Paying Off Medical School Loans Part 3: Income-Driven Repayment
For many doctors and residents, income-driven repayment plans can be a great option after medical school, since payments are linked to the ability to pay over time and can lead to potential federal loan forgiveness.
For many med school graduates, Income-Driven repayment (IDR) plans are quite attractive, as their payments are aligned with their ability to pay over time.
In Parts 1 and 2 of our series on paying off your medical school loans, we explored the options of consolidation, forbearance, and forgiveness under the Public Service Loan Forgiveness (PSLF) Program. Now, let’s explore IDR in more depth.
Understanding Income-Driven Payment plans
IDR plans were introduced so borrowers could establish more affordable payments based on their income and family size. The US Department of Education currently offers multiple IDR plans for Federal Direct Loans. Use the table below to compare IDR options:
IDR Comparison Chart
| Applications for SAVE, other IDR plans, and loan consolidation are all temporarily unavailable on studentaid.gov. However, you can still submit a PDF application to your loan servicer by uploading it to your servicer’s website, or mailing it to them. If you apply to SAVE, expect a delay in processing. The Education Department recommends checking its website for updates – there is no processing time estimate available. | |||
| Plan | Monthly Payments | Repayment Period | Status |
| SAVE (formerly REPAYE) |
|
|
Replaced REPAYE |
| Income-Based Repayment (IBR) |
|
20-25 years, depending on when you become a new borrower | Remains available but borrowers cannot select plan after 60 payments on REPAYE that occur on/after July 1, 2024 |
| Income-Contingent Repayment (ICR) |
The lesser of the following:
|
25 years | Not accepting enrollments for current students; only available to future borrowers with consolidated Parent PLUS loans |
| Pay as You Earn (PAYE) |
|
20 years | Not accepting new enrollments |
Challenges to SAVE: Multiple legal challenges made by states to the Saving on A Valuable Education (SAVE) plan could impact implementation of key aspects of the plan. For the most up-to-date developments, visit studentaid.gov.
The monthly payment amount under these IDR plans is calculated by determining your discretionary income. And each plan requires payments equal to specific percentages of your discretionary income for various lengths of time.
Under each of these plans, the balances of your qualifying federal student loans may be forgiven if your loans are not paid off at the end of the repayment period. For many physicians, an IDR plan offers a path to student loan forgiveness and some also offer interest subsidies.
IDR plans are generally more affordable during residency. However, if your salary rises considerably after residency and fellowship, expect your monthly payment amounts to increase proportionally.
The most up-to-date information on IDR plans can be found at https://studentaid.gov/manage-loans/repayment/plans/income-driven and https://studentaid.gov/manage-loans/repayment/plans/income-driven/questions.
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