Career and Life Planning Guidebook for Medical Residents

Difference Between Income-Based Repayment & Pay-As-You-Earn Repayment Plans The most common program is the Income-Based Repayment (IBR) plan. The second most-common program is the Pay-As-You-Earn Repayment (PAYE) plan. IBR and PAYE both accomplish the same goal: minimizing your student debt payments while you’re in residency/fellowship, and then allowing you to pay back your student loans at a higher rate once you are making more dough. Requirements Note that IBR and PAYE both require a “partial financial hardship.” This is different than a 10-year Standard Repayment Plan that you would automatically get forced into. Don’t worry- you should be fine! Not to confuse you, but if you are a resident and have a spouse with a similar income ($50k to $60k), you won’t have any problems being considered to have a “partial financial hardship.” $30,000 below the current loan amount; and I assumed that the loans carry an interest rate of 6.8%. While you would likely qualify for IBR while in residency, the calculator on the website doesn’t allow me to calculate the payment at a $200,000 income level - $150,000 loan amount for IBR. However, we could safely assume that the payment should be $2,216/month, given the example below, because the monthly payment fluctuates with changes in compensation, but not with the loan amount. Commitment The commitment for IBR will be a monthly payment of 15%of discretionary in- come, whereas under PAYE the commitment will be only 10% of discretionary income. Note that discretionary income is defined quite specifically: it is your income minus whatever income meets poverty guidelines as established by the U.S. government. Compensation Loan Amt IBR PAYE $150,000 $150,000 $1,591/mo. $1,061/mo. $150,000 $250,000 $1,591/mo. $1,061/mo. $200,000 $150,000 *Does not qualify $1,478/mo. $200,000 $250,000 $2,216/mo. $1,478/mo. SECTION III: T MINUS ONE YEAR CAREER AND LIFE PLANNING GUIDEBOOK FOR MEDICAL RESIDENTS 372