Loan Repayment Options

With medical school behind you, you’re certainly due for congratulations. But that’s not all that’s due – loan payback time is just around the corner – either beginning now or when residency is over. Fortunately, when it’s time to repay, you have flexibility in structuring your repayment schedule by choosing the plan that works best for you.

Refer to the Repayment Plans Compared chart for a side by side comparison of highlights of each plan and to determine which repayment plan is best for you.  For comprehensive details about each plan, visit the federal student aid website.

Standard Repayment

  • Fixed monthly payment with possibly the lowest interest-cost plan
  • 10-year repayment term (longer if consolidated)
  • Default plan if no other plan is chosen

Extended Repayment

  • Reduced payments stretched over a longer term (without consolidating)
  • 25-year repayment term; to be eligible, must owe more than $30,000
  • May be more costly because of lengthened term and total interest paid

Graduated Repayment

  • Initially smaller payments that increase after two-years
  • 10-year repayment term (longer if consolidated)
  • May result in higher costs compared to the Standard plan

Income-Contingent Repayment (ICR)

  • Lower monthly payments with capitalization limited to 10% of the original amount owed*
  • Payments based on the lesser of either 20% of monthly discretionary income or a 12-year payment plan times a percentage factor (based on income)
  • Up to 25-year term and then remaining balance forgiven; need to re-apply each year

Income-Based Repayment (IBR)

For new borrowers on or after July 1, 2014

  • Lower monthly payment based on family size and Adjusted Gross Income (AGI)
  • Payment "caps" at 10% of your discretionary income
  • Up to 20-year term and then remaining balance forgiven (but taxable)
  • Partial Financial Hardship (PFH) needed to qualify
  • Income and family size verification required annually

For those who are not new borrowers on or after July 1, 2014

  • Lower monthly payment based on family size and AGI
  • Payment "caps" at 15% of your discretionary income
  • Up to 25-year term and then remaining balance forgiven (but taxable)
  • Partial Financial Hardship (PFH) needed to qualify
  • Income and family size verification required annually

Pay As You Earn Repayment (PAYE)

  • Possibly one of the lowest monthly payments
  • Capitalized interest cannot exceed 10% of original amount owed*
  • Payment "caps" at 10% of your discretionary income (based on family size and AGI)
  • Up to 20-year term and then remaining balance forgiven (but taxable)
  • Partial Financial Hardship (PFH) needed to qualify
  • Must be a new borrower on or after 10/1/2007, and have a Direct Loan disbursement on or after 10/1/2011

Revised Pay As You Earn Repayment (REPAYE)

  • Possibly one of the lowest monthly payments during residency
  • When monthly payment doesn’t cover interest, you are responsible for only 50% of the interest
  • Monthly payment is always based on your AGI and family size
  • Up to 25-year term (for graduate/professional borrowers) and then remaining balance forgiven (but taxable)
  • No income requirements

* When borrower entered repayment

About Your Options

Select a plan that provides a manageable payment amount, but keep in mind that lower payments aren’t always better. The longer it takes you to repay your loan, the more interest you could pay over the life of the loan. Therefore, you should aim for a repayment schedule that allows you to meet all of your financial needs and goals. If your financial situation changes, you can change your repayment plan by contacting your servicer(s). For an example of what your monthly payment might look like, review the charts within the Education Debt Manager and run repayment estimates with the MedLoans® Organizer and Calculator.

When Do You Start Repaying?

About a month or two before your first payment is due, you’ll receive a notice from your loan servicer(s). This notification will tell you the due date of your first payment, the payment amount, current information about interest rates, and your total outstanding balance. Be sure your loan servicer(s) have your accurate contact information because whether you receive a statement or not, the servicer of your loans requires that your payments be received on time each month. It is recommended that you set up an online account with your servicer(s) so that you can better manage your loans. See the Next Steps guideline to make sure you take timely action regarding repayment of your student loans.

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MedLoans® Organizer and Calculator (MLOC)

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The MedLoans® Organizer and Calculator was developed to assist medical students and residents with managing their education debt.

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