The Office of Financial Aid is here to assist students and residents with understanding their finances and accessing financial resources during all phases of their medical education. For residents and fellows, this includes loan forgiveness and loan repayment programs.
According to the AAMC, more than 80% of 2014 medical school graduates borrowed student loans, and the median debt was $180,000 (October 2014, AAMC Education Debt Fact Card https://www.aamc.org/download/152968/data/debtfactcard.pdf). It is important to understand loan repayment options, select an appropriate plan, and balance student loan repayment with other financial goals and obligations.
In addition to providing the basic information below, the director of Financial Aid is available to meet with residents and fellows.
Neither Western Michigan University Homer Stryker M.D. School of Medicine nor its employees provide financial guidance or tax advice to residents and fellows, their parents, or any other taxpayer in any of our offices or on our website. Any examples, illustrations, or Frequently Asked Questions (FAQs) regarding tax questions are intended to be illustrative in nature only and cannot be construed as tax advice or relied on for the purpose of avoiding penalties under the Internal Revenue Code. Students and other taxpayers should seek guidance on all tax-related questions from a qualified tax professional who can evaluate specific circumstances when providing tax advice.
Deirdre Moore, Director of Financial Aid
Office of Student and Resident Affairs
The office is located in the Student and Resident Affairs suite on the second floor of the W.E. Upjohn Medical School building. Residents are encouraged to email, call, or stop by the office with any questions or concerns.
Federal Loan Repayment Options
There are several repayment plans available to help manage repayment of student loans. Depending on the plan, the repayment period can be extended, or the monthly payment can be established according to household income. Payments made under income-driven plans may qualify for Federal Public Service Loan Forgiveness PSLF) explained below.
Federal Subsidized, Unsubsidized, PLUS, and Consolidation loans borrowed prior to July 1, 2010 may have been under the Federal Family Education Loan Program (FFELP) or the Federal Direct Loan Program (FDLP). Since July 1, 2010, these loans have been made under the Federal Direct Loan Program only.
Some repayment and loan forgiveness plans apply only to Direct Loans. Borrowers with FFELP loans who wish to qualify for a Direct Loan repayment or forgiveness plan may choose to consolidate those loans into a Federal Direct Consolidation Loan. The benefits must be weighed against the higher cost of repayment a consolidation loan.
Repayment Options Include:
- Standard: Up to 10 years to repay. Fixed monthly payments. This plan is available for FFELP and FDLP loans.
- Graduated Repayment: Up to 10 years to repay. Fixed monthly payments that start lower and then are increased every 2 years. This plan is available for FFELP and FDLP loans.
- Extended Repayment: Up to 25 years to repay. Monthly payments can be fixed or graduated. This plan is available for FFELP and FDLP loans.
- Income-Based Repayment (IBR): Up to 25 years to repay. Maximum monthly payments calculated at 15 percent of discretionary income. Discretionary income is the difference between adjusted gross income and 150 percent of the poverty guideline for family size and state of residence (other conditions apply). This plan is available for FFELP and FDLP borrowers but excludes Parent PLUS Loans. Remaining balance after 25 years of repayment may be eligible for forgiveness. Amount forgiven may be subject to income tax.
- Pay as You Earn (PAYE) Repayment: Up to 20 years to repay. Maximum monthly payments calculated at 10 percent of discretionary income. Discretionary income is the difference between adjusted gross income and 150 percent of the poverty guideline for family size and state of residence (other conditions apply). This plan is available for FDLP loans including FDLP Consolidation Loans. Remaining balance after 20 years of repayment may be eligible for forgiveness. Amount forgiven may be subject to income tax.
- Income Contingent Repayment: Up to 25 years to repay. Payments are calculated annually based on adjusted gross income, family size, and total amount of Direct Loans. This plan is available for FDLP loans including FDLP Consolidation Loans. Remaining balance after 25 years of repayment may be eligible for forgiveness. Amount forgiven may be subject to income tax.
