Medical Loan Repayment FAQ
How do I plan for successful repayment on my medical school loans?
Who do I write the check to?
When do I have to start paying back my medical school loans?
How long do I have to repay my loan?
How much do I have to repay?
What are my repayment options?
What type of payment incentives can Medical School Loans offer me?
What are deferments and forbearance?
What can I do if problems making my loan payments?
What are the consequences of default?
How can federal loan consolidation help with repayment?
|Q:||How do I plan for successful repayment on my medical school loans?|
|A:||It's a common mistake for borrowers to begin thinking about repayment after they graduate from medical school but successful repayment begins well before you receive your diploma. You need to understand all of your options before entering repayment and so you can be sure that you are choosing the plan that is right for you. It's important to remember that you will also have other financial obligations.
Following these four simple steps will help you to plan out your repayment:
Estimate Your Monthly Payments
Your monthly payments can be estimated using loan calculators found online. To utilize these tools, you'll need to know the disbursed amount, interest rate, and repayment term of each loan.
Project Your Incomeb Research average starting salaries in your area and realistically estimate what your income after medical school. Remember to keep in mind the length of time it will take for you to find a job.
Develop a Personal Budget
Medical student loan payments are as important as car notes, insurance and rent/mortgage. You can avoid making late payments and stay on track with your payments by including student loan payments in your budget. Once you have estimated your monthly loan payments and projected salary, you can evaluate your debt-to-income ratio. This will come in handy when you are allotting funds to payments on your medical school loans.
Prepay Your Loans
When you have extra money, you should send in more than your required minimum monthly payment. The money sent in above the required payment will be applied toward your principal balance. Your medical student loan will be paid off faster and you'll be saving hundreds, possibly thousands, of dollars in interest.
|Q:||Who do I write the check to?|
|A:||Most borrowers are a bit confused when it comes to this question. There are so many players in the industry (lenders, servicers, guarantors, etc.), it's not easy to keep track of whom you need to repay. You are responsible for paying the holder of your loan's promissory note. Most lenders contract out transactions associated with repayment, such as billing, deferment, contact information updates, etc., to servicers. If you believe this is the case with your medical school loan, you should contact your lender to find out who its servicer is. If you are unsure who holds your loans, you can visit the National Student Loan Data System (NSLDS) at http://www.nslds.ed.gov. This system is the central location of all your federal loans. In order to access this system, you must have a FSA PIN, which can be generated from http://pin.ed.gov/request.htm. As for private loans, it's best to refer to any correspondence to find a repayment address.|
|Q:||When do I have to start paying back my medical school loans?|
|A:||For most medical student loans, repayment begins following a grace period. Below please find the list of types of loans and their corresponding grace periods. You should receive your repayment terms from your lender/servicer at least a month prior to your first payment. The total amount you owe, your monthly payment, the monthly payment due date and where to send payments will all be outlined in repayment terms.
|Q:||How long do I have to repay my loan?|
|A:||The repayment term in your medical school loan is determined by several factors. The amount of time you have to repay your loan is affected by the type of loan, the loan amount, and the repayment plan you choose.
Below, you'll find the maximum repayment term for each type of loan:
There are no early repayment or prepayment penalties on Federal Loans. This means you will not be not be charged for paying your loan ahead of time. If you are able to do this, by all means do so, as this will save you money on interest.
|Q:||How much do I have to repay?|
|A:||As a borrower, you are required to pay the principal you borrowed for your medical school loan, plus any interest that accrues. You are not obligated pay the entire amount upfront but, if you'd like to, you can. There are no early payment penalties on most student loans. So unless you win the lottery or inherit a large sum of money from a long lost relative, it's easier to pay off your medical school loans with monthly payments.
The three factors determining your monthly payment are: the amount you owe, the interest rate associated with the loan, and the repayment plan you choose. If your interest rate is variable, your monthly payment will adjust to reflect the changes. When you take advantage of federal loan consolidation you will avoid fluctuating rates and payments. Read on for more information on this valuable federal program.
It's important to remember that every type of loan carries a maximum repayment term. Failure to pay the loan in full by the end of the term will reflect negatively in your credit report. If you keep on top of your medical school loan payments throughout your repayment term, this will not affect you.
|Q:||What are my repayment options?|
|A:||Medical School Loans offers many repayment plans to fit the many needs of medical students.
