A Unique Approach to Student Loans
- adeadistrict2
- Jan 12, 2021
- 2 min read
As a second-year dental student, I began to realize there was only two years separating myself from entering the real world, with thousands of dollars of debt on the other side of this rainbow. Every year, dental students across the nation utilize massive loans in an attempt to afford their education and living expenses. These loans can be quite perplexing as different interest rates, origination fees, and other factors are all associated with different types of loans. Due to the magnitude and future implications of these loans, it is important to understand how quickly these loans could multiply, digging one into an uncontrollable ditch if not assessed carefully. Although there is no sugar coating the massive sum dental school has become, there are some beneficial repayment options that should be looked at depending on the student’s situation. One very beneficial strategy that is can be looked at 4th year is to consolidate your loans, and apply for REPAYE. This is an income-based plan that allows you to pay 10% of your income, depending upon your prior years tax returns. In this case, upon residency your effective income would be $0 due to the fact that it accounts for your tax return during your fourth year of school, resulting in a required payment of $0. If your income is greater than or equal to 150% under the poverty line ($12,760 for one person in 2020), then your payments would be $0. It is also advantageous to stay with REPAYE during your first year of occupancy following residency. Due to your lower income as a resident, your payments would be minimal. Another benefit of REPAYE is that if your minimum payment does not cover 100% of the accruing interest, you accrue only 50% of the remaining interest after your minimum payment. This strategy is typically only utilized for two years, followed by loan consolidation to a private, lower interest, loan company. Every situation differs, but it is important to remember that there are a variety of options, and a plethora of resources at your fingertips when assessing your own debt.
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This post was contributed by Michael Casab, Director of Finance at ADEA COSRF District 2 and student at University at Buffalo School of Dental Medicine ('23).
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