Entrance Education Debt Manager

Association of
American Medical Colleges

Education Debt Manager
A common-sense approach for borrowing wisely
www.aamc.org/FIRST
ii
Introduction iv
Education Debt 1
Loan Basics for Entering Medical Students 3
Medloans
Organizer and Calculator 3

Know Who You Borrowed From and Who to Pay Back 4
Tracking Your Loans 4
Lenders 5
Servicers 5
Master Promissory Note (MPN) 6
Federal Student Aid (FSA) Ombudsman 7
Delinquency and Default 8
Less than Full-Time, LOA and Withdrawing 8
Know the Type of Loans Borrowed 9
Important Loan Details 9
Understand the Total Cost 10
Interest 10
Capitalization 11
Strategic Borrowing 13
Alternatives to Borrowing 13
Borrow in the Right Order 14
Borrow Only What You Need 15
Loan Timeline 19
During the Transition: The Residency Years 19
Grace 19
Loan Repayment Timeline (chart) 19
Using Up Your Grace 20
Postponing Payments 21
Deferment 21
Deferment Eligibility Chart 21
Post-Enrollment Deferment Direct PLUS Loans 22
Forbearance 22
Mandatory Forbearance for Medical Interns & Residents 22
Table of Contents
www.aamc.org/FIRST
iii
Loan Repayment 23
When Do You Start Paying and How Much? 23
Rights During Repayment 23
The Repayment Plans 24
Standard 24
Extended 24
Graduated 25
Income-Contingent 25
Income-Based 25
Monthly Payment Amounts 26
AAMC Monthly Payment Estimator Stafford Loans 27
AAMC Monthly Payment Estimator PLUS Loans 28
Credit 29
Your Credit Score: What It Is and Why It Matters 29
How Your Credit Score is Determined 29
The Benets of Good Credit 31
Really? 31
Budgeting 33
Benets of Budgeting 33
Creating a Budget 33
The Basics of Budgeting 34
Finding Alternatives 34
Budget Worksheet 36
Financial Literacy 37
Identity Theft 37
Credit Cards 37
Signs You Could be Heading for Trouble 38
Fixing the Problem 38
Take Positive Steps to Get Out of Debt 38
Other Considerations 39
Private Loans 39
Federal Direct Loan Consolidation 39
www.aamc.org/FIRST
iv
A Note from FIRST for Medical Education
First and foremost, we want to congratulate you on making the decision to
become a doctor. You have worked hard to get where you are today, but
the next years will also be challenging both academically and financially.
Facing student loans may seem daunting, confusing and even downright
frustrating. Despite this, it is vital to your financial future that you avoid
the temptation to ignore your loans and instead choose to face your debt
situation armed with the knowledge to make educated borrowing decisions.
This resource, the Education Debt Manager for Entering Medical Students,
was designed to help students, residents, financial aid staff and others
navigate the complexities of medical student debt. There are details included
within that will not only show you how to borrow and repay wisely, but will
also help to develop your debt management skills.
Benjamin Franklin said it best when he said, An investment in knowledge
always pays the best interest. So be encouraged, you are about to make a
major investment in yourself, your future, and the future of healthcare; and
rest assured, this investment will reap great dividends.
The best advice that I received when I was contemplating a career in medicine was to
concentrate my initial efforts on getting into medical school and leave the issue of how to
pay for it until another day. They assured me that there would be enough money available
in the form of scholarships, grants, and low interest loans to pay for my medical education.
What they did not educate me about was the debt management, the principle of
compound interest, and that it could take me the bulk of my professional career to
pay off my student loans.
It has been over twenty years since I heard those words of wisdom, and I would continue
to provide students with similar advice, but I would qualify my comment with the fact that
the trend line for medical student indebtedness has become increasingly steep with each
academic year.
Students must arrive at the door of the house of medicine with an enhanced awareness of
how they will navigate the rising tide of medical education debt that they will encounter
prior to their graduation.
Gary LeRoy, M.D.
Associate Dean,
Wright State University
www.aamc.org/FIRST
Education Debt
Paying for a medical education is challenging. In fact, the majority of medical school
graduates complete their education with the assistance of student loan financing. In the
graduating class of 2010, nearly 86% of medical students reported leaving medical school
with student loans.
So, you are not alone. As you borrow to finance your education, know that you are in good
company!
Across the country, the median level of debt for the class of 2010 was $160,000 (based on
public and private MD granting medical schools, and including undergraduate debt).
Additionally, the median amount of non-education debt for these graduates was $11,000.
This included car loans, credit card debt, residency and relocation loans, etc.
Data like this is collected each year by the Association of American Medical Colleges
(AAMC), and we share it with you as a point of reference. Prior to leaving medical school,
you will also be asked to share your feedback regarding your medical school experience via a
survey called the Graduate Questionnaire.
1
Medical Student Education:
Costs, Debt, and Loan Repayment Facts
October 2010
Indebted Graduates, Class of 2010*
Public Private All
Mean $148,222 (0.1%) $172,422 (1%) $157,944 (1%)
Median $150,000 ( 0%) $180,000 (1%) $160,000 ( 0%)
Education Debt of: Public Private All
$100,000 or more 78% 79% 78%
$150,000 or more 54% 65% 59%
$200,000 or more 22% 42% 30%
$250,000 or more 7% 20% 13%
Graduates with Education Debt 88% 85% 86%
Graduates with Premedical Education Debt: 37%
Median Premedical Education Debt: $20,000
Graduates with Non-education Debt: 26%
Median Non-education Debt: $11,000
* Source: FIRST analysis of AAMC 2010 Graduation Questionnaire (GQ) data. Education debt
gures include premedical/college education debt. Non-education debt includes car, credit card,
residency relocation loans, etc.
Cost of Medical School, M1 In-State, 2010-11
Public Private
Median Tuition & Fees $28,685 (7%) $46,899 (4%)
Median Cost of Attendance $49,298 (3%) $66,984 (3%)
Source: AAMC Tuition and Student Fees Survey. Based on the 74 public schools and 52 private
schools for which data are available.
Resident/Fellow Stipends
Median Stipend
Approximate Monthly
Income-Based Repayment Amount
1st Post-MD Year $47,716 $393
2nd Post-MD Year $49,431 $415
3rd Post-MD Year $51,376 $439
4th Post-MD Year $53,444 $465
Source: Preliminary data from 2010 AAMC Survey of Resident/Fellow Stipends and Benets and
AAMC analysis.
www.aamc.org/rst
Current Interest Rates
Federal Graduate/Professional Stafford Loan:
For loans disbursed on or after July 1, 2006: 6.8% xed
For loans disbursed prior to July 1, 2006: see aamc.org/rst for interest rate history
Grad PLUS Loan: Direct Loan Program 7.9% xed
Contact Information
Julie Fresne, jfresne@aamc.org Matthew Shick, mshick@aamc.org
Jay Youngclaus, jy@aamc.org Jason Cantow, jcantow@aamc.org
www.aamc.org/rst
Sample Repayment $160,000 in Federal Stafford Loans
($34,000 subsidized)
Description
Repayment
Years
Monthly
Payment
Interest
Cost
Total
Repayment
IBR for full
repayment with
$170,000 starting
salary after
residency
Residency: 3
Post-Res.: 12
$390 to $470
$2,100
$135,000 $295,000
Forbearance
during residency,
then Extended
repayment
Residency: 3
Post-Res.: 25
$0
$1,500
$287,000 $447,000
Forbearance
during residency,
then Extended
repayment with 2
yr NHSC ($50K)
Residency: 3
Post-Res.: 15
$0
$1,500
$97,000 $262,000
Public Service
Loan Forgiveness
with $100,000
starting salary
after residency
Residency: 3
Post-Res.: 7
$390 to $470
$1,200 to $1,500
$100,000
$134,000
then
$164,000
forgiven
Notes: IBR is Income-Based Repayment. NHSC is National Health Service Corps Loan Repayment
Program. All gures are approximate and rounded for clarity. Full assumptions for each
repayment scenario available on request. Salaries in 2009 dollars.
The AAMC is the leading source of education debt management information
for medical students. See www.aamc.org/rst for more details on Income-Based
Repayment, Public Service Loan Forgiveness, and National Health Service Corps
Loan Repayment. To calculate repayment with a longer residency see the sites
Medloans
Organizer and Calculator, the only on-line tool that calculates detailed
repayment scenarios for personalized medical student loan portfolios while
accurately accounting for the residency/fellowship training period.
www.aamc.org/FIRST
3
Loan Basics for Entering Medical Students
The first step to managing your education debt is to get organized. In the coming years, if
you track and keep all of your student loan documents in a single place, you will find that
not only are you a more educated borrower (because you understand the current state of
your debt portfolio) but after medical school you will be more prepared to manage this debt.
Medloans
Organizer and Calculator

