Managing Student Loans During Residency

by | | Debt

Student loans

Managing student loans during residency is often overlooked, but it has a huge impact on your financial future!

This article assumes the following:

  • You have federal loans.
  • You’re early in residency. For now, you’re managing your existing loans as they are. When you lock in your first attending position, you’ll have more information to make longer-term decisions about refinancing or pursuing forgiveness.


You have two main options for managing student loans during residency:

  • Going into forbearance. Many residents choose this because they feel they can’t afford to pay anything.
  • Entering repayment status. We recommend this route! Your payment can be low or even $0, and you give yourself more options.


Going into forbearance means you request relief from making payments. Forbearance doesn’t hurt your credit, but you don’t make progress on your loans either.

Interest accrues during forbearance. You can pay interest as you go, or have it added to your loan balance at the end.

Depending on your loan balance, the interest can be significant:

Starting Debt

Annual Interest (6%)

After 3-Year Residency









$590K (!)

Notably, forbearance is not the same as default. Default means you keep your head in the sand and do nothing. Default is terrible for your credit, so avoid it at all costs! If you’re in default, you still have options.

Repayment status

Going into repayment status just means you choose a repayment plan. Your payment may be low or even $0, depending on the plan you choose!

There are many repayment plans to choose from (eight as of this writing).

Standard Plan

The most basic plan, the Standard Plan, gives you a fixed payment for 10 years.

The payment under the Standard Plan is too high as a resident if you have significant student debt.  For example, with $250K in debt at 6%, the monthly payment would be $2,776!

Plans with lower payments

Affordability is key on a resident’s salary. Other plans offer lower payments in one of two ways:

  • Letting you pay over more than 10 years.
  • Basing your payment on your income (referred to as “income-driven plans“).


Rule #1

Enter repayment status during residency instead of going into forbearance. Any amount you pay is progress. Your payment could be very low or even $0 under an income-driven plan.

Rule #2

If you’re considering forbearance, estimate your payment under an income-driven plan first, and make absolutely sure you can’t afford it.

Don’t go into forbearance unless both these conditions are true:

  • Your income-driven payment is greater than $0.
  • You can’t afford this amount because you need to pay down high-interest credit card debt.

Rule #3

Choose an income-driven plan, for two reasons:

  • Your payment should be affordable, if you keep your other living expenses low enough.
  • Any payment under an income-driven plan (even $0) counts toward future forgiveness. You may or may not pursue forgiveness once you’re an attending, but keep your options open.

To explore the best strategy for your student loans, schedule a FREE Financial Pulse Assessment™. This is a 3-step process to get clarity on your finances and “test drive” our services.

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