This post deals specifically with debt accrued while pursuing a medical education.  Although other professional programs involve federal student loans, medical school loans and how they are dealt with during residency is very different.  So here it is-us-debt-and where we’re at….

I’ve been blissfully married for 11 years!   The first 3, both John and I were in school.  The next 5 John finished his undergrad in biochemistry and did medical school at the Ohio State University.  The next 3 we’ve been in residency.  We are very lucky because we have no credit card debt, no car payments, no undergraduate student loans.  Nonetheless….we accrued a tremendous amount of debt in medical school.  It was pretty much inevitable-unless you were to have owned and sold a small island in the pacific.  Even then, the economy tanked in 2008 and we probably would have lost $$$$ and still had triple zeros assigned to our debt alias.

For the past 3 years, our loans have been in deferrment.  Indeed residents get paid.  They even get paid well enough to live on.  But, they don’t get paid enough to contribute significantly to repay all the money that was loaned to them.  Oh, to be an attending….  Nonetheless, our loans have been in deferrment since graduating-meaning we don’t have to pay them back right now because John is in a residency.  One is only allowed to defer loans for 3 years.  If your residency is longer than that then you can do what is called forbearance.  While in forebearance, your interest starts to capitalize but you are not required YET to start payback. 

John and I have looked into a number of options hoping to find a way to keep our loan interest from capitalizing.  After discussing a number of things at length, we’ve woefully decided that we are consigned to pay back a boatload of cash to the feds. 

John was talking the other day to one of his chief residents about loans.  He was introduced to what is called income based loan repayment system.  After some research and discussion, this has proven to be a bright alternative to forbearance.  One is required to apply for eligibility every year.  However, with our family size and financial status our payment will either be very small or not required.  The great thing about this program is that our interest will not capitolize.  There are a couple of other perks that need to be researched a little more but they sound really great.  The first involves working for a not for profit hospital.  There is a clause that suggests forgiveness of federal loans if one works for a not for profit hospital for 10 years.  Residency, apparently, counts towards these 10 years.  Truman hospital is definitely a not for profit hospital.  We are not really looking to work for a not for profit hospital in the future but if it happens that way, we will have done 6 years already–another 4 will complete the 10 years and we may be expelled from the 200,000 club and the in debt club altogether for that matter.  Another thing that needs to be researched is something another resident mentioned to us–again working for a not for profit hospital, it is rumored that while enrolled in an income based repayment plan-the federal government will pay a portion of the interest on a loan for a resident who is unable to pay due to economic hardship (residency salary). 

All things taken into account, for our current situation, this seems like a wise path to follow.  If you have medical school loans that have nonrenewable deferment stamped on them-this may be a good option for you.