When putting your essential documents in order, you may rely on a folder system, a filing
cabinet, a scanning-and-saving process or even a shoebox. The specific method you use is
not as important as the actual process of opening, reading yes, reading and saving your
student loan paperwork!
To assist you in staying organized through medical school and residency, the AAMC has
created an online location where you are able to not only safely and securely organize
and save your loan portfolio information but also calculate the various repayment options
- for after graduation. This tool will help you to be organized, while also helping you to
be conscious of the impact of your borrowing decisions (total repayment cost) before you
accept and borrow a loan.
The earlier that you begin utilizing the Medloans
Organizer and Calculator, the more

prepared you will be to make wise borrowing and repayment decisions.
Organize and keep track of your student loan information
Develop repayment strategies using the calculator
Use the only calculator designed specically for medical students
the Medloans Calculator
is pretty darned useful.
Job well done!
Frank Bauer, med student,
URochester SOM
Use your AAMC username and password
to log in to the Medloans
Organizer and Calculator

www.aamc.org/FIRST
For help with your username and password, contact Denine Hales (dhales@aamc.org).
www.aamc.org/FIRST
4
Know Who You Borrowed From and Who to Pay Back

Tracking Your Loans
Where are your loans coming from who is your lender? Where will your payments go
who services your loans? The next step to managing your education debt is to know who
you are borrowing from and who to pay back. If you keep good records, you will know
the answers to these questions. Do not despair, though, if you lose track of your loan
information. There are two resources you can rely on to nd the details of your loans:
The nancial aid ofce (pre-med and medical) are able to assist you in identifying
the lender and servicer of your loans.
www.nslds.ed.gov The National Student Loan Data System (NSLDS) is the U.S.
Department of Educations central database for federal student aid.
NSLDS is a repository of all of your federal loans and it will list the current lender, servicer
and the outstanding principal balance (OPB) of the loan. Realize, though, that the
information displayed on NSLDS is not real-time data, and due to processing times and only
periodic updates, your current loan situation may be different than what is reected.
Contact your current servicer with any questions about the state of your student loans.
Non-federal loans (including private, alternative, and institutional loans) are not listed on the
NSLDS website. For this, you will need to consult with the nancial aid ofce or review your
credit report (www.annualcreditreport.com) to determine the lender of those loans.
www.nslds.ed.gov
To log-in, provide the following information:
social security number
date of birth
rst two letters of your last name
FAFSA pin number
If you dont know your pin #, request it by going to:
www.pin.ed.gov
Additional information on record keeping is available on the FIRST website at: www.aamc.org/rst/factsheets
www.aamc.org/FIRST
5
Lenders
During medical school, you will borrow your federally guaranteed student loans from Direct
Loans (DL), also known as the William D. Ford Federal Direct Loan Program (www.dl.ed.
gov). The DL program is a federal program that lends to borrowers directly from the U.S.
Department of Education.
The loans you may receive from DL include Direct Stafford loans (subsidized and
unsubsidized), Direct PLUS loans and Direct Consolidation loans.
Other common loans received during medical school include Perkins loans, Primary Care
Loans (PCL) and Loans for Disadvantaged Students (LDS), and though these are federally
mandated loan programs, the loans are actually issued to you through your school on behalf
of the federal government.
Loan Type Lender
Direct Stafford & Direct PLUS Direct Loans (Dept of Education)
Institutional Loans Your School
Perkins, PCL, and LDS Your School
Private Bank or Other Lending Institution
Direct Consolidation Direct Loans (Dept of Education)
After understanding who your lenders are, the next step is to nd out who services your
loans. The loan servicer is very important because until your loans are repaid in full the ser-
vicer is the point-of-contact for all things concerning these loans.
Servicers
After a lender lends the loan, a servicer will be the entity that oversees the administration
of the loan during repayment like the manager of the paperwork. Be advised that the
lender may act as the servicer of their loan or they may contract with a third party to do
the servicing on their behalf. In any case, the servicer will be your point-of-contact for most
activities that occur during repayment, like making payments, updating contact information,
processing forms for deferment and forbearance, and providing tax forms with information
for deducting student loan interest.
For successful loan repayment, its crucial that you know the servicers of your loans.
The NSLDS website lists the lender and servicer for each of your federal loans.
www.aamc.org/FIRST
6
Loan Type Lender Servicer
Direct Stafford Direct Loans (Dept of Education)
Direct PLUS Direct Loans (Dept of Education)
Institutional Your School
Perkins, PCL, and LDS Your School
Private Bank or Other Lending Institution
Direct Consolidation Direct Loans (Dept of Education)
NOTE - Direct Loans may service their loans through Direct Loan Servicing Center (DLSC),
www.dlsc.gov, or Direct Loans may contract another company to service your DL loans.
For this reason, its important to read and organize the notications sent to inform you of these
changes or at least be familiar with your information in NSLDS.
Master Promissory Note (MPN)
The Master Promissory Note (MPN) is a legally binding contract, between you and your
lender. One MPN covers all Stafford loans and a separate MPN is required for PLUS loans.
Simply stated, an MPN is your documented promise to repay the debt under the specied
terms, and for this reason it is important to carefully read and understand the MPN before
signing it. If you have already signed an MPN, a copy can be obtained from your lender or
servicer.
Inside of the MPN, you will nd that the obligation to repay your student loan debt is a
serious responsibility that cannot be excused, even if:
your course of study is not completed (or not completed in the regular
amount of time),
you do not receive the education program or service that you purchased,
you are unable to obtain employment or
you are dissatised with your education experience.
The benets of an MPN to you as a borrower include a reduction of paperwork and a
simplication of the borrowing process because an MPN can have a multi-loan feature
allowing a single promissory note to cover multiple loans disbursed by the same lender over
a 10 year period (while at the same school). This means that as a student loan borrower you
may only sign one or two MPNs while attending medical school enabling monies to be
received more efciently when new loans are obtained.
www.aamc.org/FIRST
7
Review the Statement of Rights and Responsibilities for a complete list

For questions about the rights and responsibilities, or terms and conditions, of your student
loans, contact the lender, servicer or your medical schools nancial aid ofce.
Federal Student Aid (FSA) Ombudsman
If at any time you experience a situation with your lender that cannot be resolved after
repeated attempts, the Federal Student Aid (FSA) Ombudsman may be able to help you. The
FSA Ombudsman conducts impartial fact-nding research about your complaint and works
with you and the lender to reach a resolution. Note that the Ombudsman can recommend
solutions, but doesnt have the authority to reverse decisions or dictate specic actions. They
can be reached at www.ombudsman.ed.gov or 877-557-2575.
Rights
Prepay any federal loan without penalty
Request a copy of your promissory note
Change selected repayment plan
Experience grace and subsidies on
certain loans
Seek deferment or forbearance of
payments
Responsibilities

Use loan funds only for authorized
expenses
Make loan payments on time
Make payments despite receipt of bill
Notify the servicer of changes in your
contact info
Notify the servicer of changes in your name
Notify the servicer of changes in your
enrollment status

Resources for Borrowers
Borrowers who experience problems or disputes with their federal student loan lenders or repayment
services have several resources available to assist them, including:
The U.S. Department of Educations Federal Student Aid Ombudsman
(1-877-557-2575, fsaombudsmanofce@ed.gov)
www.ombudsman.ed.gov/
The Student Loan Borrower Assistance Project run by the National Consumer Law Center
www.studentloanborrowerassistance.org
A recently enacted nancial reform law created an ombudsman for private student loans to mediate
disputes between private loan borrowers and their lenders. This service has not been set up yet, but it
will be a resource for borrowers in the future.
www.aamc.org/FIRST
8
Delinquency and Default
On a positive note, medical school borrowers
have a very low default rate. This means that
borrowers like you repay their loans, repay them
on-time, and many even pay these loans off earlier
than required. The key to duplicating this positive
repayment behavior with your own debt portfolio
is to stay organized and know when your payments
are due.
When it comes time to repay your student loans,
in the case that something does slip thru the
cracks, you should know that the loan will be
considered delinquent on the rst day that the
payment is late, and after being late for 270 days,
the loan is considered to be in default.
There are negative consequences for both of these
(see list), as each will hurt you well into the future,
especially if you need credit for a house, a car, a
practice, or other consumer loans.
The record of a late or defaulted student loan
remains on a credit report for seven years but
nobody wants you to be there. If you are experiencing nancial difculties, do not wait until
its too late -- call your servicer and see what arrangements can be made.
On a related note, maintaining good credit will also require that you stay current on all
required payments (like credit cards, utilities, etc.) during medical school. A resource to
consider tapping into during medical school, and beyond, is automatic withdrawal or
scheduling payments (online) to be automatically sent from your checking account to those
that you owe (before the due date). This automation of payment removes the element of
a students fatigue and/or forgetfulness and can be used as a strategy to ensure that all
required payments during medical school are paid in a timely manner.
Less than Full-Time, LOA and Withdrawing
If your course load or enrollment status drops below half-time or you withdraw altogether, it
is critical that you remember to immediately contact the nancial aid ofce. They will need to:
1) guide you through your required exit counseling for your loans, and
2) update you on which loans are going into repayment right away and which loans
have a grace period
The problem with not being a full-time student or taking any type of leave of absence
(LOA) is that if you drop below half-time, loan repayment begins. So, stay in touch with the
nancial aid ofce to best understand your situation.
Consequences of
delinquency
Reported to credit bureaus
Negatively affects credit
default
Entire balance due immediately
Additional charges, fees and
collection costs
Negatively affects credit
Garnished wages and tax returns
Withheld Social Security and
disability benets
Lawsuits and costs are your
responsibility
Ineligible for additional student aid
Other federal debt collection
methods
www.aamc.org/FIRST
9
Know the Type of Loans Borrowed
Important Loan Details
The terms subsidized and unsubsidized are probably familiar, but do you know what a
subsidy actually is? Its nancial assistance that is granted to cover the interest accruing on
a loan. The result of a subsidy is that interest does not accrue on the loan while the subsidy
is active, or in other words, the loan is essentially interest-free for the borrower at certain
points in time. To be clear, once you are in active repayment, interest will accrue on both
your subsidized and unsubsidized loans.
A subsidy is only active and working for you while you are in school, in a grace period or
in a qualifying deferment. Alternatively, unsubsidized loans are always accruing interest and
payment of that interest is solely your responsibility.

