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If you are a graduating medical student. Congratulations! If you are a graduating medical student and made it to this page, congratulations again! Not only do you have a promising career ahead, but you understand that managing debt can give you freedom and opportunity.
No graduating medical student wants to think about student loans. However, an hour now can save you thousands later. No this is not a sales pitch, this is free advice, to help you have less stress later.
Most residency and fellowship programs are non-profit. Most residency and fellowship programs don’t pay you much. And, many post residency/fellowship jobs are for non-profits.
Why is this important? Because what you do now will determine whether you will benefit from public service loan forgiveness later.
The Public Service Loan Forgiveness Program (PSLF) forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.
What does this mean? Let’s say you do a three-year residency and a three-year fellowship for a non-profit. Post fellowship, you work four years for a non-profit. Viola, you have worked 120 months for a qualifying employer.
But it is not quite so simple as this. No, we’re not talking bio-chemistry complicated, more like registering for class complicated. Here is what you need to do.
Step 1: Make sure your loans are Federal Direct Loans. If you have an FFEL or HEAL loan, you can consolidate it through the Department of Education.
Step 2: Make sure you are on an income driven repayment plan (IDR), and re-certify every year so you stay on the income driven repayment plan.
Step 3: Make sure you submit the public service employment certification form every year and request an annual update on number of qualifying payments from your servicer. You can access the form here: https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/employment-certification-form
Step 4: When you hit 120 months, submit the PSLF Application for Forgiveness, which you can access using the same link above.
Why should you act now? By the time you get out of residency/fellowship, it will be too late to benefit. Your income will be too high and thus you won’t qualify for reduced payments. By the time you get to 120 months post/residency fellowship, there will be nothing to forgive. Thus, generally if you don’t accumulate qualifying payments while in fellowship/residency, you will not benefit from this program.