Resideny loan grace period: how important?

[cooldown]

I took a year between MS2 AND MS 3. I could start paying the loans now and get ride of the 6 month grace period when i graudate MS 4, ...or I could enroll and save my 6 months grace period (at a cost of $1000 vs $1500 for making payments now).

in short, did you guys think it was nice to have that 6 month payment mandatory- free grace period or it's not a big deal either way? Likely I wil income base so my payments will be $300/month so i can manage that for a month until the the residency check comes in...hopefully

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[differentiating]

It depends on whether you’re planning on doing pslf or not. I skipped mine to start my qualifying payments sooner, and since I filed taxes MS4, my income-based payments this year are 0/month.

 

[cooldown]

I am planning to do pslf...seems like a great idea. The only issue is that i hear the program is't so good anymore
@differentiating

 

[differentiating]

I am planning to do pslf...seems like a great idea. The only issue is that i hear the program is't so good anymore
@differentiating

From what I’ve heard and from conversations with my med school’s financial advisor, a lot of the people who had issues with pslf had the wrong type of loans, the wrong repayment plan, or hadn’t made the right number of payments. I don’t plan on making more than IBR payments in residency, so i figure it doesn’t really matter either way - aside from starting my 10 years sooner rather than later.

 

[swoopyswoop]

Yea, I received some stupid advice to consolidate towards the end of the grace period to take advantage of it - all I did was miss out on 6 months of $0 payments. Your payments should be $0/month for about a year, then $150/month, then finally $300 per month because your annual income will be 0, then half a residents salary (only paid from july-apr), then a full salary.

 

[cooldown]

thanks a lot.
what did u get to consolidate?

The issue is that i would like to pay it off asap, but find that interest compounding and capitalizing isn't as imp as putitng away money in tax-sheltered accounts

 

[swoopyswoop]

I don't understand your question about what I got to consolidate. I consolidated so they would all be under one servicer (FedLoans). I'm in a long training program so I am going for minimum payments and hoping that PSLF lasts.

 

[cooldown]

I don't understand your question about what I got to consolidate. I consolidated so they would all be under one servicer (FedLoans). I'm in a long training program so I am going for minimum payments and hoping that PSLF lasts.

Sorry, I meant what types of different loans did you consolidate? and I guess once you consolidate, you miss out on the grace period b.c it's a new loan once you consolidate? something like that

 

[swoopyswoop]

Yea, once you consolidate your grace period ends (but it takes a while for the consolidation to go through). I don't remember the different types of loans.

 

[differentiating]

I consolidated my loans as well, even though they were all stafford unsub, because consolidating is one of the only ways to skip the grace period. Before banking on pslf, definitely make sure you have the correct loans & servicer.

 

[cooldown]

I consolidated my loans as well, even though they were all stafford unsub, because consolidating is one of the only ways to skip the grace period. Before banking on pslf, definitely make sure you have the correct loans & servicer.

Why did you want to skip the grace period? You are pursuing an aggressive strategy to pay off?

 

[differentiating]

Why did you want to skip the grace period? You are pursuing an aggressive strategy to pay off?

As I said before - I’m doing pslf, so I wanted to start my 10 years sooner rather than later. My payments are 0/month, so it seemed like a no-brainer option.

 

[Sardonix]

From what I’ve heard and from conversations with my med school’s financial advisor, a lot of the people who had issues with pslf had the wrong type of loans, the wrong repayment plan, or hadn’t made the right number of payments. I don’t plan on making more than IBR payments in residency, so i figure it doesn’t really matter either way - aside from starting my 10 years sooner rather than later.

Just wanted to say that I have friends and family who are going through the PSLF process. Unfortunately, a significant part of it is gross incompetence and what could easily be interpreted as malicious bureaucratic changes. People can have the right kind of loans, the right number of payments, and the right payment plan but they'll randomly be told to go pound sand. Or worse, their loan managing company will buy/sell their debt then change something without telling anyone. Or they'll straight up say something like, "Hey, you've been making all these payments for 7 years. We just wanted to let you know we don't count those anymore. Because sucks to suck. Bye."

Not saying you're wrong, but it's a personal mini-campaign of mine to correct the notion that it's been the students' fault that PSLF is so terrible right now. 99% of applicants being rejected doesn't happen by accident.

 

[cooldown]

As I said before - I’m doing pslf, so I wanted to start my 10 years sooner rather than later. My payments are 0/month, so it seemed like a no-brainer option.

i see but $0/payment doesn't count as one of the 120 qualifying payment or does it?

 

[cooldown]

Just wanted to say that I have friends and family who are going through the PSLF process. Unfortunately, a significant part of it is gross incompetence and what could easily be interpreted as malicious bureaucratic changes. People can have the right kind of loans, the right number of payments, and the right payment plan but they'll randomly be told to go pound sand. Or worse, their loan managing company will buy/sell their debt then change something without telling anyone. Or they'll straight up say something like, "Hey, you've been making all these payments for 7 years. We just wanted to let you know we don't count those anymore. Because sucks to suck. Bye."