This option provides equal monthly payments over the term of the loan.
Select 2/Graduated Payments
This option allows for interest-only payments for the first two years of repayment. In the third year, payments increase to level installments of principal and interest payments for the remaining term of the loan.
Select 5/Graduated Payments
This option allows for interest-only payments for the first two years of repayment. In the third through fifth years, payments increase to include a portion of principal. In the sixth year, payments increase to level installments of principal and interest payments for the remaining term of the loan.
This option provides for payments to be adjusted annually, based on your expected total monthly gross income from employment and all other sources. For spousal consolidation loans, monthly payments are adjusted according to combined monthly incomes. Your account will initially be disbursed at the Select 2/Graduated repayment plan. After the consolidation loan is disbursed, you must contact your servicer to qualify. Once eligibility is determined, your servicer will calculate your new payment.
Extended Equal Payments*
This option allows up to a 25-year repayment term of equal payments.
Extended Select 2 Payments*
This option allows up to a 25-year repayment term with the Select 2/Graduated Payment plan.
Extended Select 5 Payments*
This option allows up to a 25-year repayment term with the Select 5/Graduated Payment plan.
*All Extended Repayment plans are for qualified borrowers with more than $10,000 in eligible loans. Applicants interested in any of the Extended Repayment plans should contact their servicers to determine eligibility.
|Q:||What type of payment incentives can Medical School Loans offer me?|
|A:||Medical School Loans rewards responsible medical students for their responsible behavior. That is why we offer a .25% interest rate reduction on all private student loan consolidations. Simply make your monthly payments using auto-debit and we'll reduce your interest rate by .25%, saving you money on unnecessary interest.|
|Q:||What are deferments and forbearance?|
|A:||Every medical student has the hope of repaying student loans without a break or pause but sometimes circumstances arise in which one might need to postpone or reduce monthly payments. Deferment or forbearance options are available if you become temporarily unemployed or disabled, experience economic hardship, or return to school. If you think you qualify to for a federal student loan forbearance, or a private loan forbearance, speak to your lender.
Federal Student Loan Deferment
A federal student loan deferment is a period of time during which payments are postponed. Deferments usually require documentation. There are different types of deferment for which borrowers can apply, such as in-school deferments or unemployment deferments.
Federal Student Loan Forbearance
A federal student loan forbearance is an agreement between a borrower and the lender/servicer to temporarily postpone payments, extend the timeframe for making monthly payments, or reduce the amount of monthly payments on a short-term basis.
Private Student Loan Forbearance
Similar to a federal student loan forbearance, a private student loan forbearance is an agreement between a borrower and the lender/servicer to temporarily postpone payments, extend the timeframe for making monthly payments, or reduce the amount of monthly payments on a short-term basis.
It is best to contact your contact your lender/servicer to learn more about what options are available to you.
|Q:||What can I do if problems making my loan payments?|
|A:||Unforeseen circumstances can arise during your repayment term that might it difficult to make your monthly payments. Medical emergencies, lay-offs, car accidents, or any number of uncontrollable events can damage an otherwise spotless record of on-time payments. If you are facing financial hardships and are unable to make your monthly payments, contact your lender/servicer immediately. There are many options offered by borrowers that can assist you through these unforeseen circumstances. This is especially true if you have federal student loans. A variety of benefits, such as income-sensitive repayment, are offered with federally guaranteed student loans.
Income-Sensitive Repayment Plan
|Q:||What are the consequences of default?|
|A:||You are responsible to repay your medical student loans according to the terms set forth in the promissory note you signed when you originally borrowed your medical student loans. If you fail to meet these terms you will be faced with negative consequences, such as your loans going into default. Default occurs when you fail to meet the terms of your promissory note.
Default can have the following consequences:
|Q:||How can federal loan consolidation help with repayment?|
|A:||You will receive a fixed interest rate for the life of the loan when you consolidate your federal loans. There is no reason for you not to consolidate your medical student loans because it is quick and easy. Consolidating your federal student loans will lower your monthly payment, which will help you during the repayment term of your medical student loans. Consolidating your federal student loans will also extend your payment term which gives you more time to pay off your medical student loans.|
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