Most people have exclusively federal loans.
Immediate Aside: If you do have any private loans, they are ineligible for the magical IDR repayment plans and other possible forgiveness mumbo-jumbo that make up a big portion of this book. The best thing you can do with private loans is to make sure you have the lowest rate possible for the shortest term you can afford and then pay them off. There are a few options for private refinancing available to residents (the general merit or lack thereof discussed in the chapter on private refinance) and many more options available to attendings (due to their substantially superior income). If a company can offer you a better rate than the private loans you have currently, then refinance. Refinancing is a no-cost proposition and need not be avoided when it makes sense. For private loans, it’s usually a no-brainer. Refinance now, and if rates drop significantly, refinance again.
Get your student debt snapshot:
Visit https://www.nslds.ed.gov and see how much you owe (this will show every cent you’ve borrowed from the feds and how much you currently owe on it). You’ll also see who the servicers are for each loan if you have more than one.
If you have any private loans, you’ll have to find those separately (if you can’t keep track of them, they’re on your credit report). You can also see your federal loans using the MedLoans calculator by logging into your AAMC account (which still works as a resident, in case you were curious), though the assumptions it uses to illustrate your options are inappropriate for anyone who is doing some serious planning. It’ll give you a rough idea of what you’ll be paying over the long term if you were to choose a repayment plan and stick with it forever.
NSLDS also gives you several more important bits of information:
What kind of loan?
If the lender is the US Department of Education, it’s a DIRECT loan and is eligible for all the IDR repayment plans. If you have some really old loans, they may have a different lender and won’t be eligible for all the same plans.
Status: Deferment, In-school, Forbearance, Grace, Repayment
Also included are the current loan balance including principal and accrued interest, disbursement date, interest rate, servicer, etc.
Create your virtual consolidation
So now you have all of your loans laid out, each with their own interest rate. There may be times you want to have the granular data (particularly if you have a mix of federal and private loans), but if you haven’t consolidated your loans, you’ll likely want to create a “virtual” consolidation loan with a weighted average interest rate to in order to evaluate your options.
To do this:
Add up all the loan balances including accrued interest. This is your new principal balance in the event of a capitalization event such as the end of your grace period or consolidating.
Multiply each loan’s interest rate by its loan amount divided by your total loan amount. Add up all the weighted rates, and that’s your weighted average.
(Note: this is exactly what happens when you do a federal direct consolidation loan.)
- Loan 1: $50,000 at 6.8%
- Loan 2: $55,000 at 6.4%
- Loan 3: $60,000 at 6%
- Loan 4: $62,000 at 5.8%
Weighted Rate: .068 x 50/227 + .064 x 55/227 + .06 x 60/227 + .058 x 62/227 = .062
So, we’re looking at $227,000 at an average interest rate of 6.2%.
There are free online calculators to do this simple math for you, like this one: https://www.doctoredmoney.org/student-debt/weighted-average-interest-rate-calculator
After this step, you now have the big (scary) numbers. Next, we’ll discuss how federal loans work and what you can do about them.
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Next: How Federal Loans Work