Not saying you're wrong, but it's a personal mini-campaign of mine to correct the notion that it's been the students' fault that PSLF is so terrible right now. 99% of applicants being rejected doesn't happen by accident.

there was piece in the paper about it (NPR?)

 

[Sardonix]

there was piece in the paper about it (NPR?)

Several, actually. And for good reason:

'I Am Heartbroken': Your Letters About Public Service Loan Forgiveness

NPR reported on the troubled Public Service Loan Forgiveness program, and dozens of aggrieved student borrowers wrote in to share their stories.

www.npr.org

 

[dpmd]

Several, actually. And for good reason:

'I Am Heartbroken': Your Letters About Public Service Loan Forgiveness

NPR reported on the troubled Public Service Loan Forgiveness program, and dozens of aggrieved student borrowers wrote in to share their stories.

www.npr.org

Well, the letters in the last link demonstrate how people think they qualify when they clearly do not fit the criteria, aside from the one who had a "misapplied" payment though I wonder if that was because the payment was made incorrectly by the person (like the time i sent a payment to one of two credit cards I have with the same bank but it wasn't the one that I meant to pay, though I immediately figured it out when I got a late charge and my bank fixed it for me because they were nice) and that is what led to the payment being applied "wrong".

 

[dpmd]

Unless by gross incompetence you meant on the part of the person trying to get a program they didn't meet the requirements on.

 

[differentiating]

Just wanted to say that I have friends and family who are going through the PSLF process. Unfortunately, a significant part of it is gross incompetence and what could easily be interpreted as malicious bureaucratic changes. People can have the right kind of loans, the right number of payments, and the right payment plan but they'll randomly be told to go pound sand. Or worse, their loan managing company will buy/sell their debt then change something without telling anyone. Or they'll straight up say something like, "Hey, you've been making all these payments for 7 years. We just wanted to let you know we don't count those anymore. Because sucks to suck. Bye."

Not saying you're wrong, but it's a personal mini-campaign of mine to correct the notion that it's been the students' fault that PSLF is so terrible right now. 99% of applicants being rejected doesn't happen by accident.

I’m just going off of news reports of the vast majority of applicants having made errors and what I’ve been told by financial advisors. I have no personal opinion. And I wouldn’t blame students even if they’ve been getting things wrong- it’s needlessly complicated.

i see but $0/payment doesn't count as one of the 120 qualifying payment or does it?

Of course it counts. If you’re making payments while employed by a qualified employer, they count; I haven’t heard of any stipulations about a minimum dollar value per payment from any of the resources I’ve consulted.

 

[Sardonix]

Well, the letters in the last link demonstrate how people think they qualify when they clearly do not fit the criteria, aside from the one who had a "misapplied" payment though I wonder if that was because the payment was made incorrectly by the person (like the time i sent a payment to one of two credit cards I have with the same bank but it wasn't the one that I meant to pay, though I immediately figured it out when I got a late charge and my bank fixed it for me because they were nice) and that is what led to the payment being applied "wrong".

I did not say that the entire problem (you know, the one where 99% of all applicants are denied) is due to shady practices/policies. But I did say a significant part of it is. The situation you describe, where a simple inconvenience is quickly fixed, is what SHOULD have happened. But one cannot do that if they make payments for X number of years and no one bothers to tell them there was a problem to begin with.

Or perhaps they were just misled from the beginning.

I will defer to the article I posted where the largest teachers union in the US is suing the Dept of Education for gross incompetence:

The American Federation of Teachers filed the lawsuit Thursday in federal court. In the complaint obtained by NPR, the union is asking the court to order the department to fix the Public Service Loan Forgiveness program so that it meets legal standards. It's also asking the department to come up with an appeals process for people who believe they have been treated unfairly."

...

There are different kinds of federal loans and a wide array of payment plans. If a student loan borrower is told they need to switch from one type to the other to qualify for the program, that's easy enough to do. For public service loan forgiveness, borrowers need to have a "direct federal loan." But if their loan servicer never tells them that, they can remain in the wrong type of loan or plan for years, thinking they're making progress toward loan forgiveness only to find out later that none of those payments counted towards forgiveness.

The teachers union lawsuit alleges that the Department of Education "knows of — but completely disregards — repeated misrepresentations made by [student loan] servicers to borrowers who are attempting to qualify ... resulting in unwarranted denials of loan forgiveness. In other words, people like Baker aren't given the right information or advice, and many end up in the wrong types of loans or repayment plans and get unfairly disqualified. Government reports and investigations have found similar problems with borrowers getting bad information.

