually have a really good calculator and you can put your filing status, you can put how much your partner makes, you can put how much loans your partner has, and it can, it gives you. all of their loan options broken down and says this is how much you pay on this plan if you file a joint. This is how much you'll pay on this plan if you file separately.
So you can look at it and actually literally just by putting some numbers in a government provided calculator, essentially see this is the best government payment plan for me. Now, obviously that doesn't look at any of the private options. It looks just at the government funded options, but that's a good way to do it.
FASFA: Federal Student Financial Aid Calculator: https://studentaid.gov/aid-estimator/
Do not consolidate your loans until after you have graduated.
Final Thoughts and Resources
Stephanie Moss, MD: Thank you, Dr. Moss for sharing all that amazing information. There was obviously a lot, but I really hope it was helpful. It was helpful for me, so I know very much how it can be helpful to all of you. If you have any questions that you would like us to do on a further episode, put them down in the comments.
That will really help gear what are people wanting to know? Because it is hard to figure these, this stuff out, especially when we have to deal with. moving Going to your new residency Like there's a lot of stuff in this transition and points that we're dealing with the next two years
Jonah Moss, MD: I hate to interrupt your end point. There's one more thing. I wanted to
Stephanie Moss, MD: Go ahead
Jonah Moss, MD: because you reminded me because I like what you were saying oh yeah the chaos. At this point It's probably not relevant for anybody who is going to residency this year, But it'll be relevant for anyone who watches this in the future.
IMPORTANT: Consolidation Timing and Forbearance
Do not do not do not consolidate your loans until after you have graduated. And you have walked, your ceremony is over, honestly, give it another month. And the reason why is because. It gets into some nitty gritty complications, but ultimately what's really important is you can't consolidate loans that are in like a protected status. So they will consolidate some of your loans.
So even if you're graduating next week, they'll consolidate like most of your loans, but any of the loans for that most recent semester will not be covered. So wait until after you graduate to consolidate your loans. The other thing that I would say is that when you consolidate your loans, if you do. You will have the option to either add an additional forbearance period or to start repayment immediately.
Generally speaking, and once again, everyone has to count, what a forbearance is essentially you have six months before you're required to start paying your loans. And so adding an addition, so if you re, if you consolidate your loans on the first day you graduate, your payments start. that month. If you add, you can essentially add up to a six month forbearance so that you don't start repayment until you were supposed to for all your little loans.
Now, for most residents, I would say don't do a forbearance period because your income driven calculation is going to be near zero, if not zero, because you had no income the year before. And then essentially all six months of your, for, the first six months of your residency will count towards public student loan forgiveness.
Stephanie Moss, MD: Even though we're, okay, so letme make sure I understand that. So wait till you graduated. After you graduated consolidate your loans and then start making fake payments because those fake payments could be zero
Jonah Moss, MD: Yeah, they could they're real payments
Stephanie Moss, MD: wait six months
Jonah Moss, MD: or when you can when you're consolidating your loans when they ask you would you like to add an additional forbearance period?
Just make it start when you start your residency period because you can't count your you can't count public student, public service loan forgiveness payments until you've actually started working. But let's say your income driven repayment calculation is zero. Even if your income driven repayment is zero, that still counts as one of your payments if you're employed at the time that it's zero.
Stephanie Moss, MD: And I'm not currently employed by the government by residency until July 1st.
Jonah Moss, MD: You are not.
Stephanie Moss, MD: Yeah, it actually is officially because I remember I had this question actually to my residency because we start training two weeks before July 1st. And we're not paid.
So ask your residency if that's the case, because I remember that I was confused. Actually, you had a similar situation that it was like, you were a couple weeks, you had a CPR training and you're like, is it paid because normally trainings paid, but it isn't until July 1st, that they start the official you work, you're paid.
Oh my God, I didn't say Dr. Moss Squared.
Jonah Moss, MD: Dr. Moss Squared.
Stephanie Moss, MD: If you want to follow us at Dr. Moss Squared, we are Dr. Moss Squared only on Instagram. So follow us there.
You can follow just me @MedPsycMoss, or you can follow this podcast episode as right now on YouTube it's called Patient Doctor Moss. But in all other places the podcast is called Life as a Patient-Doctor so you can follow there.
If you have any questions, please put them in the comments. You can also message me @medpsycmoss
You can email me at medpsycmoss@gmail.com
please check out my website at medpsycmoss.com because I have all the transcripts of this episode, all the links blog posts on it, resources, and I hope they will help you.
I just released a workbook, for every single year in medical school. It's one consolidated workbook, I have one page for finance. Definitely after this talk, I'll be doing a little bit more. Maybe I'll do like a residency workbook. Cause I guess this is more for residency. So maybe I'll do a second one just for residency.
But anyway, Dr. Moss squared signing off. Take care, everyone.
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