Module Number 6 0 Calculated IDR Payments during

Why $0 payments? • Helps with cash flow as you start residency • You might need $0 payments to help pay consumer debts and private loans • $0 calculated payments on income plans count towards PSLF*, assuming other requirements met * Public Service Loan Forgiveness

IDR payment calculation • Formula looks at income and family size* • Income used in calculation – Prior year income from tax return, or – Current income if either a) no return filed in either of past two years or b) current income has significantly decreased from last reported income * Formula includes comparison to families living in poverty in your state

How to get a $0 payment* 1. File a return for the 2019 year, even if income was $0 – Formula looks at prior year AGI 2. If you did not file a return in either of prior two years, consolidate right after school but before residency – Answer current income question that you are not currently working * Payment calculation determined by your loan servicer

Why consolidation • You cannot waive grace period and apply early for income plan • When you apply for IDR in late summer or early fall (toward end of grace), you are making a stipend, and if you didn’t file a return for either of prior two years, loan servicer will likely use current income for calculation – You submit paystubs, loan servicer likely uses * You should NOT need to consolidate for $0 payment if you filed a return

The solution • Federal consolidation loans do not have grace periods, they enter repayment immediately • You apply for repayment when you consolidate, all done online • Consolidate after school but before residency starts and you can honestly say you have no current income when asked such on the income application* * Income Driven Repayment Plan Request Form

How to get a $0 payment* 1. Easiest way is to file a return for the 2019 year, even if income was $0 – Formula looks at prior year AGI 2. But if you did not file a return in either of prior two years, consolidate right after school but before residency starts – Answer current income question that you are not currently working * Payment calculation determined by your loan servicer

Reminders • $0 calculated payments on income plans count towards PSLF, assuming other requirements met • $0 payments do nothing to help pay down your debt • Payments on income plans are good for 12 months • This is different than forbearance

Reminders • Servicers determine repayment amount • Married borrowers may not see $0 payments, depends on spousal income • $0 means ZERO (no payment required) • $0 does nothing to help pay down debt