Climbing Mt. Debt - Veterinary Interns and Residents
STUDENT LOAN REPAYMENT FOR VETERINARY INTERNSHIPS AND RESIDENCIES
Conventional wisdom and reflex in the medical training community often says to defer your loans while pursuing internships and/or residencies. However, income-driven repayment (IDR) is often a much better option for veterinarians with federal student debt pursuing advanced education.
Income-driven repayment (IDR) calculates your monthly payment using your taxable income. After making payments for a specified number of years (20 or 25 depending on the plan), your remaining balance can be forgiven, triggering a tax on the amount forgiven. IDR can also lead to Public Service Loan Forgiveness (PSLF) which is a non-taxable benefit with specific requirements, including making payments to your federal Direct loans using an IDR plan while working for a qualifying organization for at least 10 years. The most beneficial IDR plans include Pay as you Earn (PAYE), Revised Pay as you Earn (REPAYE), or Income-Based Repayment (IBR).
If you need help understanding your loan types, go to studentaid.gov, download your federal student aid data file, and upload your file to the VIN Foundation My Student Loans tool. This tool will organize your student loans by type and loan servicer, and you can see your potential IDR plans with the “Income-Driven Repayment Eligibility” function.
Choosing the right student loan repayment strategy for your situation can save you a ton of time, money, and stress — a concept VIN Foundation calls Repay Wiser.
CLIMBING MT. DEBT - VETERINARY INTERNS AND RESIDENTS WEBINAR RECORDING
Avoid deferment/forbearance during your internship and/or residency
- Interest accrues on all unsubsidized federal loans during the deferment/forbearance period.
- After your deferment/forbearance, all accrued interest capitalizes, meaning it gets added to your principal.
- Adding interest to your principal increases future interest accrual.
- More interest means higher costs during repayment, regardless of your repayment plan.
Using PAYE, REPAYE, or IBR for internships and/or residencies:
IDR payments are calculated at either 10% or 15% of your discretionary income, depending on the plan. The more beneficial options, like PAYE and REPAYE, use the lower percentage.
On average, veterinary interns and residents earn $30,000-$40,000 per year. This means using a plan like PAYE or REPAYE, your loan payment would be $90-$174/month. If you follow the New Veterinary Graduate Student Loan Playbook, you can achieve a $0/mo payment for at least the first 12 months, if not the first 24 months, of your advanced education. These zero dollar monthly “payments” still count towards IDR forgiveness and PSLF depending on your employment type.
Interest still accrues while using IDR. However, when your income increases, your unpaid interest will not capitalize. Preventing your interest from being added to your principal can save you tens of thousands of dollars during the course of repayment.
CAUTION: If you are enrolled in school at least half-time during an academic internship/fellowship/residency, your school will automatically report your status to the Department of Education. This will result in an automatic loan status change to “deferment.” You may be able to prevent this automatic status change by providing oral and written notice to your loan servicer(s) to waive your in-school deferment and remain in repayment. Do this before starting your academic position and have dated documentation of your request (ie certified mail).
MORE INTERNSHIP AND RESIDENCY STUDENT LOAN REPAYMENT TIPS
Using the Repay Wiser strategies veterinarians pursuing advanced education with student loans can set themselves up for debt repayment success:
There are two ways to access the In-School Loan Estimator:
Repay Wiser is part of the VIN Foundation Student Debt Center three part series of helping veterinary colleagues throughout their student loan path. It starts with pre-veterinary students learning how to Apply Smarter to veterinary school, continues for veterinary school students as they learn how to Borrow Better while in school, with the final (and longest) journey along the path helping veterinarians Repay Wiser.
As always the VIN Foundation welcomes questions and feedback on all of the tools and initiatives available.
The helpful three-part student loan series Apply Smarter, Borrow Better and Repay Wiser is part of the VIN Foundation Student Debt Center. The VIN Foundation Student Debt Center is a mobile-friendly comprehensive resource helping veterinary students, veterinarians, and those who support them manage student debt through school and beyond. Explore the VIN Foundation Student Debt Center.