There are a significant number of residents, fellows, and new physicians who have accumulated significant medical education debt. In 2016, the median amount of student loan debt carried by graduates of medical schools was $190,000.
There is one category of student loans known as medical education loans. They might have interest rates that are lower than the interest rates on some student debt, and the government might help pay for them. The Federal Student Aid office, which is part of the United States Department of Education’s Higher Education Division, is where you can obtain information on current Federal Direct Subsidized Loans and Direct Unsubsidized Loans.
As a general guideline, you should begin arranging how you will handle your student or medical education loan payments at least six months before the end of any grace period that may apply to you this $500 loan suggests.
Acquiring Knowledge of Loan Interest
The principal balance, which is the amount of money that was borrowed in the first place, is subject to interest, which is the cost of borrowing the money. Daily calculations are made to determine the amount of interest that must be paid on Federal Direct Loans and Federal Perkins Loans. This indicates that interest will be determined on a daily basis throughout the course of a year. Compound interest is the term used to describe this kind of interest. When you make a payment toward your loan, that payment is typically applied first to any interest or fees that were added during the previous month, and then it is applied to the main balance of the loan. It is imperative that you make a demand that any money received in excess of the required minimum payment be used towards the principal balance. It is essential to minimize the principal balance in order to reduce the amount of interest that has accrued, which in turn can reduce the total amount of money that is owed over the course of the loan.
If you have a student loan with a variable interest rate, your loan servicer or lender will send you a written notification each year regarding changes to the interest rate that will become effective on July 1 of that year. In order to take into account any shifts in the interest rate, the amount that you pay on a monthly basis will be modified.
If you have a Direct Subsidized Loan, you were not charged any interest while you were enrolled in school, and you will not be charged any interest during the grace period following your graduation. If you have a Direct Unsubsidized Loan, interest will continue to be charged to your balance even if it was accrued while you were still enrolled in school if you have one of these loans. If you have a Direct Unsubsidized Loan and you do not pay the interest as it accumulates — even while you are still attending school — it will be added to the loan when it comes time for you to start making payments on it. When you have the interest capitalized, it means that the interest you receive will be added to the amount you borrowed initially, which will result in a higher principal balance.
Acquiring Knowledge of the Grace Period
- Six months is the length of a grace period. During this time no payments are required.
- The grace period begins on the date that the student either graduates or withdraws from school.
- After a period of six months, the grace period will come to an end, and regular monthly payments will then commence.
- If you consolidate your debts while you are still in the grace period, you may be able to negotiate a lower interest rate on the consolidated loan. Inquire with your lender for further information, and be aware that the grace period on a loan may be shortened or eliminated altogether if you want to consolidate your debt.
- You need to get your application for consolidation processed and verified by a consolidation lender in order to satisfy the consolidation standards.
- There is no set amount of time required to finish this consolidation. Consolidating your debts at least one month before the conclusion of your grace period is recommended as a good rule of thumb.
Comprehending the Concepts of Deferment and Forbearance
- A deferment is a period of time in which you are relieved of the need to make payments on a debt.
- Attending school, being unemployed, or being in a difficult financial situation are all common justifications for deferments.
- During the time that the loan is being deferred, interest will continue to be charged on it.
- You are required to submit an application in order to receive a deferment.
There is a possibility that the conditions of the deferment will change depending on the kind of loan or the lender. Get in touch with your lending institution for further information.
Only a select few varieties of federal loans, such as subsidized and unsubsidized Stafford loans, SLS, PLUS loans, and Direct Consolidation loans, are qualified for deferments. The deferral request ought to be submitted before the monthly installments on the student loan are more than 180 days past due.
A temporary cessation of payments, a temporary reduction of payments, or an extension of time for completing payments is referred to as forbearance.
- If you are having trouble repaying your debt but do not qualify for a deferment, your lender may be willing to issue you a forbearance instead.
- You need to submit an application in order to receive a forbearance.
- The goal is to either keep you from defaulting on your loan in the first place or provide you the opportunity to start meeting your repayment obligations again once you have already fallen behind.
- For the duration of the forbearance period, interest will be accrued on the balance of your account.
- There is a possibility that the conditions of the forbearance will change depending on the kind of loan or the lender. Get in touch with your lending institution for further information.