*Underlying eligible subsidized loans
**Underlying eligible unsubsidized loans
***Its important to know that if you put your Perkins or LDS loans into a Consolidation loan,
they will not only lose their favorable grace and deferment rights but they will also become
unsubsidized balances.
Direct Subsidized Stafford
Perkins***
Loans for Disadvantaged
Students (LDS)***
Primary Care Loans (PCL)
Institutional (some)
Direct Consolidation*
Direct Unsubsidized Stafford
Direct PLUS
Private/Alternative
Institutional (some)
Direct Consolidation**

This will reduce interest capitalization and the
overall interest cost.
Consider making payments toward the interest accruing
on your UNSUBSIDIZED loans while youre in school, in
grace, in deferment, or in forbearance.
Subsidized
These loans receive an interest subsidy, in
which the government or your medical
school pays accruing interest on your
behalf, while youre enrolled in school and
during periods of grace and authorized
deferment.
Unsubsidized
These loans accrue interest from the date
of disbursement. If the interest is unpaid, it
will be added back to the principal balance
(original amount borrowed) at specic
points via a process called capitalization.
You are responsible for this interest.
www.aamc.org/FIRST
10
Understand the Total Cost
You have heard the saying that nothing in life is free, and your student loans certainly
are no exception. However, understanding exactly how your loans cost you money will help
you make smart borrowing and repayment decisions. If borrowed and paid strategically, its
possible to save yourself time and money.
There are two primary factors that will
contribute to the cost of your loans:
1) Interest and
2) Capitalization
Interest is what the lender charges you to use their
money. Understanding the way interest accrues is
necessary for borrowing wisely. The most important fact
to know about student loan interest is that if the loan
is unsubsidized, interest accrues on the outstanding
principal balance of the loan beginning on the date
of disbursement. For this reason, borrow all available
subsidized loans before accepting unsubsidized
monies. Also remember that you always have the right
to pay the accruing interest on your unsubsidized debt
even if no payments are required.
Furthermore, different loans carry different interest
rates. The chart on the next page will help you
understand what the interest rates are for your loans.
Debt Management Strategies during Repayment
Here are some debt management strategies to help
you pay these loans off faster:
% Prioritize your debt by arranging it from
highest to lowest interest rate.
The highest rate debt should be your rst
priority.
% Pay as much toward your highest-rate
debt as possible. If able, reduce the required
payment on your lower rate debt allowing for
more monies to go to the higher costing debt.
% Pay with purpose, it can save you money. Dont forget to include your credit card
and private loan debt in your priorities theyre often the highest costing debt.
Manage
your debt,
dont let it
manage you!
How to Make a Voluntary Payment
1) Send it separately from any
required payment that may be
due.
2) Send directions telling the
servicer how to apply the
voluntary payment (i.e.
Apply to interest on my Direct
PLUS loan, Loan #, etc.)
3) Follow-up and make sure your
payment was applied accurately.
NOTE All fees and interest must
be paid before payments can be
directed towards the principal of
the loan.
www.aamc.org/FIRST
11
Direct Stafford Loans
(disbursed on or after 7/1/06)
6.8%
Fixed
Direct PLUS Loans 7.9%
Fixed
Perkins Loans / PCL / LDS 5.0%
Fixed
Private Loans* Typically Variable Check the Promissory Note
Institutional Loans Varies by Loan Check the Promissory Note
Direct Consolidation Loans Fixed rate based on weighted average interest
rate of underlying loans rounded up to the
nearest one-eighth of a percent (capped at 8.25%)
* Private and alternative loans typically carry a variable rate that is higher than federal student loans.

Capitalization occurs when any accrued and unpaid interest is added to the original
principal of the loan. (The principal of your loan is the primary balance you owe, exclusive of
interest and fees.) Capitalization causes your principal balance to grow and the effect of this
is that your interest begins to accrue interest. Lenders and servicers can tell you when your
loans are scheduled to capitalize, but since this can be a costly process, some tips to reduce
the cost of capitalization are included below.
Debt Management Strategies during Repayment
% Contact your servicer to determine their capitalization policy.
This will allow you to understand when your loans are scheduled to capitalize.
% Pay accruing interest prior to capitalization. This may mean making partial or full
interest-only payments while you are in school or residency. Remember, its always an
option to make interest payments, even when no payment is required.
% Submit timely requests. Filing your forbearance, deferment, or repayment plan forms
late with the servicer may result in capitalization earlier than expected.
Borrow smart, maximize your least expensive debt rst. A $40,000 Direct
PLUS loan can cost an additional $4,560 compared to a Direct Stafford loan, and
a $40,000 private loan (at 12%) will cost an additional $23,400 compared to
a Direct Stafford loan. Save yourself thousands by borrowing wisely, and
realize that private loans should be a last resort.
Debt Management Tip
www.aamc.org/FIRST
13
Strategic Borrowing
For the majority of medical school students, borrowing student loans is a necessary component
of completing a medical education. Despite this, it is important to know that there is a right
and a wrong way to get into debt. Understanding how to strategically borrow will enable you
to borrow less, reduce your interest costs and repay your student loans earlier.
Consideration #1: Alternatives to Borrowing
Borrowing wisely may mean not borrowing at all. There are other sources of monies that can
reduce or eliminate the need to borrow. These alternatives include scholarships from outside
sources such as your faith afliation, civic organizations, state of residency, etc. There are
also service based scholarships such as military and public health service programs (i.e.
National Health Service Corps and National Institute of Health). Or even scholarships from your
institution check with the nancial aid ofce for more details on scholarships available from
the school.
Dont forget your family support both nancial and emotional. Whether it is parents,
grandparents or a working spouse, your family may be able to provide an alternative to
borrowing. At the least, if unable to contribute large upfront gifts towards your education
costs, family members may be able to help you pay the accruing interest on your student loans
while you are in school this will go a long way to help keep the cost of your student debt
down and help to reduce your repayment costs.
Also, be familiar with loan forgiveness and repayment options following graduation and
residency the AAMC website lists nearly 100 possibilities. www.aamc.org/stloan
Finally, your medical schools financial aid office is your primary point of contact for all
nancial aid matters so visit them to discuss other alternatives to borrowing.
The Impact of NHSC Loan Repayment*
The nancial benets of participating in the National Health Service Corps Loan
Repayment (NHSC LR) program can be substantial. For example, the minimum
two-year commitment results in a $60,000 award that must be applied to
loan repayment. If the borrower applies the entire award immediately to their
outstanding balance, they would experience dramatic savings compared to someone
who does not receive an NHSC LR award.
Borrowed during med school: $160,000
NHSC LR applied post-Residency: $60,000
Total Repayment Cost: $236,000
Total Savings of NHSC LR: $211,000 (and nearly 12-years of repayment)
The impact of the NHSC LR program would be greater for higher debt levels.
*Assumes a 3-year residency program, use of forbearance during residency and an Extended Repayment Plan (25-years).
www.aamc.org/FIRST
14
Consideration #2: Borrow in the Right Order
Borrowing wisely means borrowing the least expensive debt FIRST and only moving onto a
more expensive student loan after your less costly options have been maximized.
This translates into accepting all free money (grants and scholarships) prior to moving to 1)
Perkins (if eligible), PCL and LDS Loans, 2) Stafford Loans, 3) Direct PLUS Loans and nally
private loans and credit cards.
Your nancial aid ofce and institution have worked carefully to create a cost of attendance
budget that, in most cases, enables you to never borrow beyond PLUS loans. If you nd
yourself in the red zone during medical school, you will want to immediately see the
nancial aid ofce to discuss your situation, as your original award package was made with the
intention of avoiding drastic nancing options like private loans or credit cards. Additionally,
if an unexpected emergency occurs, your nancial aid ofce may be able to assist you in
obtaining federal loans, instead of private loans or credit cards, to cover the situation.
Also, understand that when you borrow certain loans it may affect your eligibility
for future aid. The reason for this is that you are limited in the total amount of nancial
aid that you are able to receive each year, including all loans and scholarships. You are
prohibited from receiving more aid than your cost of attendance. This fact could mean
forfeiting free or lower rate monies if you have already accepted a higher rate loan so
borrow in the right order.
F
R
E
E

M
O
N
E
Y
P
E
R
K
I
N
S
/
P
C
L
/
L
D
S

S
T
A
F
F
O
R
D

P
L
U
S

P
R
IV
A
T
E
CRED
IT
CA
RD
S/
Additional information on stafford loans is available on the FIRST website at: www.aamc.org/rst/factsheets
www.aamc.org/FIRST
15
Based on borrowing $40,000 (unsubsidized) with interest capitalizing after 4 years of medical school;
based on interest rates of 6.8% (Stafford), 7.9% (Grad Plus), 12% (Private).