- Income Sensitive Repayment: Up to 10 years. Payments are calculated annually based on adjusted gross income. This plan is available for FFELP loans. Payment calculation is set by individual lender.
Loan Repayment and Forgiveness Programs
The AAMC maintains a searchable database of state and federal loan repayment/forgiveness and scholarship programs.
Federal Public Service Loan Forgiveness (PSLF)
The remaining balance on qualifying Federal Direct Loans may be forgiven for borrowers employed in certain public service jobs who have made 120 payments on those loans (after October 1, 2007). The loans must not be in default to be eligible for forgiveness.
- Loans must be received under the Federal Direct Loan Program. Federal loans not received under the Federal Direct Loan Program may be consolidated to qualify.
- Payments must be made while employed full time in public service.
- Payments must be made on time under a qualifying repayment plan (an income-driven plan, the standard plan, or any plan where the minimum monthly payment is at least the amount of the standard plan).
Employment Tracking for PSLF
There is currently one federal loan servicer, FedLoan Servicing, that tracks public service employment for PSLF eligibility. The Employment Certification Form can be dowloaded from the FedLoan Servicing website at http://www.myfedloan.org/manage-account/loan-forgiveness-discharge-programs/loan-forgiveness.shtml.
Michigan State Loan Repayment Program (MSLRP):
Application period begins January 1
You can apply to the MSLRP in your final year of residency once you have an employment agreement to start work no later than October 1. The application period runs January - April.
You must be a U.S. citizen to participate. You will find more information on eligibility requirements, selection criteria, application forms and instructions on how to apply at www.michigan.gov/mslrp. (You will complete Provider Applications A & B, and your employer will complete the Practice Site Application.) All application forms must be mailed together in a single envelope.
The program expects to receive state funding for the 2015 application period that would reduce the employer contribution requirement from 50 percent to 20 percent. You must discuss the contribution requirement with your employer before applying to the program.
The MSLRP requires providers to work at HPSA-eligible practice sites, but does not consider HPSA scores when awarding loan repayment contracts. Go to http://www.michigan.gov/mdch/0,4612,7-132-2945_40012-342417--,00.html for a list of job search resources, including a link to the federal website identifying practice sites in HPSAs eligible for loan repayment. The website provides each practice site's HPSA score to assist in determining the likelihood of an NHSC loan repayment contract.
National Health Service Corps (NHSC) Loan Repayment Program
Application period begins in January
Information about the NHSC loan repayment program can be found at: www.nhsc.hrsa.gov. The NHSC does not require an employer contribution but targets practice sites with higher HPSA scores denoting more severe provider shortages.
Applying to both MSLRP and NHSC Loan Repayment Programs?
Applications can be submitted to both the NHSC and MSLRP, but participation can be in only one program at a time. If applying for both programs, MSLRP may send a contract offer first. Applicants must be ready to accept or decline the MSLRP contract when it is offered.
Veterans Affairs Education Debt Repayment and Loan Forgiveness
Opportunities exist for loan repayment and forgiveness for health care providers who are employed by the U.S. Department of Veterans Affiars.
- AAMC resources for residents: https://www.aamc.org/services/first/first_for_residents/
- Fact Sheets that provide clear and concise information on topics such as repayment options, borrowing residency/relocation loans, tips for transitioning to residency, and many more, designed specifically for residents.
- Practical information on budgeting, money management, credit, debt management, and other helpful topics through a partnership with ASA/SALT online financial tools.
- Medloans® Organizer and Calculator which enables residents to download or enter student loan information, compare repayment plan options, and calculate potential federal loan forgiveness.
- Federal Student Loan Forgiveness https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service
- Federal Student Loan Repayment https://studentaid.ed.gov/repay-loans/understand/plans#direct-and-ffel
- Fedloan Servicing (to start tracking Public Service Loan Forgiveness) http://www.myfedloan.org/manage-account/loan-forgiveness-discharge-programs/index.shtml