If you used Direct Federal Loans to help pay for your medical schooling, there is a 6 month grace period after the day of graduation. Some choose not to use this grace period because (1) they are considering the Public Service Loan Forgiveness program or (2) they are avoiding interest charges on specific federal loans that accrue interest during this period.

When making a plan to start repayment, it’s necessary to take an inventory of the types of loans you have – both federal or private. To see your federal loans, you can check the National Student Loan Debt System. To see all outstanding loans – both federal and private, you can check your credit report. Remember that Parent PLUS loans are listed under the parent’s name, not the student.

9 Repayment Methods

For federal loans, the government offers 9 different repayment methods that fall into three categories:

FIXED PAYMENT

• STANDARD TEN-YEAR REPAYMENT
• EXTENDED REPAYMENT PLAN

VARIABLE PAYMENT

• GRADUATED REPAYMENT 
• EXTENDED GRADUATED REPAYMENT PLAN 

INCOME DRIVEN PAYMENT (IDR)

• INCOME-BASED REPAYMENT (IBR) 
• PAY AS YOU EARN (PAYE) 
• REVISED PAY AS YOU EARN (REPAYE)
• NEW IBR 
• INCOME-CONTINGENT REPAYMENT (ICR) 
• INCOME SENSITIVE REPAYMENT 

Exploring these options will allow you to find the optimal repayment method for your needs.

Refinancing Loans

Once you are graduated and earning an income, you may also be in a position to refinance your loan. When you refinance, your new lender pays off your existing student loan and issues you a new, private student loan. This is an opportunity for a lower overall interest rate.

It is often thought that federal loans have the lowest interest rates, which is not necessarily true. The federal government offers the same interest rate to all borrowers, regardless of credit history or income. Private lenders, on the other hand, consider a number of criteria when setting an interest rate, such as: 

• strong monthly cash flow
• healthy credit
• demonstrated financial responsibility
• current employment or job offer
• an accredited degree. 

When you initially entered school, it is likely that you did not meet all of these criteria. Thus, a private lender would have offered you an interest rate higher than the federal rate. However, as a graduate, you may meet these criteria and be eligible for a lower overall interest rate.

It is possible to combine federal and private student loans when refinancing, and even combine previously consolidated federal student loans with private loans. However, it is important to remember that when you refinance federal student loans, you will lose most flexible student loan repayment plans and certain protections offered by the federal government. When a lower interest rate or better overall terms are your biggest priority, refinancing is for you.

If refinancing seems like a good option, the process is quite easy:

1. Apply: applications are all online and you can receive an interest rate within minutes.
2. Choose your loan: select a fixed or variable interest rate. Choose your loan term and how fast you want to pay it off.
3. Submit documentation online
   1. Government issued ID (Driver’s license or passport)
   2. Transcripts or diploma to verify your degree
   3. Payoff statements from your current lender
   4. Monthly rent amount or mortgage payments
   5. Two most recent pay stubs or tax returns (or offer letter for employment)
4. Lender will review your application
5. Approved!
6. Review disclosures and sign loan documentation
7. Your loan is dispersed!

After graduating, the first thing on your mind might be paying back your loans. It is important to remember that there are two types of loans: federal and private. Repayment begins at different times depending on which type of loan and when it was awarded, which can be confusing.

For Direct Federal Loans, there is a 6 month grace period after the day of graduation. Some choose not to use this grace period because (1) they are considering the Public Service Loan Forgiveness program or (2) they are avoiding interest charges on specific federal loans that accrue interest during this period.

When making a plan to start repayment, it’s necessary to take an inventory of the types of loans you have – both federal or private. To see your federal loans, you can check the National Student Loan Debt System. To see all outstanding loans – both federal and private, you can check your credit report. Remember that Parent PLUS loans are listed under the parent’s name, not the student.