Consideration #3: Borrow Only What you Need
A common misconception that new medical school students have is that they have to accept
and borrow the maximum amount of loans that are available to them; however this is not
the case. We encourage you to know how much money you need each semester/quarter.
Then, borrow only what you need and decline any loans that exceed your need. If a nancial
crisis occurs during the semester and more money is needed, you can contact the nancial
aid ofce to assist you in accessing those previously declined monies.
When you avoid borrowing beyond what you need, what you protect yourself from is:
1) the origination costs for the unneeded money,
2) the interest costs that would accrue on the balance of needless funds,
3) the affects of capitalization on the extra money and
4) the possibility that this extra money will actually go towards things that you want, not
things that you need.
To quantify the impact of borrowing in the right order, lets compare the cost of
repaying the interest for three different types of loans when the original amount
borrowed is $40,000.
INTEREST COST TOTAL COST
Stafford Loan: $23,240 $63,240
PLUS Loan: $27,800 $67,800
Private Loan: $46,640 $86,640
Additional information on unforseen emergencies is available on the FIRST website at:
www.aamc.org/rst/factsheets
www.aamc.org/FIRST
16
www.aamc.org/FIRST
17
Live like a medical student
while you are a medical student and you
will reap the rewards during repayment.
COMMON MISTAKE: Hoping to be nancially prepared for the coming semester/
quarter, new medical school students tend to think they should borrow everything
that is made available to them.
CORRECT ACTION: Borrow only what you need, decline what you do not need,
and if additional money is required in the future, the nancial aid ofce can help
you obtain those previously declined monies.
Consider accepting less than what is made available to you in your award package. It is
possible. If you have a budget, know what you need and only accept that amount, you will
save yourself money
CHALLENGE
Make a decision to borrow $5,000 less each year* from what is offered to you in your
award package. If you choose to do this, you will avoid borrowing a total of $20,000
during medical school, and this will easily result in reducing your:
Monthly Payment by $400(+) per month
Total Loan Cost by $39,000(+)
Repayment Term by 2 (+) years
So, have a plan a budget and stick to it. Borrow only what you need
to borrow because it will save you time and money during repayment.
*Example is based on Stafford loans at 6.8% with a 3 year residency and 3 years of forbearance prior to beginning
a Standard repayment.
Additional information on budgeting is available on page 33 of this booklet and on the FIRST website at:
www.aamc.org/first/factsheets
www.aamc.org/FIRST
19
Loan Timeline
During the Transition: The Residency Years
Lets face it, your years after medical school (residency) will not be your most extravagant or
lavish times. Not only will it be a good idea to continue living within a realistic budget, but this
will also be the time to begin managing the repayment of your student loans.
Be encouraged. You will have a number of options that, if needed, will allow you to complete
your residency making little or no student loan payments. These options include postponing
payments through grace, deferment or forbearance or making reduced payments through
several of the ve repayment plans (IBR, ICR, Standard, Graduated or Extended).
Grace
After you leave school, your loans will either enter a grace period or payments will be required.
The grace period is a time when payments arent required. Grace periods occur automatically
so you dont have to apply for them; and even better than that, while you are in grace, your
subsidized loans remain interest-free. Alternatively, unsubsidized loans continue to accrue interest
during the grace period just as they have always done. The availability and length of a grace
period depends on the loan type. The chart below lists some common grace periods, but notice
that PLUS and many Consolidation loans do not offer a grace period though, if necessary, there
are other options to postpone payments on these loans, just work with the servicer.
For a list of common deferments, see http://www.aamc.org/first/debtmanager.pdf
Internship/Residency Forbearance: Available on Direct Stafford, Direct PLUS and Direct Consolidation loans, this forbearance allows you to postpone or reduce the
amount of your monthly payment for a limited and specific period of time if you have been accepted into an Internship/Residency Program.
Repayment: Consult with your servicer regarding repayment plans and postponement options that may be available.
4
Upon receipt of written request and documentation, institution shall grant a temporary cessation of payments.

This timeline is intended to provide general information and is subject to change based on federal regulations. Always consult your servicer for detailed information
regarding deferment, forbearance and repayment options.
Loan Repayment Timeline
Stafford Loan
Consolidation Loan
Direct PLUS Loan
Disbursed on or after 7/1/08
Perkins Loan
Primary Care Loan
Institutional Loans
Private Loans
Enrolled
6 month
grace
6 month
grace
Deferment
1
, Internship/Residency Forbearance
2
,
or Repayment
Deferment
1
2
, or Repayment
Deferment
1
2
,
or Repayment
Deferment
1
2
,
or Repayment
Deferment
1
, Forbearance
4
, or Repayment. Possible 6
month post deferment grace.
Residency Deferment (up to 4 years in an eligible
primary health care residency program)
Must re-apply each year
9 month
grace
12 month grace
Possible Grace, Deferment or Forbearance
Varies by servicerCheck promissory note
Possible Grace, Deferment or Forbearance
Consult your financial aid administrator
School Deferment
School Deferment
School Deferment
Enrolled
Enrolled
Enrolled
Enrolled
Repayment
3
or Forbearance
Repayment
3
or Forbearance
Repayment
3
or Forbearance
Repayment
3
or Forbearance
Repayment
3
or Forbearance
Repayment
3
or Forbearance
Repayment or Forbearance. Varies
by lenderservicer promissory note
Repayment or forbearance.
Check promissory note.
6 month
defer-
ment
School Residency/Graduate Fellowship Post Residency
DL In-school
Consolidation Loan
Consolidated prior to 7/1/06
www.aamc.org/FIRST
20
For many loans, the initial capitalization of accrued interest will occur at the end of the
in-school deferment period (when you separate from school) OR at the end of the grace period
- whichever occurs later. The Loan Repayment Timeline, page 19, visually depicts this.
The actual repayment start date for loans differs depending on:
the loan type
the grace period
when the loan was disbursed, and
possibly the lender of the loan
Its important to know what is in your loan portfolio and when repayment begins so that a
repayment strategy can be determined in a timely manner.
Using Up Your Grace
Once you completely exhaust the grace period, it is gone and you will not be able to acquire
another one.* During medical school, if you take time off, drop below half-time status or
take a leave of absence (LOA), your grace period may be completely used. Additionally, if
you have federal loans from your undergraduate program, and you took longer than six
months to transition from undergrad to medical school, the grace period may also have
been exhausted on those loans. In this case, those loans will go into repayment immediately
upon your separation from school. Understanding the repayment timeline for each of your
loans is necessary for successful loan management.
*Perkins and LDS loans have additional grace periods that are available in certain circumstances.
Enter repayment when fully disbursed
Interest begins accruing at disbursement
Interest accrues continuously
Maximum interest rate is 7.9%
An automatic in-school deferment will postpone payments
Direct PLUS
Loans
Additional information on postponing payments and PLUS loans is available on the FIRST website at:
www.aamc.org/FIRST
21
Postponing Payments
While you are enrolled as a student, at least half-time, payments will not be required on any
of your federal student loans. The reason for the postponing of payments while you are a
student is because either an in-school status or an in-school deferment is applied to your
loans. Additionally, after graduating or separating from medical school, there are several other
ways to continue to postpone payments, keeping in mind, that at any point in time if you
cannot make a required payment, simply contact your servicer immediately and they will assist
you in exercising one of the options detailed below.
Deferment
Deferment is a period of time when a borrower, who meets certain criteria, can delay making
payments. This option is ideal because during a deferment, the government will pay the interest
that accrues on the portion of the federal loans that is subsidized; however, during this time
you are responsible for the accruing interest on the unsubsidized portion. Deferment does not
occur automatically; you must apply AND qualify in order to receive a deferment period. If you
have more than one servicer for your loans, youll need to apply with each of these servicers
individually.
New Borrower
1
7/1/93
New Borrower
1
7/1/93
New Borrower
1
7/1/93
New Borrower
1
7/1/93
Deferment Eligibility Chart*
Type Max Time Stafford and SLS Loans PLUS Loans Consolidation Loans Perkins
Loans
Full-Time Student None
Half-Time Student None
Graduate Fellowship None
Rehabilitation Training None
Unemployment 3 Years
Economic Hardship 3 Years
Military Service
(1)
None
Military Active Duty 13 Months
(3)
Student
(2)
1
New Borrower: A borrower who received an FFEL loan with a rst disbursement on or after July 1, 1993. The borrower has no outstanding principal or interest balance on a FFEL loan
as of July 1, 1993, or on the date the borrower obtains a loan on or after July 1, 1993. This includes a borrower who obtains a Federal Consolidation loan on or after July 1, 1993, if the
borrower has no other outstanding FFEL loan when the Federal Consolidation loan was made.
(1) A deferment may be granted to a borrower who is serving on active duty during a war or other military operation or national emergency (including qualifying National Guard duty)
The service period must include or begin on/after 10/1/07.
(2) A deferment may be granted to a borrower called to active National or State duty who is a member of the National Guard or Reserves (including retired members) and who was
enrolled at least half time at an eligible school at the time of, or within 6 months prior to, being activated. The service period must include or begin on/after 10/1/07.
(3) Max time for this deferment applies each time the borrower qualies for the deferment.
* This chart is to be used only as a guide. Contact your servicer(s) to determine eligibility.
www.aamc.org/FIRST
22
Currently, the most common deferment types used by medical residents are Fellowship
Deferments and Military Deferments, but for more extreme nancial situations an Economic
Hardship Deferment may be available. To discuss eligibility for these and other deferment types,
contact the servicer(s) of your loans.
Post-Enrollment Deferment Direct PLUS Loans
Ofcially, Direct PLUS loans enter repayment immediately after they are fully disbursed. However,
servicers will automatically apply an in-school deferment on your Direct PLUS loans to postpone
payments while you are enrolled in school.
After you leave school, though no grace period is available, a special 6-month post-enrollment
deferment will automatically be applied to the loan (if it was disbursed after July 1, 2008).
This deferment postpones payments for an additional 6-months, but keep in mind that Direct
PLUS loans are unsubsidized loans, so interest is always accruing. If you would prefer to start
repayment immediately - to avoid the additional accrual of interest - contact the servicer to
decline this deferment.
Forbearance
Forbearance is the period of time when a borrower may either
Make voluntary payments of any amount, or
Postpone payments.
During forbearance, interest accrues on ALL loans including
subsidized loans making this a potentially costly way to postpone
payments. Though you may voluntarily pay interest during
forbearance, any interest that is not paid will be capitalized
typically at the end of the forbearance period. Note that, according
to regulation, capitalization is allowed to occur as often as each
quarter, so check with your servicer for their capitalization policy.
All forbearance periods must be formally requested from the loan servicer, who, in most cases, will
determine the type and length. For medical interns and residents, there are a number of available
forbearance types, but the most often used is a mandatory forbearance (described below).
To learn about forbearance options, contact your servicer(s).
Mandatory Forbearance for Medical Interns & Residents
Medical residents are eligible for a mandatory forbearance on federal student loans. Although
you are required to request and provide documentation of your eligibility, the lender/servicer
must grant it on your federal loans. This mandatory forbearance is only approved in annual
increments; therefore, you must reapply each year to keep the forbearance active for the entire
duration of your residency.
Mandatory forbearance is a viable option to avoid making payments on federal loans during
residency. It is important to note that forbearance provisions may differ on some loans, such as
the Federal Perkins (which requires you to pay at least some interest while in forbearance). Be
sure to nd out, from your servicers, what the provisions are on your loans. Also, remember that
during forbearance while interest is accruing on your entire loan balance, you can always make
voluntary payments without risk of losing the forbearance.
The Cost to Postpone
For a 2010 graduate with
$160,000 in Stafford loans
borrowed, the capitalization of
unsubsidized interest accrued
during school and grace will
turn the principal balance into
$182,670. During residency,
an estimated $1,000 in
interest will then accrue on
this outstanding balance
each month!
www.aamc.org/FIRST
23
Loan Repayment
Keep in mind that as a student enrolled in medical school, at least half-time, payments are
not required on your federal student loans. Additionally, if you borrow and manage your
money wisely during medical school, you will nd the task of repaying these loans much
easier and more affordable. By making smart nancial decisions early and consistently, you
can signicantly reduce the cost of your debt.
When Do You Start Paying and How Much?
Your Stafford, Perkins, and other loans with a grace period will enter repayment at the end
of the grace period. In the case of Direct PLUS loans, payment is required after the post-
enrollment deferment ends. For loans without a grace period, you will be required to begin
repaying them when you graduate, withdraw, or drop below half-time status.
See the Repayment Timeline on page 19 for more details.
Approximately one to two months before your rst payment is due, youll receive a notice
regarding the exact due date. Around that same time, youll also be asked to select a
repayment plan. The plan that you opt for will determine the amount of your required
monthly payment and, consequently, the amount of
interest you pay over the life of the loan.
Understanding the ve repayment options will
allow you to choose the best plan for your nancial
situation.
Rights During Repayment
Take comfort in the fact that if your nancial
situation changes, you have the ability and right to
request any of the following items:
A deferment or forbearance to postpone
payments
Change the selected repayment plan (and
thereby, change the required monthly
payment amount)
Shorten the repayment schedule
Prepay loans without penalty
Simply contact your servicer as your circumstance
requires.

