Money Meets Medicine Podcast

Everything You Need to Know About Student Loans as a Doctor in 2023

You may have already heard about President Biden’s student loan forgiveness plans, but what does that mean for you?

Physician Disability Insurance

We’re covering those qualifiers today, plus identifying three 2023 dates in particular that really matter for those managing student loan debt. Join us as we walk through those three important dates, what they mean, as well as the potential impact. 

Plus: find out how to make sure you don’t get stuck with a surprise 4-figure loan payment.

It’s everything you need to know about student loans as a doctor in 2023.

Full disclaimer: this episode was recorded in advance. Please know any of this information could change at any time, but all information is true and correct to the best of our knowledge as of the time we shared it with you. 

Everything you need to know about student loans: important 2023 dates

There are three important dates coming up this summer that you’ll want to be aware of if you think you might qualify for President Biden’s student loan forgiveness plan. 

The first important date for your student loan forgiveness calendar is June 30th.

President Biden originally announced his loan forgiveness plan earlier this year. The terms were $10,000 in student loans for single earners making under $125,000 annually and up to $20,000 for single earners making under $125,000 who also went to undergraduate school on a Pell grant. 

After being met with lawsuits, the case went to the Supreme Court for their ruling. They’re set to decide whether the President of the United States has the legal right to forgive student loan debt via executive order. June 30th is the first date we can expect to hear from the court on their decision in this matter.

If the court hasn’t made their ruling by June 30th, then President Biden and the Department of Education will work together to prepare those with student loan debt to repay their loans.

Which leads us to the second important date, which is around September 1st. If the court still hasn’t ruled within 60 days of their June 30th deadline, then on or around September 1st is when the three-year loan payment pause will end, and payments will become due again.

July 1st is the third important date to know about. Per this White House memo, the Department of Education, with their longstanding authority over public service loan forgiveness (PSLF), is making definite changes to the PSLF landscape. July 1st is when those changes will start to take effect, so make sure to stay in the loop about any changes that could affect your repayment status or terms.

Two changes we know of for sure:

  1. The definition of full-time is now 30 hours per week. 
  2. Some non-employee 1099 contractors will be covered by PSLF.

We want you to know about these dates and changes so you can stay informed and continue making educated decisions about your personal finances. So keep these in mind and check out the White House memo we linked to get up-to-date on what changes might apply to you.

How to prevent four-figure monthly payments on your student loans

We know there are physicians who have never enrolled in an income-driven repayment (IDR) program because they haven’t had to – payments have been on pause for so long.

As these future dates on the calendar become present, payment pauses will end. You’ll need to have a plan for how you’re going to pay back your student loans. And t​he default program that you’ll get put into if you don’t select an IDR is the standard repayment program. 

To calculate what you owe in the standard repayment program, they do the math to figure out how much you’d have to pay every month to pay off the balance in 10 years, similar to a car loan. Except the student loan payment is often a four-figure number. It could be one, two, $3,000 a month.

If you’re in training and you forgot to enroll in an IDR, and you’re making $3,000 a month post-tax, then get a bill for $3,000…you can imagine why that would be a problem.

What are the next steps to make sure that doesn’t happen?

Consider consolidating your loans

We all know in the medical world the new year happens at the end of June, early July, maybe early August for some folks starting fellowship. During this time of transition, consider consolidating your loans. 

Why might that be helpful? Because when you went to medical school, you took out a student loan for each semester in which you were in medical school. It’s not like you have one medical school loan – usually it’s that you had eight medical school loans for the eight semesters of medical school, or 12 if you went to medical school during the summers. Then you’re stuck managing 12 different loans at 12 different interest rates and 12 different amounts…

That can be a lot to keep track of. 

 So if you’re relying on PSLF and that is your game plan, you might want to consider consolidating your loans and combining them into one giant loan. One, because it’s just easier to manage. But two, because if you consolidate your loans, you’re able to waive the grace period and start your PSLF payment clock immediately.

Your default plan in training should be public service loan forgiveness. However, if you’re in training and you are not 100% certain that you’re pursuing PSLF, do not refinance. Refinancing is a catastrophic financial mistake we’ve seen far too many people make. Once you refinance, your bridge is burned and there’s no going back. 

Sign up for an IDR plan

As we already mentioned, IDR stands for income driven repayment, and they’re the types of repayment plans offered by the Department of Education that make your student loan payments more affordable.

IDR plans are based on your income instead of based on your total student loan balance, which is really beneficial for physicians and trainees who don’t make a lot of money, but have a lot of debt. 

Not sure if you’re enrolled, or what you’re enrolled in? Visit the MOHELA website and you’ll be able to find out how much money you owe and they’ll also tell you about your IDR plan.

If you haven’t changed plans in two or three years, you’ll still be enrolled in whatever you selected a few years ago. If you never selected anything, likely you’ll be in the default standard repayment plan, in which case you need to change it. 

How do you change it? You can sign up directly with MOHELA or visit studentaid.gov for one of those IDR plans. 

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