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Vocab:
Subsidized While student is in school, loan has no payments and it does NOT accrue
interest
Unsubsidized While student is in school, loan has no required payments but does
accrue interest.
Consolidation Combines separate federal loans into one lump sum with a new interest
rate that is a weighted average of the previous rates
Capitalization Interest that has accrued is added to the principal
Deferment Instead of repaying the loan after med school, a student may apply to have
the interest waived, as if it were a subsidized loan.
Forbearance Instead of repayment, loans have no required payments but they do accrue
interest. No application necessary, student simply notifies lender
Loans:
Perkins Loans1 5% interest rate; available to students with exceptional financial need
Primary Care Loans (PCL)2 subsidized; 5% interest rate;
Interest starts accruing one year after one stops being a full-time student
Must complete residency in primary care specialty within 4 years
Must practice primary care for 10 years OR until loan is paid back
If the contract is broken, student must pay back loan at 7% interest
Not eligible for consolidation
Direct Unsubsidized Stafford Loans3 unsubsidized; 6.21% interest rate (subject to
change based on state of economy)
6-month grace period after med school or drop below half-time enrollment
Interest not capitalized until repayment begins or deferment/forbearance ends4
1 https://studentaid.ed.gov/types/loans/perkins

2 http://www.hrsa.gov/loanscholarships/loans/primarycare.html

3 http://www.staffordloan.com/stafford-loan-info/unsubsidized-student-loan.php

4 http://www.studentloannetwork.com/tips/financial-aid/federal-student-loan-interestcapitalization/

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DirectPLUS Loans5 7.21% interest rate (subject to change based on state of economy)
Repayment begins immediately after disbursement + a 6-month grace period
6-month deferment after dropping below half-time enrollment

Repayment Options:
Loan Consolidation Only possible after leaving medical school
Combines existing federal loans into one new lump sum with a new interest rate
Has no grace periods
National Health Service Corps (NHSC) Loan Repayment Program6
Physicians must practice primary care at an NHSC-approved site
Depending on length of commitment and Health Professional Shortage Area
(HPSA) score, physicians may receive up to $50,000 in loan repayment
Must apply for program
Students to Service Loan Repayment Program7
In final year of medical school, students commit to 3 years full-time or 6 years
part-time of primary care for up to $120,000
Must be an NHSC-approved site in an HPSA
Must apply for program
State Loan Repayment Program (SLRP)8
Only available in certain states
Similar to other NHSC programs, but each state has its own rules for eligibility
and disbursement

5 https://studentaid.ed.gov/types/loans/plus

6 http://nhsc.hrsa.gov/loanrepayment/nhscloanrepayment/index.html

7 http://nhsc.hrsa.gov/loanrepayment/studentstoserviceprogram/index.html

8 http://nhsc.hrsa.gov/loanrepayment/stateloanrepaymentprogram/index.html

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e.g. Georgias Physicians for Rural Areas Assistance Program9
-Must practice in rural GA county with 35,000 population
-Provides up to $25,000/year for 4 years
Public Service Loan Forgiveness (PSLF)10
Must work full-time for federal, state or local government or a 501(c)(3)
Must make 120 scheduled payments on time with an acceptable payment plan
If requirements are met, Direct federal loans will be forgiven
Payment Plans:
Standard Repayment Equal amount distributed usually over 10 years
Highest monthly payment, but lower interest cost
Extended Repayment Extends repayment term up to 25 years
Lower monthly payment, but higher interest cost
Graduated Repayment Low payments for two years, then increases to finish repayment
in 10 years
Income-Contingent Repayment (ICR) Monthly payment based on current income
Any balance remaining after 25 years is forgiven
Eligible to be combined with PSLF
Income-Based Repayment (IBR)
Monthly payment capped at 15% of discretionary income
Any balance remaining after 25 years is forgiven
Eligible to be combined with PSLF
Pay As You Earn (PAYE)
Monthly payment capped at 10% of discretionary income
Amount of unpaid interest that will capitalize is limited to 10% of original
principal. Additional interest will accrue, but not capitalize.
Any balance remaining after 20 years is forgiven
Eligible to be combined with PSLF

9 http://gbpw.georgia.gov/loan-repayment-programs

10 https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service