Repayment Strategies UCSD School of Medicine Class of 2013 Paul S. Garrard Founder and President, PGPresents, LLC Independent Student Loan Consulting 2013 PGPresents, LLC - All Rights Reserved

Common Sense Approach Know what you borrowed, who has your loans, and when they come due Identify and constantly review your repayment objectives Consider repayment options during residency, fellowship, and practice Talk with your colleagues

Your portfolio Federal Stafford Loans* (6.8%) Federal Grad PLUS Loans* (7.9%) Campus-Based Loans – Federal Perkins*, University Loan (from UCSD), Primary Care Loan Federal Consolidation Loans* Private Loans * These loans are reflected on NSLDS at

NSLDS National Student Loan Data System Cumulative total of Stafford, Grad PLUS, Consolidation, Perkins Loans Direct Loans will be indicated* Information on lenders and servicers Updated regularly, but not real time * Only Direct Loans are eligible for Public Service Loan Forgiveness

Repayment objectives Protect income, maximize cash flow Minimize adverse impact of interest accrual and capitalization Pursue help through service commitment or forgiveness programs Convenience of one loan provider

When loans come due Loan servicers notify borrowers days prior to loans entering repayment Two options at repayment 1.Postpone payments 2.Choose a repayment plan and start actively repaying your loans

Postponement Deferment* or Forbearance Credit protected under both Mandatory Internship Residency Forbearance available throughout residency, regardless of length Graduate Fellowship Deferment Different rules on private loans** * Preferable due to interest-free status ** May have a fee to postpone payment

Repayment options* Standard (Level) Graduated Income-driven** – Income Based Repayment (IBR) – Pay As You Earn Extended * Stafford, Grad PLUS, Federal Consolidation ** Income Sensitive, Income Contingent, Income Based, Pay As You Earn

IBR and Pay As You Earn Repayment plan for highly indebted borrowers with low to moderate incomes who cannot afford other plans Must apply annually* Expect payment to change each year Stafford, Grad PLUS, Federal Consolidation** Loans only * You must demonstrate what is called “Partial Financial Hardship” ** Consolidation may not include Parent PLUS; Paye As You Earn only available on Direct Loans

IBR and PAYE: What we know Eligibility determined by: – Eligible federal debt – Income (AGI) – Family size Subsequent payment determined by: – Income (AGI) – Family size * NOTE: “PAYE” is not an official acronym for Pay As You Earn

Pros and cons Advantages – More manageable payments – Helps with PSLF* eligibility – May help build credit Disadvantages – Minimal dent in debt – Must renew annually – Married borrowers may feel pinch * Public Service Loan Forgiveness

What happens post PFH Payments automatically revert to Standard 10 year* Options at that point include: 1.Pay until balance paid in full 2.Pay Standard until PSLF eligible 3.Switch to another plan to extend repayment term** * What you would have paid had you entered Standard 10 year when loans came due ** Public Service Loan Forgiveness goes “off the table” at that point

PSLF* program Designed to encourage public service work by forgiving a portion of borrower’s balance after certain conditions met All eligible borrowers, any discipline, any specialty Borrowers must meet requirements * Public Service Loan Forgiveness

PSLF eligibility* Three things must happen at the same time in order to qualify: 1.Make eligible payments (like IBR Pay As You Earn, Standard 10) … 2.On eligible loans (only Direct Loans qualify), while … 3.Working in eligible employment * See for more details ** Includes non-profits, which includes many teaching hospitalswww.studentaid.ed.gov/publicservice

PSLF: What we know You don’t apply now, you take steps to preserve option of using program later if your career takes you into public service Decisions about PSLF likely made towards end of residency or fellowship

PSLF: What we know Currently an “entitlement” program Recent enhancements including Employment Certification Form FedLoan Servicing is designated loan servicer for PSLF Changes in loan programs tend to be for first time borrowers

Consolidation Paying off or “refinancing” multiple loans with one new loan Debt management tool often chosen prior to entering repayment Direct Consolidation Loan program only option for federal loans Pros and cons

Advantages Convenience of one loan provider Converts non-Direct Loans into Direct Loan balance, increasing potential forgiveness amount under PSLF* program May extend repayment term * Public Service Loan Forgiveness

Disadvantages Partially negates aggressive repayment Usually slightly higher rate Process may be lengthy and cumbersome Loss of Grace periods and interest subsidy if consolidate too soon

Should you consolidate? Probably a candidate when you – have multiple loan servicers – have non-Direct Loans and you are interested in PSLF* Probably not a candidate when you – have one loan servicer, and – have no interest in PSLF or are interested in PSLF but have no non- Direct Loans * Public Service Loan Forgiveness

Your TO DO items Do inventory of borrowing Run estimated repayment under different options – Don’t assume you need income-driven plans – Run 10 year Standard and estimate when you will no longer show PFH* Sign up for Debt Management Listserv Keep loan servicers in the loop * Partial Financial Hardship (when you no longer qualify for the lower IBR or Pay As You Earn payments)