9 Repayment Methods

For federal loans, the government offers 9 different repayment methods that fall into three categories:

FIXED PAYMENT

• STANDARD TEN-YEAR REPAYMENT
• EXTENDED REPAYMENT PLAN

VARIABLE PAYMENT

• GRADUATED REPAYMENT
• EXTENDED GRADUATED REPAYMENT PLAN

INCOME DRIVEN PAYMENT (IDR)

• INCOME-BASED REPAYMENT (IBR)
• PAY AS YOU EARN (PAYE)
• REVISED PAY AS YOU EARN (REPAYE)
• NEW IBR
• INCOME-CONTINGENT REPAYMENT (ICR)
• INCOME SENSITIVE REPAYMENT

Exploring these options will allow you to find the optimal repayment method for your needs.

Refinancing Loans

Once you are graduated and earning an income, you may also be in a position to refinance your loan. When you refinance, your new lender pays off your existing student loan and issues you a new, private student loan. This is an opportunity for a lower overall interest rate.

It is often thought that federal loans have the lowest interest rates, which is not necessarily true. The federal government offers the same interest rate to all borrowers, regardless of credit history or income. Private lenders, on the other hand, consider a number of criteria when setting an interest rate, such as:

• strong monthly cash flow
• healthy credit
• demonstrated financial responsibility
• current employment or job offer
• an accredited degree.

When you initially entered school, it is likely that you did not meet all of these criteria. Thus, a private lender would have offered you an interest rate higher than the federal rate. However, as a graduate, you may meet these criteria and be eligible for a lower overall interest rate.

It is possible to combine federal and private student loans when refinancing, and even combine previously consolidated federal student loans with private loans. However, it is important to remember that when you refinance federal student loans, you will lose most flexible student loan repayment plans and certain protections offered by the federal government. When a lower interest rate or better overall terms are your biggest priority, refinancing is for you.

If refinancing seems like a good option, the process is quite easy:

1. Apply: applications are all online and you can receive an interest rate within minutes.
2. Choose your loan: select a fixed or variable interest rate. Choose your loan term and how fast you want to pay it off.
3. Submit documentation online
   1. Government issued ID (Driver’s license or passport)
   2. Transcripts or diploma to verify your degree
   3. Payoff statements from your current lender
   4. Monthly rent amount or mortgage payments
   5. Two most recent pay stubs or tax returns (or offer letter for employment)
4. Lender will review your application
5. Approved!
6. Review disclosures and sign loan documentation
7. Your loan is dispersed!

The timeline for law education and training is much longer than other professions. Obtaining a law degree usually takes seven years of full-time study after graduating from high school, which includes four years of undergraduate study, and three years of law school. During their studies, law students complete coursework that touches upon constitutional law, property law, civil procedure, contracts, and writing legal documents. Upon completion of an accredited law program, graduates qualify to practice law after successfully passing the licensure examination for law, which is referred to as a state’s written bar examination.

In addition to providing a wide-ranging career field, the legal profession is considered one of the most lucrative industries in the current job market, where associates in the largest law firms in the United States start with a salary of $150,000 to $180,000, and partners in notable law firms earn average salaries in excess of $1.2 million. According to the BLS, lawyers earned a median salary of $113,530 in 2012, and received the highest average incomes when working for industries such as: Management of Companies and Enterprises ($164,270); Securities and Commodities Exchanges ($188,430); and Offices of Physicians ($235,020). Because of this, specializing in a particular field and returning to school to receive an educational background related to a specific area of law (like immigration law, civil rights law, environmental law, or intellectual property law) qualifies professionals to pursue a greater range of employment opportunities.

The BLS projects the number of job openings for lawyers to grow 4 percent from 2019 to 2029, which is as fast as average.

These factors actually make income share agreements with law students a different and safer prospect from the investor perspective when compared to those for undergraduate studies and even other graduate programs. 

However, it is important to note that new graduates face strong competition for these positions as the number of law school graduates is higher than positions available at law firms. And, the variation of income levels for attorneys in different industries means the percentage of income required to be “shared” with investors will vary significantly. So, it’s important to consider what industry you may end up in.