Get a Jump on Your Loan Payments
It may be a relief to know that you dont
have to make payments during school,
but you could still consider making some
type of payment especially towards
your most expensive (a.k.a. high
interest rate) debt.
Sending in an interest-only payment each
month, while in school or residency, even
if it is only a small amount, can be a very
smart thing to do. Every dollar you pay
now helps to reduce the overall cost of
your debt. The fact is, the quicker you
pay off your debt the less it will cost you.
(NOTE You can make payments
towards student loans at any time,
even during school, and your grace,
deferment or forbearance status will
remain uninterrupted when a voluntary
payment is made.)
Debt Management Fact
The faster you reduce the principal of your loans, the less your debt will
cost you in interest.
www.aamc.org/FIRST
24
The Repayment Plans
There are ve payment plans to choose from during the repayment of federal student loans.
The purpose of the different repayment plans is to provide exibility in your nances. These
options were designed to make your payments more manageable, and in most cases, you
are able to change your selected plan when your nancial situation changes.
Whether your debt is large or small, the repayment plan you select will impact the overall
cost of the loans. A hastily thought out decision could turn out to be a costly choice, so
when the time comes, select wisely.

Standard Repayment
When you choose this plan, your monthly
payment amounts will generally be an equal
amount throughout the term of the loan,
and typically, the term length is 10-years. In
comparison to the other options, the Standard
plan requires higher monthly payments, but
this causes lower interest costs. Standard
Repayment is the plan that allows borrowers to
pay education debt in the most aggressive and
cost-efcient manner.
If you fail to notify your servicer otherwise, the
Standard Repayment plan is the default plan for
loan repayment.
Best Option For: Borrowers whose primary goal is to minimize the repayment time
period and the total interest cost of their student loan debt.
Extended Repayment
The Extended Repayment plan allows you to stretch your current repayment term to up to
25 years (lowering the required monthly payment amount). The qualications for Extended
Repayment include:
You must have an outstanding balance of principal and interest totaling more than
$30,000 in either Federal Family Education Loans or Direct Loans
All loans must have been issued on or after October 7, 1998
Before opting to extend your repayment term, consider the degree to which this option will
negatively impact the overall interest cost of your debt.
Best Option For: Borrowers seeking to lower their monthly payment
(without consolidating).
Based on an original principal balance of $160,000
entering repayment after 4 years of medical school
and 6 months of grace. All numbers are rounded for clarity.
Standard/Level
Extended
Graduated
Income-Contingent/Sensitive
Income-Based Repayment (IBR)
$2,100/mo
$1,300/mo
$1,000/mo
$610/mo
$390/mo
www.aamc.org/FIRST
25
Graduated Repayment
The Graduated Repayment plan allows you to begin with smaller monthly payments that will be
scheduled to increase one or more times during your repayment term. Often, the amount of the
required payment in this plan is equal to the amount of interest accruing each month, making it
potentially an interest-only payment.
Though Graduated Repayment offers monthly payments that are initially lower than Standard
Repayment, it may lead to higher interest costs over the life of the loan because the principal of
the loan is not paid off as quickly.
Best Option For: Borrowers seeking temporary relief from high loan payments but
expecting an increase in their income in the next few years.
Income-Contingent Repayment (ICR)
When you select Income-Contingent as a repayment plan, you must provide documentation
of your income the monthly payment amount will be based on a percentage of the expected
total gross monthly income received from all sources.
This plan must be reapplied for each year and income documentation will be required. If this
plan does not meet your needs, Income-Based Repayment may offer additional exibility with
lower payment amounts.
Best Option For: Borrowers that have a lower income, or are experiencing a
nancial hardship, and need assistance making their monthly payment.

