Question:
Dear Steve,
I have a student loan that exceeds 240K. I accrued that loan by going to medical school, unfortunately I have not been able to pass my boards and as a result I have not been able to apply for residency. In the meantime, I am having to work and study and with my current salary and family needs; my loans have been deferred ever since I graduated in 2013.
What can I do to get out of the debt completely? And be forgiven?
Will deferring my loan and eventually increasing my debt, affect me when buying a house?
Will my house be taken away from me?
David
Answer:
Dear David,
I sure wish situations like this didn’t happen. But they do. A while back I wrote about the struggles facings foreign medical students who graduated, passed their boards, and can’t get into a residency program.
The big issue with student loans is when you have the debt but not the degree.
For all you federal student loans you’ve got the option at this time to drop them into a Direct Loan and consolidate them. Select an income driven repayment option and your payment will be based on your current income. You will need to recertify each year. I’m sure after you pass and your income rises your payment will rise as well.
For your private student loans, which I’m confident you have some, there is no help available outside of any allowance the private lender makes. This is most often a forbearance or deferment which just inflates the balance you owe and makes the situation worse. You wind up owing more money you still can’t afford.
For forgiveness of your federal student loans, the quickest way would be to get on that consolidated income driven repayment program and then work in a field that would qualify for the Public Service Loan Forgiveness program. This is something you can get going on now before you pass your boards. And if you get a residency at a 501(c)(3) non-profit hospital your time there as an employee should count as well.
The issue here with buying a house has more to do with what your overall debt to income ratio will wind up being when you go to purchase. And who knows what your income will be at that time.
The best way out of this debt and to have a better future will be to deal with your federal loans, pass your boards and get into a residency, and make the minimum private student loan payments.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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