In a similar fashion to college and trade-school ISAs, a law school ISA would define upper and lower wage boundaries and the lawyer would only share their income when within these boundaries. Considering the high starting salaries, it would be uncommon for the graduate to be under a low wage boundary which could reasonably be set around $100,000. However, if they became unemployed for any reason, they would be insulated from having to pay. The upper boundary would be much more specific to the lawyer’s specialty, but could soundly be set at around 150 percent of the average annual income for each specialty.

These factors could make law school ISAs a possible method for students to achieve an education that would have been otherwise financially unattainable, while also giving investors a reliable ROI. 

The timeline for business graduate education is longer than simply completing a bachelor’s. A full-time MBA program typically lasts two years, though there are many accelerated full-time MBA programs that only last a single year, especially at non-U.S. business schools, where this fast-paced type of MBA is common. Part-time and executive MBA programs vary in length, depending on how many credits a student enrolls in each academic semester or quarter. Both executive and part-time MBA programs are designed for working professionals who are attending school while maintaining a full-time job.

MBA programs generally offer a range of concentrations or specializations that allow students to acquire expertise in a specific aspect of business, such as finance or technology. So, when modeling business school ISAs, it is important to consider which specialties are most likely to increase your job opportunities. MBA graduates with in-demand specializations are paid higher wages than their peers who focus on less-marketable disciplines.

Starting salaries and bonuses vary greatly among MBA graduates, with alumni of highly ranked business schools in the U.S. earning notably more than their peers who graduated from lower-ranked schools. Among the highest ranked business graduate schools (per U.S. News) where the average salary and bonus were highest, the overall average compensation was $166,999. By contrast, at the 10 ranked business graduate schools where the average salary and bonus were lowest, the overall average compensation was $53,464.

Data shows that pay among MBA grads depends on which sector they enter. Those who work in the consulting sector are paid an average salary exceeding $130,600, while those who work at a nonprofit typically earn less. The average newly minted MBA who works at a nonprofit earns slightly more than $57,500.

In a similar fashion to college and trade-school ISAs, a business school ISA would define upper and lower wage boundaries and the graduate would only share their income when within these boundaries. Because of the variation in projected incomes, the lower boundary would prevent recent graduates from having to share their income if they end up in lower paying positions or become unemployed for any reason. The upper boundary would be much more specific to the graduate’s industry, but could soundly be set at around 150 percent of the average annual income for each specialty.

These factors could make business school ISAs a possible method for students to achieve an education that would have been otherwise financially unattainable, while also giving investors a reliable ROI. 

If you are planning to take out student loans without a cosigner, here are the important steps you should take to find the best options for you. The first and most important thing to do is apply for federal student loans, as these do not require a cosigner and do not involve a credit check during the application process. 

Although federal student loans are an excellent starting point for funding your education without a cosigner, there is a limit to the amount you can borrow. Because of this, many students utilize private student loans to help bridge the gap. 

If you are looking for student loans and don’t have someone to cosign, follow these steps to make sure you complete all the necessary actions to assure that you can fund your education. 

1. Capitalize on all your federal student loan options. Remember, Federal student loans do not require a cosigner and will not ask for credit history as part of the application process. They also come with a variety of benefits that private student loans do not offer, such as low interest rates, flexible repayment plans and loan forgiveness. To apply for federal student loans, the first thing to do is complete the Free Application for Federal Student Aid (FAFSA). This helps you access potential grants and work-study options, as well as present you with various federal loan options. By filling out the form accurately, you may be offered Direct unsubsidized or subsidized loans, which tend to have favorable interest rates to private loans, and the possibility of a Parent PLUS loan for additional lending if a borrowing cap is reached. 
2. Consider all your cosigner options. The odds that you will be approved for private student loans increase dramatically when you have a cosigner. Because of this, it is important to think about all your cosigner options to give yourself the best chance for approval. To be a cosigner, someone will need to provide their credit score, income, assets, etc in the same way they would if they were taking out the loan themself. This will determine things such as the interest rate and repayment terms of the loan. Cosigning is a serious decision not to be taken lightly, but is very advantageous for you as the recipient of the loan.
3. Bolster your odds of approval. Staying up to date on bills, lowering your credit utilization, and ensuring your credit report does not have any errors are crucial to improving your chances for approval. Having a sound financial history is crucial to private student loan lenders decisions. 
4. Compare your options. Always compare student loan options before applying to a loan. By comparing your options, you can see which lender offers the lowest rate, what repayment options they have for you, and what their fees are.
5. Come up with a plan for repayment. Once you have settled on a lender and have been approved for a loan, you should put together a budget that accounts for your student loan payments so you can make sure you stay on top of them.