Income-Based Repayment (IBR)
This is the plan that many medical residents consider during residency because it offers several
appealing features:
1. This plan often offers the lowest required monthly payment (comparatively)
2. There is a partial subsidy available on the subsidized loans
3. This plan is acceptable under Public Service Loan Forgiveness
The Income-Based Repayment (IBR) plan was designed specically to help those experiencing
a partial nancial hardship (PFH), by capping the monthly payment at 15%of discretionary
income (see the example). Once you no longer demonstrate a PFH, the maximum required
monthly payment amount under IBR may not exceed what the standard 10-year payment amount
was at the start of making IBR payments. In other words, under IBR even when your income goes
up, your required payment amount cannot exceed the Standard Repayment amount.
Additional information on Public Service Loan Forgiveness is available on the FIRST website at:
www.aamc.org/FIRST
26
Under IBR, the monthly payment will be adjusted each year according to changes in your
income and family size. IBR also offers a partial interest subsidy during the rst 3 years.
During this period, any accruing interest on your subsidized loans that is not covered by
your scheduled monthly payment will be paid by the federal government. You may choose
to remain in IBR for the maximum 25-years, at the end of which, any remaining federal
loan balance will be discharged/forgiven though, after 25-years in IBR, it is most likely that
a physician will have already repaid their student loans in full. For more information, visit
www.IBRinfo.org.
Best Option For: Borrowers who need a lower monthly payment. This option works
well for residents, those pursuing careers in public service or anyone that has a
lower income and needs assistance in making their monthly payments.
Example of a PGY-1 Resident in IBR
1
Monthly Adjusted Gross Income
2
$3,976
(minus) 150% of Poverty Line
3
- $1,354
Discretionary income = $2,623
(multiplied by) x .15%
Monthly IBR Payment $393
1) Based on the 2010 rst post-M.D. year median stipend of $47,716.
2) Based on the 2010 Federal poverty guideline for a family size of one (as determined by the US
Department of Health and Human Services in the 48 contiguous states $10,830.).
3) Based on 2010 Federal regulations.
Monthly Payment Amounts
Estimates of monthly payment amounts are provided in the following charts on pages 27 - 28.
The rst chart depicts payment amounts for Stafford Loans, and the second chart shows
payment amounts for PLUS Loans. These estimated breakouts show the original principal
balance (in the rst column), the balance after the initial capitalization (in the second
column) and the estimated required monthly payment for each of the ve repayment
plans (in the remaining columns).
Find the row with the debt level that most closely correlates with your loan balance to see
your estimated monthly payment amount. If you have Direct Stafford and Direct PLUS loans,
you will need to add the two correlating payment amounts together with the exception of
ICR and IBR plans to get the total payment amount.
For more accurate numbers, consult your servicers websites, or use the AAMC Medloans
Organizer and Calculator at www.aamc.org/FIRST.
Additional information on Public Service Loan Forgiveness is available on the FIRST website at:
www.aamc.org/FIRST
27
AAMC Monthly Payment Estimator for Medical School Borrowers
www.aamc.org/FIRST
Medical
School
Stafford
Loan
Amount
Balance at
repayment
10-year
repayment
term
Years 1-4
(Interest
Only)
Years
5-10
25-year
repayment
term
Years
1-4
Balance
(after a
4 year
residency)
Payment and years
based on balance
at start of IBR
Years
1-4
(Interest
Only)
Years
5-10
Years
1-4
Balance
(after a
4 year
residency)
Payment and
remaining years
Standard Extended
$75,000 $82,377 $948 $467 $1,397 $572 $82,688 $948 for 10.1 yrs. $467 $1,397 $70,205 $1,257 for 5.7 years
$80,000 $88,276 $1,016 $500 $1,497 $613 $89,767 $1,016 for 10.3 yrs. $500 $1,497 $77,942 $1,347 for 5.9 years
$90,000 $100,075 $1,152 $567 $1,697 $695 $104,075 $1,152 for 10.6 yrs. $567 $1,697 $93,417 $1,529 for 6.3 years
$100,000 $111,875 $1,287 $634 $1,897 $776 $118,530 $1,287 for 10.9 yrs. $634 $1,897 $108,894 $1,709 for 6.7 years
$110,000 $123,674 $1,423 $701 $2,097 $858 $390 to $133,091 $1,423 for 11.2 yrs. $701 $2,097 $610 to $124,369 $1,889 for 6.9 years
$120,000 $135,473 $1,559 $768 $2,297 $940 $500 $147,730 $1,559 for 11.4 yrs. $768 $2,297 $760 $139,845 $2,069 for 7.2 years
$130,000 $147,272 $1,695 $835 $2,497 $1,022 per $162,429 $1,695 for 11.6 yrs. $835 $2,497 per $155,320 $2,249 for 7.3 years
$140,000 $159,071 $1,831 $901 $2,697 $1,104 month $177,173 $1,831 for 11.8 yrs. $901 $2,697 month $170,796 $
$2,789 for 7.8 years
$2,825 for 7.8 years
$2,964 to $2,969 for 7.9 yrs.
$2,964 to $3,149 for 8.2 yrs.
$2,964 to $3,305 for 8.5 yrs.
2,429 for 7.5 years
$150,000 $170,870 $1,966 $968 $2,897 $1,186 $191,954 $1,966 for 11.9 yrs. $968 $2,897 $186,271 $2,609 for 7.7 years
$160,000 $182,670 $2,102 $1,035 $3,097 $1,268 $206,764 $2,102 for 12.1 yrs. $1,035 $3,097 $201,747
$162,000 $185,029 $2,129 $1,048 $3,137 $1,284 $209,729 $2,129 for 12.1 yrs. $1,048 $3,137 $204,842
$170,000 $194,469 $2,238 $1,102 $3,297 $1,350 $221,598 $2,238 for 12.2 yrs. $1,102 $3,297 $217,222
$180,000 $206,268 $2,374 $1,169 $3,497 $1,432 $236,452 $2,374 for 12.3 yrs. $1,169 $3,497 $232,698
$188,668 $216,495 $2,491 $1,227 $3,670 $1,503 $249,342 $2,491 for 12.4 yrs. $1,227 $3,670 $246,112
Income-Contingent Repayment (ICR) Graduated Income-Based Repayment (IBR) Income-Sensitive
Federal Stafford Loans with 6.8% annual interest
These gures provide a borrower with
estimates of balances and monthly
payment amounts. They are estimates
only, based on federal regulations, and are
subject to change. (Values are rounded
to the nearest dollar.) Please contact your
servicer(s) to discuss your exact balance
and payment amounts. Bolded row of
$150,000 is the median medical school
debt for the class of 2010. Last row
shows maximum Stafford loan limits for
a borrower in a 4-year M.D. program
comprised of four 12-month academic
years. The amount borrowed is spread out
over 4 years in 8 equal disbursements.
All values above are based on the
following assumptions:
Stafford loans (Federal or Direct) with
a fixed interest rate of 6.8% and no
fees. For all loan amounts, $34,000
is subsidized with the remainder
unsubsidized.
Four years of medical school then
a 6-month grace period with the
capitalization of all accrued interest
occurring at the end of the grace period.
Per IBR guidelines, IBR repayment amounts
are based on federal poverty guidelines,
family size, and stipend/salary.
The IBR values above are based on the
Family size of 1 in the 48 contiguous
states.
Monthly payment amounts increase
gradually each year starting at an
estimated $390/month in year one up to
an estimated $500/month in year four
(based on median stipend amounts from
the AAMC Survey of Resident/Fellow
Stipends and Benefits). Actual monthly
IBR amounts will vary depending on
borrower salary/stipend.
After a 4-year residency the borrower
earns a starting salary that causes the
accrued interest to capitalize (a partial
financial hardship no longer exists).
For Income-Sensitive repayment, if
warranted, lenders can offer more than
4 years of interest-only payments which
would extend repayment term beyond 10
years.
The ICR values are based on the
ICR amounts will vary depending on
After a 4-yr. residency, borrowers
starting salary is $170,000 in 2010
dollars.
www.aamc.org/FIRST
28
AAMC Monthly Payment Estimator for Medical School Borrowers
www.aamc.org/FIRST
Medical
School
Grad PLUS
Loan
Amount
Balance at
repayment
10-year
repayment
term
Years 1-4
(Interest
Only)
Years
5-10
25 years Years
1-4
Balance
(after a
4 year
residency)
Payment and years
based on balance
at start of IBR
Years
1-4
(Interest
Only)
Years
5-10
Years
1-4
Balance
(after a
4 year
residency)
Payment and
remaining years
Standard Extended Income-Contingent Repayment (ICR)
Federal Grad PLUS Loans with 8.5% annual interest
Graduated Income-Based Repayment (IBR) Income-Sensitive
1
1
$5,000 $6,045 $73 $40 $106 $46 $7,419 $75 for 12.2 yrs. $40 $106 $7,060 $92 for 8 years
$10,000 $12,090 $146 $80 $211 $93 Pct. of $14,880 $150 for 12.3 yrs. $80 $211 Pct. of $14,195 $182 to $185 for 8.1 yrs.
$15,000 $18,135 $219 $119 $317 $139 $390 to $22,380 $225 for 12.3 yrs. $119 $317 $610 to $21,398 $265 to $278 for 8.2 yrs.
$20,000 $24,180 $292 $159 $423 $185 $500 $29,914 $301 for 12.4 yrs. $159 $423 $780 $28,664 $343 to $372 for 8.3 yrs.
$25,000 $30,226 $365 $199 $528 $231 per $37,479 $376 for 12.5 yrs. $199 $528 per $35,987 $416 to $465 for 8.6 yrs.
$30,000 $36,271 $438 $239 $634 $278 month
1
$45,074 $451 for 12.6 yrs. $239 $634 month
1
$43,362 $486 to $559 for 8.8 yrs.
$38,000 $45,943 $555 $302 $803 $352 $57,281 $571 for 12.7 yrs. $302 $803 $55,262 $590 to $709 for 9.2 yrs.
$50,000 $60,451 $730 $398 $1,057 $463 $75,703 $751 for 12.8 yrs. $398 $1,057 $73,311 $730 to $936 for 10 yrs.
Federal Grad PLUS Loans with 7.9% annual interest
These figures provide borrowers with
estimates of balances and monthly
payment amounts. They are estimates
only, based on federal regulations, and are
subject to change. The amount borrowed
is spread out over 4 years in 8 equal
disbursements.(Values are rounded to the
nearest dollar.)
Grad PLUS loans in the former FFEL
Program have an annual interest rate
of 8.5% which will slightly increase all
balance and monthly payment figures
listed above. For example, the monthly
payment amount for a $10,000 loan with
8.5% annual interest and a standard 10-
year repayment would be $152 compared
to the $146 listed above. Please contact
your servicer(s) to discuss your exact
balance and payment amounts.
NOTE: Because Grad PLUS loans are
unsubsidized, the rows above may be
used as building blocks. For example,
the values for a loan amount of $40,000
would be equal to the values in the
$20,000 row multiplied by two; note
the values in the $20,000 row are twice
the values shown in the $10,000 row.
This is only applicable for the Standard,
Graduated, and Extended repayment
plans.
The IBR values are based on the
Family size of 1 in the 48 contiguous
states.
IBR payments will vary depending on
After a 4-year residency the borrower
earns a starting salary that causes the
accrued interest to capitalize (a partial
financial hardship no longer exists).
The ICR values are based on the
ICR amounts will vary depending on
After a 4-yr. residency, borrowers
starting salary is $190,000.
All values above are based on the
Grad PLUS loans with a fixed interest
rate of 7.9% and no fees.
Four years of medical school then a
6-month post-enrollment deferment
with the capitalization of accrued
interest occurring at the end of the in-
school deferment or, if taken, at the end
of the post-enrollment deferment.
For IBR and ICR, Grad PLUS loans are
in addition to $162,000 of Stafford
loans.
1
During the 4-year residency, under IBR and
ICR the payment is applied proportionately
between Stafford and Grad PLUS loans
(based on the percentage of total owed
for each loan type). For example, if the
IBR payment amount is $400 and the
Grad PLUS balance is 10 percent of the
total owed, 10 percent of the payment (or
$40) would be applied to the Grad PLUS
balance.
www.aamc.org/FIRST
29
Credit
There are 3 items to focus on, during medical school, to improve your credit score:
1) Pay your bills on time
2) Pay down your debt
3) Dont close accounts or open new ones
After 4 years of watching and protecting your credit, its very likely that youll leave school
with a better credit score than when you started.
Your Credit Score: What it is and Why it Matters
A credit score is an indicator of the creditworthiness of an individual. Stated in other words,
it is a numerical value that represents the probability of a person to repay their debt. This
score is an important number because it will directly impact your ability to gain approval (for
loans, insurance, housing, utilities, and more) as well as the rates and deposits that come
after approval has been obtained. In most situations, the better your credit score, the less it
will cost you to borrow.
Read on to nd out how you can get and keep a high credit score during medical school.
How Your Credit Score is Determined
A credit score is the result of a numerical calculation that takes into account the entries on
your credit report. The best known and most commonly used credit score is a FICO
score,
with scores ranging from a low of 300 to a high of 850. Knowing your exact FICO score is
not as important as understanding what it is based on.
A credit score, or FICO score, is based on only 5 specic factors (as determined by Fair Isaac
Corporation) which give no consideration to employment status, income or profession. So,
be aware of these factors, because even once you are an MD earning a nice salary, a good
credit score is not guaranteed.