The lawsuit also alleges that loan servicers are having trouble keeping track of the number of qualifying payments people make — even when they are in the correct loan and payment plan and manage to do everything right.

...

But Menzel says that after 10 years of making payments, she was told by her loan servicer that she was in the wrong type of payment plan and couldn't qualify. If a call center worker had told her that 10 years before, she easily could have switched into the right kind of loan. But she says nobody ever told her. And so that never happened. She remembers after contacting her loan servicer repeatedly, trying to find a way to appeal, a call center worker told her, "Look, you just need to give up."

Etcetera.

I would also argue any system that fails to help 99% of the people it's specifically meant to help is fundamentally flawed. Imagine if 99% of people failed Step 1. Would you really be arguing that it was just the test takers that failed to prepare, or perhaps there was a problem with the system leading up to test day...

 

[dpmd]

I did not say that the entire problem (you know, the one where 99% of all applicants are denied) is due to shady practices/policies. But I did say a significant part of it is.

I will defer to the article I posted where the largest teachers union is suing the Dept of Education for gross incompetence:



Etcetera.

I would also argue any system that fails to help 99% of the people it's specifically meant to help is fundamentally flawed. Imagine if 99% of people failed Step 1. Would you really be arguing that it was just the test takers that failed to prepare, or perhaps there was a problem with the system leading up to test day...

Depends on if you believe that it was supposed to actually help people or if it was just supposed to make people think they might get helped in the meantime encouraging them to pay on time while having the smallest financial hit to the government possible.

 

[Sardonix]

Depends on if you believe that it was supposed to actually help people or if it was just supposed to make people think they might get helped in the meantime encouraging them to pay on time while having the smallest financial hit to the government possible.

That's quite a leap in logic given your previous post implied it was the applicants screwing up the whole time.

 

[dpmd]

That's quite a leap in logic given your previous post implied it was the applicants screwing up the whole time.

That the program is designed to be difficult to qualify for does not excuse people being so clueless about the rules that are right there in black and white.

 

[Sardonix]

That the program is designed to be difficult to qualify for does not excuse people being so clueless about the rules that are right there in black and white.

I've posted several links at this point contradicting your insistence that 10,000s of people are all too clueless to be treated fairly here. Despite that, here's one more for the road:

In December 2016, it was reported that some employees who had been previously told by the government that their jobs were eligible for the program were later told that their jobs were not eligible.[14] In response, the American Bar Association joined four individual plaintiffs who were denied eligibility under PSLF in a lawsuit against the United States Department of Education to stop the Department’s decision to retroactively refuse to honor loan forgiveness commitments it made to individuals who "have dedicated their careers to public service."[15] The ABA argued the Department of Education "substantially changed its policy on PSLF-eligible employers" which directly contradicts statutory procedures for modifying regulations requiring public notice and comment periods.[16] On February 22, 2019, a New York federal district court found The Department of Education's actions "arbitrary and capricious." The Court found: “In adopting the new standards, the Department failed to display awareness of its changed position, provide a reasoned analysis for that decision and take into account the serious reliance interests affected.”[17] The Court vacated The Department's denial letters and remanded the matters to The Department of Education for reconsideration.[18] Such ruling could lay the groundwork for borrowers who were denied loan forgiveness after being told they were eligible to appeal.[17] The court classified the department's position as "nonsense". The Department elected not to appeal the ruling.[19]

 

[dpmd]

I've posted several links at this point contradicting your insistence that 10,000s of people are all too clueless to be treated fairly here. Despite that, here's one more for the road:

Every single story I have read complaining about it has been majority people failed to file the right form, failed to have an eligible loan, failed to make enough on time payments, or failed to have the right repayment plan. Then a sprinkling of cases less clear like this last one where they don't work for a government agency or a 501(c)(3) but are trying to qualify as a not for profit providing designated services. As I read it now I don't see how the ABA qualifies (Public interest law refers to legal services provided by an organization that is funded in whole or in part by a local, state, federal, or tribal government). Did it used to say something different, perhaps. But the employment certification form tells you that you have to qualify when you make the payments as well as when you apply.

 

[Sardonix]

Every single story I have read complaining about it has been majority people failed to file the right form, failed to have an eligible loan, failed to make enough on time payments, or failed to have the right repayment plan. Then a sprinkling of cases less clear like this last one where they don't work for a government agency or a 501(c)(3) but are trying to qualify as a not for profit providing designated services. As I read it now I don't see how the ABA qualifies (Public interest law refers to legal services provided by an organization that is funded in whole or in part by a local, state, federal, or tribal government). Did it used to say something different, perhaps. But the employment certification form tells you that you have to qualify when you make the payments as well as when you apply.

Sounds like we're reading entirely different articles then. Guess we'll have to agree to disagree. Cheers.