At what point is a cosigner required?

Cosigning may be necessary if you do not have the credit score or income necessary to qualify when attempting to take out a private loan. This is very common, considering many high school students don’t have much of a financial history.

Choosing the best no-cosigner loan

Different loans are right for different people. No-cosigner loans are no exception to this, so it’s important to consider your options before you make any decisions. What’s right for someone else may not be right for you.  

When you’re comparing different loans, consider this list to find the best fit:

• Requirements for Eligibility: Always review the eligibility requirements for each company. By doing this, you’ll make sure you aren’t wasting your time considering a loan that you won’t be approved for. Things such as credit score, income, GPA, age, and what state you live in may affect your eligibility.
• Amount of the Loan: Each loan has its minimum and maximum amount. If you need to borrow less than the minimum requirement for a loan, you shouldn’t consider that option. If you need more than the maximum amount offered for a loan, check other options to see if there is one that will meet your needs so that you don’t need to take out multiple loans.
• Rates (APR): The APR of the loan is the annual rate of interest that will be charged on your current balance. With most loans, you’ll have the option between a fixed and variable rate. A fixed rate stays the same during the life of the loan, while a variable rate can increase or decrease depending on market conditions. When comparing rates, a lower rate is better.
• Discounts: Many companies allow you to lower your rate with specific interest rate discounts. These discounts can include an automatic payment discount, a loyalty discount for banking with the lender, and more. 
• Repayment terms: There are two parts to the repayment of your loan. First, you’ll need to decide whether you want to start repayment in school, or you’d like to defer your payments until after you graduate. Second, you’ll need to determine how long you take to repay the loan. This can typically vary between 5 to 15 years. Remember, the longer you take to repay the loan, the more you’ll pay in interest.
• Benefits: Find out if there are any benefits to borrowing from a specific company.

By keeping everything above in mind when comparing your options, you can increase your chances of finding the best student loan without a cosigner for your needs. 

The timeline for medical education and training is much longer than other professions. Generally, a student begins postgraduate medical studies within two years of completing an undergraduate degree. They then spend four years in medical school and three to eight years in post-graduate training (residency) before being eligible to practice medicine on their own and begin making an income that could realistically pay back the cost of education.

But, it is important to recognize that medical students have significantly lower attrition and loan default rates compared to four-year college students, a deficit of professionals in their field guaranteeing employment, and projected income that far exceeds graduates not pursuing additional higher education. These factors actually make income share agreements with medical students a radically different and safer prospect from the investor perspective when compared to those for undergraduate studies and even other graduate programs.

Still, when modeling medical school ISAs, it is important to consider the significant variation of projected incomes and required length of post-graduate schooling across the medical specialties. For instance, pediatricians (three-year residency) have among the lowest average salaries ($225,000) for physicians, while orthopedic surgeons (five-year residency) have among the highest average salaries ($482,000). Thus, the percentage of income required to be “shared” with investors will vary significantly.

In a similar fashion to college and trade-school ISAs, a medical school ISA would define upper and lower wage boundaries and the physician would only share their income when within these boundaries. A sound lower boundary could be set around $100,000, which would prevent physicians from having to share their income during post-graduate training or if they become unemployed for any reason. The upper boundary would be much more specific to the physician’s specialty, but could soundly be set at around 150 percent of the average annual income for each specialty.

These factors could make medical school ISAs a possible method for students to achieve an education that would have been otherwise financially unattainable, while also giving investors a reliable ROI.

To learn more about ISAs, apply online to prequalify with Stride. –> APPLY

• your child has maxed out their federal direct loans.
• your child is planning to enter a field with strong earning potential.
• your child doesn’t plan to work for a nonprofit or government employer.
• your child would pay less with an ISA than with a PLUS loan or private student loan, or doesn’t qualify for these options.

