I’m an intern resident with federal student loans—help!

When it comes to student loan repayment and forbearance, intern residents usually fall into one of the three categories outlined below. For more information on the difference between SAVE forbearance (Administrative Forbearance) and Processing Forbearance, visit our recent blog post here.

1. If you only have medical school loans and matched directly into residency

• Your loans are still in their 6-month grace period through November
• You will soon be prompted to enroll in a repayment plan or will be expected to make payments on a Standard 10-year plan which is usually unaffordable on a PGY Salary
• You will likely look to enroll in the Income-Based Repayment (IBR) Plan which keeps payments affordable in training and counts towards Public Service Loan Forgiveness (PSLF) if you are in an eligible program

2. If you consolidated your loans and tried to enroll in the savings on a valuable education (SAVE) plan

• You did this for one of two reasons – you had loans ineligible for PSLF (non-Direct Loans) or wanted to break the 6-month grace period and start marking qualifying payments towards the 120 needed to satisfy PSLF.
• The consolidation may have gone through completely or partially. This has provided lots of angst for interns, but may or may not be signficant.
  • If you have Federal Family Education Loans (FFEL), Perkins Loans, or particular Loans for Disadvantaged Students (LDS), you will need to ask your servicer to continue the full consolidation to ensure these become Direct Loans eligible for PSLF
  • If you only have Direct Loans and consolidated only for PSLF purposes, the partial consolidation is not a worry. The consolidation process will likely not be completed by year-end, so breaking the 6-month grace period would be a moot point.
• You can now apply online for the IBR plan online, but the loan servicers have communicated that they have yet to begin processing the applications. Furthermore, many enrollees are not seeing the pending application when they log back on.
  • Enrollees have been instructed to call and confirm the application was received and request they be put into a Processing Forbearance.
  • This allows interest to start accruing, but will credit up to 60 days towards PSLF while they work to begin processing the IBR application.
  • This PSLF credit is a silver lining for interns who consolidated prior to the loan repayment world being upended by the SAVE plan being paused on 7/18/24. This was a forward-thinking step to get PSLF credit as early as possible and has since led to much more confusion and being “left in the waiting room” while colleagues have been “cruising in the grace period”.
  • The hope is that November and December will count towards PSLF which is not too different from more senior colleagues whose consolidation application took multiple months in previous years.

3. You have undergrad loans, entered the workforce, and broke the grace period on those loans, then returned to medical school and matched directly into residency.

• If you consolidated your loans, see Section 2 above.
• If you did not consolidate your loans, that means you have medical school loans in a grace period and undergrad loans in either the SAVE forbearance or another repayment plan.
  • If your undergrad loans are in the SAVE forbearance, many are being instructed to wait this out until the grace period ends for medical school, then apply for IBR when this ends later this year.
  • If your undergrad loans are in Pay As You Earn (PAYE), it is unclear if they are allowing your medical school loans to similarly be enrolled in this plan. You may be allowed to enroll everything in PAYE or be forced to enroll these new loans in IBR after the grace period.
  • If your undergrad loans are in IBR, you will simply enroll the medical school loans in the same plan when the forbearance ends.

Many reading this may be interns who did not match directly into residency and completed a post-doc or transitional year. This means your grace period ended last year and you are either in the SAVE forbearance or another plan like PGY2’s. Like all other residents, you need to decide whether to continue in the SAVE forbearance or apply for IBR as outlined above.

To schedule a no-obligation, introductory conversation with our Financial Advisor specializing in Student Loan Guidance, Kyle Flynn, CSLP, use this link here. Kyle provides financial planning services with a focus on your current financial position and debt management.