Nothing in Life is Free, right?
If youre curious to nd out your FICO score, its likely you will either pay a fee or
agree to a nancial obligation (like signing up for a subscription) before youre
able to see that score. Time is better spent on reviewing your credit report at
www.annualcreditreport.com
(where it really is free)!
30
www.aamc.org/FIRST
30
35% Payment History
15% Length of
credit history
10% New credit
10% Types of credit used
30% Amounts owed
Payment History (35%)
This is the largest portion of your score.
Delinquent payments can have a major
impact on scoring, but consistent
payments made on-time will raise a
credit score. TIP: As a medical student,
be proactive against late payments. Set
up automatic withdrawal or schedule
online bill pay services with your bank,
so that a recurring monthly payment is
never late (like credit card payments).

Amount Owed (30%)

The total amount of your credit line that you are currently utilizing will impact your credit
score. The goal is to use less than 30% of your line of credit (add up the maximum credit
line on all of your credit cards and compare it to the total amount owed in order to
determine your utilization rate).
TIP: During medical school, make a focused effort to pay down your credit card debt or at
the minimum, avoid creating/increasing the balance on these cards.
Length of History (15%)

The longer the history, the higher the score, and for this reason, be careful when closing
accounts (like credit cards) as you may lose some of your credit history in the process.
TIP: To avoid having your oldest accounts, like credit cards, closed by the companies they are
with use them periodically.

New Credit (10%)

A high number of inquiries (over 3) inside of 12 months can be negative so limit
the number of times you allow a company to pull your credit
TIP: During medical school, there is no reason to be opening new credit cards. So, when you
are checking out and paying at your favorite store and they ask you if you would like one of
their cards, just say NO.
Types of Credit (10%)
Possessing a variety of credit is optimal. Note, there is a difference between secured
versus unsecured debt and how it weighs into your nal credit score.
TIP: Too much unsecured debt is never a good thing, so be conscious of the number of credit
cards in your wallet. For more information, visit www.myco.com
www.aamc.org/FIRST
31
The Benets of Good Credit
Good credit means you are more likely to get a loan approval. Beyond that, though, there
are additional benets to be enjoyed:
Better loan offers (rates, terms and conditions)
Lower interest rates on credit cards
Faster credit approvals
Increased leasing and rental options
Reduced security deposits
Reduced premiums on auto, home and renters insurance
Being proactive about your credit is the way to begin making smart nancial decisions that
will give you a solid foundation for years to come.
Really?
Did you know that you actually have 3 credit reports? Its true! A separate credit report is
maintained for you by each of the 3 major credit-reporting agencies Equifax, Experian, and
TransUnion. These three reports accomplish the same purpose but may vary depending on
the data included on each. To best protect yourself from mistakes and (more likely) identity
theft, its important to review each of your credit reports annually.

Reality Check: Scrutinize Your Credit Report

It is a good idea to review your credit report at least once a year. In fact, there
is a website and toll-free number through which you can request a copy of
your free report from each of the three major credit bureaus.
To order your free annual credit report, visit www.annualcreditreport.com
or call 877-322-8228.
You are entitled to a free report once a year take advantage of this!

Reality Check: Scrutinize Your Credit Report
Additional information on credit reports and credit scores is available on the FIRST website at:
www.aamc.org/FIRST
33
Budgeting
Having a spending plan is the cornerstone of a solid nancial foundation. All other efforts
for borrowing wisely will be undermined if you dont have a plan of action for managing
your money during medical school. Living on a budget isnt hard to do and your efforts will
be met with a more immediate realization of nancial goals.
Benets of Budgeting
Lets face it. Money will probably be tight during medical school; thats why having a realistic
spending plan is essential for you to most efciently accomplish the following:
Track and control your spending
Identify hidden leaks in your cash ow
Avoid credit card debt
Reduce the total cost of your medical education
Creating a Budget
The most difcult part of developing your spending plan is taking the time to sit down and
actually create it. This intimidating task can seem overwhelming at rst, but it can be done
in a few dedicated minutes using the right templates and guides. To get you started, the
AAMC offers several options to help you create a detailed budget.
Resource Format Name
Financial Literacy 101 Online module Budgeting for Medical School Students
Budget Calculator Online module Budgeting for Medical School Students
Financial Aid Fact Sheet* PDF Budgeting Worksheet
* also available on page 36

All of these resources can be found online at www.aamc.org/FIRST. Use your AAMC login
and password. If you need assistance, contact dhales@aamc.org to request your login and
password. The PDF templates are free to be downloaded. Each of these resources allows you
to document your spending plan (in writing), save these planned expenditures and revisit the
data at a later date to compare your actual spending behavior to your plans.
Once you compare your written budget to your actual spending, make the necessary
adjustments to either your behavior or your budget and repeat this process continually
throughout medical school.

A Spending Plan in 1-2-3
1) Put it in writing
2) Review periodically to
identity leaks
3) Make necessary adjustments

Your Total Income
- Your Total Expenses
= Your Discretionary Income
www.aamc.org/FIRST
34
The Basics of Budgeting
Income. The rst step is to document all of your incoming funds. If you are married,
calculate your spouses income as well. If you receive consistent gifts from family members,
add this into your income. Any monies that are incoming, like your refund checks from
nancial aid, should be included in your income calculations.
Expenses. Secondly, identify all of your monthly expenses, or monies that are outgoing.
There are two types of expenses, with the most obvious being the routine xed amounts like
rent, car payments, insurance, and so forth. Then,
dig a little deeper for those more sporadic variable
expenses that uctuate in amount like eating out,
gas, cell phone, groceries and utilities. Total your
monthly expenses, then subtract that amount from
your income, and what youre left with is your
discretionary income.
Discretionary Income. Once all income and
expenses have been honestly accounted for and
properly subtracted, the remaining number is your bottom line (aka discretionary income).
If youre being completely honest in your planning, you may nd that your discretionary
income is a negative number. If so, simply go back and adjust accordingly until you break
even on your planned spending. (By the way, if you initially end up with a negative number
on your budget - good job! The point of creating a spending plan is to find these overages
and make adjustments in advance.)
On the other hand, if you happen to have a positive bottom line (meaning extra money left
over) consider two things: 1) have you accurately documented all of your expenses and 2) if
so, ask yourself if you could possibly be paying more aggressively towards student loans or
saving more monies for retirement. Typically, during medical school, there wont be a lot of
discretionary income, so when there is, handle it wisely.
Finding Alternatives
Having a budget doesnt mean eliminating all of the joy from your life, rather, it means
keeping many of those good things and nding alternatives only when necessary.
Once your cash ow is visible in black and white on your budget form, it will be easier
to consciously reduce your cost of living. By periodically reviewing your budget for any
imbalances, youll realize that it may only require small adjustments to make a big difference.
Expenses
FIXED VARIABLE
Rent Groceries
Auto payment Entertainment
Health insurance Clothing
Credit cards (debt) Dining out
Taxes
www.aamc.org/FIRST
35
Common alternatives for medical students living on a budget include:
Buying groceries instead of eating out
Brewing your own coffee instead of stopping at the gourmet coffee shop
Choose generic instead of name brand
Opt for free TV instead of Netix, or Netix instead of the Movies, or Matinees instead
of Cable TV
Get a roommate or two
TIP: Choose to live like a student when you are a
student, so you dont have to live like one later.
THE MINIMUM PAYMENT TRAP