Even if they check all these boxes, your child should still carefully consider if an ISA is right for them.

When Is It Worth It?

If your child has tried better options. Your child should always opt for money they don’t have to repay — like scholarships, grants and work study. Once they’ve exhausted those, they should use undergraduate federal direct loans to fill any remaining tuition gap. Undergraduate federal loans have competitive interest rates, low fees and repayment benefits that private options lack.

If they have reached the borrowing cap, they should compare ISAs and student loans to see which will cost less.

If your child has a clear idea of their future. ISAs are a better option if your child has a good idea of what they’ll be doing and earning after school. Terms will normally be more favorable to students who will be entering fields with high earning potential, as income projections determine ISA terms. These offer the investor a better return on investment.

Ultimately, there’s no way to be 100% sure of your child’s future income. Sites such as PayScale, Glassdoor or the Bureau of Labor Statistics can help them estimate starting salaries and average earnings for their career.

If your child doesn’t qualify for student loans. Unlike private student loans, ISAs are not credit-based. Therefore, an ISA is a good option if your child has no or bad credit, or if your child doesn’t have a co-signer who can help them qualify for a loan with competitive terms.

However, some ISA lenders will disqualify your child based on credit history.

If your child prefers the benefits of ISAs. Unlike a student loan, your child won’t have a fixed payment hanging over their head with an ISA.

That may offer freedom to explore more opportunities after college — such as traveling, starting a business or taking a lower-paying job — without worrying about big debt payments. They also may enjoy an ISA’s other benefits such as: minimum income threshold before beginning payment; no payments if a job is lost; and eligibility for bankruptcy.

When Is It Not Worth It?

If your child will qualify for loan forgiveness. If your child plans to work for a nonprofit or government employer, pursuing Public Service Loan Forgiveness, or PSLF, will likely be less expensive than an ISA. PSLF forgives your child’s remaining federal loans after they make 120 eligible payments while working 10 years for a qualifying employer.

If your child is worried about their total debt. Unless they qualify only for an ISA, it’s possible they’ll also have loans. ISAs typically supplement federal loans, not totally replace them. To keep their overall debt affordable, they should aim to avoid committing more than 10% of their projected after-tax monthly income the first year out of school. That can be difficult with an ISA, as it could take 10% or more of their salary all by itself.

They should stick with federal PLUS loans if they’re worried about affording payments after graduation.

If your child prefers student loan benefits such as

• Early payoff. If entering a potentially high-paying profession, like law, your child can save money by paying debt off early. Not all ISAs offer this discount.
• Regulations. ISAs are unregulated and have no explicit consumer protection laws, unlike student loans.
• Lack of certainty. Your child may prefer the steady, predictable payments of a student loan, which they can’t expect with an ISA.

To learn more about ISAs, apply online to prequalify with Stride. –> APPLY

• Lower interest rates

We can potentially save thousands of dollars in interest payments by refinancing with a new loan at a lower interest rate. Depending on when we took out our loans, we could be eligible for lower rates simply due to changes in the market or because of improvements that we’ve made to our credit scores. For example, covid-19 rates are lower than ever making a great time to refinance.

• Lower monthly payments

Depending on the terms of the loan, our new monthly payments may be lower than the payments we’re currently making. This can free up money to pay down principal even faster or work towards other financial goals. We encourage you to apply to all our partners and compare rates and monthly payments. (link to https://studentfi.org/get-started/ ) 

• Cosigner release

If we originally borrowed with a cosigner, our lender might allow us to release the cosigner once we’ve met certain income and repayment requirements. Not all lenders allow for this, though. StudentFi currently has three partners that do; reach out to support@studentfi.org if this applies to you. If we want to release our cosigner but our lender doesn’t let us, refinancing can take care of that for us. 

Before pursuing student loan refinancing, it is important that you understand exactly why we do it. Our goals for refinancing will affect our financial playbook in the coming months as deferment (grace periods) are coming to an end — and loans are entering the repayment. 

Get help now! www.studentfi.org 

1. Pay more than required
   If you pay more with each monthly instalment than you’re required, you’ll pay off your balance quicker and prevent it from collecting more interest. To do this you can up the size of your automatic monthly payments to ensure that you’re always paying extra. Also, you can set things up so that any extra money that you receive like year-end bonuses are applied to your loan balance
2. Refinance
   Just as you can use refinancing to alter your payment terms when you’re struggling, you can also use it to reduce the amount of time that you spend paying back your loan. If you find a loan with a lower interest rate and higher payments, you’ll pay less interest overall. However, keep in mind that you’ll lose federal borower protections such as being able to get an income-driven repayment plan.
3. Biweekly Payments
   Rather than paying your loan monthly, it is possible to divide this payment into two halves and pay every 2 weeks. After making 26 payments in this way, you’ll have made 13 month’s worth of payments, a month extra than if you had paid in the normal monthly fashion.
4. Put more of your money towards your high-interest loans
   IF you pay off your highest interest loans first, you’ll save more money overall. For any loans with lower interest rates you must still pay the minimum, but putting all of your extra money towards your highest interest loan(s) is the best money-saving strategy.
5. Interest Rate Reductions
   A lot of student loan servicers offer reductions. If you set up automatic payments. Many offer reductions if you successfully meet a certain number of your payments on-time. These are benefits that you should definitely make use of, contact your lender to see if they offer any of these options.
6. Budget
   Make a thorough budget which considers all of your student loan repayments and expenses. Once you know how much you can afford, you’ll be more mindful of your spending, which will allow you to stay on top of your debt, and hopefully pay it off quicker.
   In order to do this, monitor your spending to see how much money you’re spending on different things. First, workout how much you’ll need to spend on necessities such as food and your rent. Next in your budget, include how much you want to spend on your loan repayments each month- you must pay the minimum, but remember that paying extra will allow you to save money long-term and pay off your debts faster. Finally, budget for any extra non-essential expenses.
   If you’re strict with yourself and stick to your budget, you’ll be able to pay off your student loan much more quickly.
7. Employer Repayment Assistance
   There are opportunities for students to receive assistance with their loans by working for specific companies. These employers will contribute a set amount of money towards their employees’ student loan balance each month- usually between $100-$300. This can really help students as it means that they can pay less themselves if they’re struggling or they can make their full payments and use this money to pay off their debts quicker.
8. Don’t Use Extended Repayment Terms
   Income-driven repayment plans can help those who are struggling to meet their monthly payments. However, if you’re able to make these payments (and more) you shouldn’t use an extended repayment plan. Using one would simply stretch out the time that it takes to repay your debts and increase them, as your loan would accrue more interest.
9. Tax Deductions
   Most student loan borrowers qualify for a tax deduction for student loan interest, usually of up to $2,500 per year. Accepting this tax deduction ultimately decreases your Adjusted Gross Income (AGI), meaning that you pay less taxes overall. However, you lose part of all of this deduction if your income exceeds a certain amount, so be sure to check that this would not happen to you, otherwise it will not be worth it.
10. Make Lump Sum Payments Where Possible
    One of the best strategies for paying off your student loans quickly is making at least one lump sum payment. For example, if you receive extra cash from a tax refund, it’s best to put this money into an extra payment towards your student loan balance. This could significantly reduce your interest, and in turn your outstanding balance.
11. Aim for Student Loan Forgiveness
    You may be eligible for student loan forgiveness if you work in certain public service roles. If you’re eligible, you can have your outstanding debt forgiven after you have successfully met 120 of your monthly payments on time. This allows you to pay off your debts in a decade.
    The Public Service Loan Forgiveness program has specific criteria which you must meet, you should look into this before assuming you’re eligible.
    Learn more about this in our blog on refinancing federal loans.
12. Join the Military
    As with public service, those who join the military may be able to wipe the remaining balance of their student loan debts via specific programs such as the GI Bill or military student loan forgiveness. To reap this benefit, you must spend a certain amount of years within the military.