$2,000 financed at 19% - paying the minimum
monthly payments results in:
Over 18 years to pay off
Pay more than $5,000
WHAT COULD POSSIBLY BE WORTH PAYING
MORE THAN TWICE ITS ORIGINAL VALUE?
Budget Worksheet
INCOME:
List all sources of income
Salary (after deductions) ______
Spouse salary (after deductions) ______
Investment income ______
Financial aid
(in excess of tuition & fees) ______
Gifts ______
Income tax refunds ______
Other (child support/alimony) ______
Veterans benets ______
Total Income ______
FIXED EXPENSES:
These are monthly or yearly expenses that are
usually unavoidable and typically unchanging in
their amounts. There is no clear-cut distinction
between fixed and variable expenses; it is up to
the individual. You may or may not have all of
these expenses.
Yearly/Monthly
Tuition & fees ______/______
Books & supplies ______/______
Regular savings ______/______
Rent/mortgage ______/______
Utilities* ______/______
Telephone (base rate) ______/______
Taxes (federal, state) ______/______
Vehicle payments ______/______
Other transportation ______/______
Credit card payments ______/______
Personal loans ______/______
Educational loans ______/______
Life insurance ______/______
Health insurance ______/______
Home/renter insurance ______/______
Auto insurance ______/______
Auto registration/taxes ______/______
Professional fees/dues ______/______
Child care ______/______
Other (i.e., alimony) ______/______
Total Fixed Expenses ______/______
VARIABLE OR FLEXIBLE:
After determining your xed expenses, list
variable expenses. When trying to gure out
variable expenses, you will be most successful,
if you write down all of your expenditures for
two weeks. Be as realistic as possible. You will
be surprised to see where your money goes and
how it adds up.
Monthly
Food/household supplies ______
Dining out ______
Clothes ______
Laundry/dry cleaning ______
Gas, oil, auto maintenance ______
Parking ______
Medical/dental/eye care ______
Hobbies/recreation ______
Entertainment ______
Travel/vacation ______
Pets, supplies, food ______
Sports ______
Records & books ______
Child care ______
Heath & beauty aids ______
Haircuts ______
Postage ______
Subscriptions ______
Cable TV ______
Long-distance calls ______
Cell phone ______
Gifts ______
Charity/contributions ______
Savings for interviews/relocation ______
USMLE ______
Other ______
Total Variable Expenses ______
Total Fixed Expenses + ______
Total Monthly Expenses = ______
Total Income ______
Total Expenses ______
Total Discretionary Income ______
www.aamc.org/FIRST
36
* gas, electric, water, sewer, garbage
Association of American Medical Colleges 2011
www.aamc.org/FIRST
37
Financial Literacy
Identity Theft
Identity theft is the fastest growing white collar crime in America.

Source: spendingonlife.com

Protect your identity by checking your credit report, shredding
your personal information, carry only necessary information
with you (43% of identity theft occurs because of stolen
wallets, purses and paper documents), enter your debit card
pin carefully and be smart with your passwords (dont use
them on public computers).
Credit Cards
Credit cards arent bad; there are many positive nancial
aspects of a credit card. These include, among other things,
the ability to use someone elses money for free for thirty days
(depending on the terms of the card). Credit cards can also be
used to improve your credit score, as a tool in tracking your
spending and as a source of rewards for the purchases that
you make. Despite this, what were more familiar with is the
negative side of credit cards. What we hear about repeatedly
is Americans bad relationship with debt, which most often
comes in the form of credit card debt. Credit cards that are
not used responsibly will have a very negative impact on your
nancial well-being.

24% of 2010
medical
graduates
reported leaving
with an average
of $11,000 in
non-education
debt
Currently,
1 out of 10
people are victims
10 million
victims
in 2008 (a 22% increase
from 2007)
Studies show that anyone earning over $70,000
experiences an increased chance of having their
identities stolen. Thus, physicians are
2 xs
more likely to be victims of identity theft.
www.aamc.org/FIRST
38
On average, the current college student leaves their undergraduate program with an estimated
$4,138 in credit card debt (as reported by Sallie Mae, 2009). This amount grows for each
additional year of education the student obtains. For medical school graduates, 24% report
leaving with an average of $11,000 in non-education debt (this includes car, credit card and
residency loans). To prevent this statistic from being a reection of your situation at graduation,
youll want to be a savvy user of credit cards throughout medical school.
Signs You Could be Heading for Trouble
These are tangible signs that youre either headed for troubleor youre already there.
Relying on credit cards to pay for the basics like food and utilities
Responding to offers to transfer balances from one card to another
Increasing your credit line or applying for new credit cards
No cushion in your nancial life for even a small or unplanned expenditure
Making only minimum monthly payments
Ignoring credit card statements
Maxing out all of your credit cards
Fixing the Problem
First and foremost: GET HELP. You dont have to face this alone. Its easy to lose control of
your credit and to let it run away from you, but there are ways to get it back. Depending on
your situation, there may be a variety of solutions.
Talk to the nancial aid ofce. Often, they have dealt with similar situations and will
be able to provide sound guidance.
Go back to the basics, work on a budget; see how you can start paying down your
credit card balances
Call your credit card company(ies) and work out a repayment plan.
If you do work out a repayment plan with your credit card company, make sure to be
clear on the interest rate.
Negotiate! Although its not widely known, often times you can negotiate rates.
If your situation is more complicated, seek the advice of a professional credit counselor.
Take Positive Steps to Get Out of Debt
Remember: Creditors would rather work with you to help you pay off your loans and repair
your credit than have you default. You have options. You dont have to give up, but you do
have to get out of debt.
www.aamc.org/FIRST
39
Other Considerations
Private Loans
The cost of your medical education, plus all living expenses, should be completely covered
by your nancial aid package (consisting of federal and institutional loans). For this reason,
resist the temptation to utilize private loans of any type to supplement your nancial
situation during school.
Typically, private education loans are less favorable than federal debt... including possibly
higher and more volatile rates (that can rise into double digits), no forgiveness programs,
limited postponement options and reduced control over the actual amount of the required
monthly payment.
The discrepancy exists between federal and private student loans because private education
debt is not regulated by the legislation that governs federal loans, therefore, the terms and
conditions of private loans are at the discretion of the lender. In fact, most of the repayment
options discussed in this booklet are applicable only to your federal loans.
Therefore, the borrowing of private loans should be avoided, and if you find
yourself in need of additional funds during medical school, visit your financial aid
office to see what other options may exist.
Federal Direct Loan Consolidation
Federal loan consolidation allows you to combine one or more existing federal student loans
into a single loan. A consolidation loan pays-off the old loans and gives you a single new
loan with new terms, conditions and possibly even a new interest rate. The advantages and
disadvantages of consolidating depend on what loans you include in the consolidation and
when you consolidate.
Advantages
Lower monthly payment
Extend the repayment period
Make a single payment to a single
lender
Fixed interest rate
No prepayment penalty
Repayment plans can be changed
Disadvantages
Longer repayment period
Possible higher interest costs
May lose current borrower benefits
Interest rate is calculated as the weighted
average of the loans in the consolidation,
then rounded up to the nearest 1/8 of a
percent
May negatively impact grace, deferment or
forgiveness options
www.aamc.org/FIRST
40
As a student, consolidation will likely not be an option available to you until after
you separate from school. However, for many medical students leaving school, the
primary reason to consolidate is to simplify the repayment process during residency. This is
especially true in the case when multiple payments are required. Alternatively, in the future,
if you would prefer to avoid consolidation, scheduling automatic payments from your online
checking account will also simplify repayment (and avoid the need to consolidate).
Currently, the only lender offering federal consolidation loans is Direct Loans.
Visit www.loanconsolidation.ed.gov for more details.
Final Note
Dont forget the nancial aid ofce at your institution. They are available to help you and are
keenly aware of issues affecting medical students. This can be a lot to sort through, so take
it one step at a time.
www.aamc.org/FIRST
NOTES
www.aamc.org/FIRST
NOTES
www.aamc.org/FIRST
NOTES
www.aamc.org/FIRST
NOTES NOTES
www.aamc.org/FIRST
46
The Association of American Medical Colleges has a variety
of Financial Information, Resources, Services and Tools for
students and residents concerned with debt management.

Take some time to go through the website
www.aamc.org/FIRST.

Congratulations on your entrance into medical school and
good luck.

AAMCs FIRST for Medical Education team wishes you
great dividends on your investment in knowledge and
encourages you to use this resource in accomplishing
your nancial goals.
2011 AAMC. All rights reserved.
rev. 6/2011

Entrance Education Debt Manager

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Entrance Education Debt Manager

Hochgeladen von

Copyright:

Verfügbare Formate

Association of

American Medical Colleges

Organizer and Calculator 3

Organizer and Calculator

Organizer and Calculator, the more

Organizer and Calculator

Das könnte Ihnen auch gefallen