Debt Management & Credit Worthiness

General Suggestions

The following are proffered regarding to debt management and your financial future.

1. Consider all scholarship options including the military, NHSC, and outside scholarships.
2. Consider low-interest loan options, including the Primary Care Loan Program
3. Keep good financial records, including all records of your student loans.
4. Ask questions. Financial mistakes can be very costly over time.
5. Maintain contact with your lenders at all times.
6. Live frugally. It will reduce your need to borrow while in school and provide extra money to repay loans after graduation.
7. Attack debt aggressively. When you are able after graduation, make voluntary payments toward your principal to accelerate loan repayment.
8. Know and review periodically your after graduation deferment options, such as the economic hardship forbearance.
9. Know and review your repayment options, such as the graduated repayment plan, the income sensitive repayment plan, the extended repayment plan, and loan consolidation.
10. Consider loan repayment programs, such as those offered by NHSC, by NIH, by the military, and by many state governments
11. After completion of training, include student loan repayments in a carefully constructed budget.
12. After graduation, seek help when needed from a qualified financial advisor.
13. Start an investment and retirement program early. You will be surprised how small investments over time will grow in value.
14. When negotiating with prospective employers who are recruiting you after the completion of your medical training, discuss your loan repayment obligations.
15. Ensure your future success by completing a residency training program and becoming board certified in your field. Expect to be well-paid for your services. Make sure your income is sufficient to allow you to repay your educational debts.
16. Whatever you do, do not go into default on your student loans!

Information Resources on Financial Aid & Debt Management

Selected Financial Aid Web Sites

These are web sites that are portals for general information on financial aid:

Non-Profit Organizations

• Association of American Medical Colleges: http:www.aamc.org
  • An excellent general site for medical student financial aid is published by the Association of American Medical Colleges at:
  • https://students-residents.aamc.org/financial-aid/
  • MedLoans Organizer and Calculator
• One of the best comprehensive sites for financial aid information: http://www.finaid.org
• Another useful site on medical education financing is published by the American College of Physicians at: http://www.acponline.org
• Student loan and financial aid calculators can be found at: http://www.finaid.org/calculators/
• Information on the scholarship program offered by National Medical Fellowships, Inc. can be accessed at: http://www.nmf-online.org
• Information on credit counseling and advice can be found at the National Foundation for Credit Counseling: http://www.nfcc.org
• Tips on living within your means can be found at: http://www.pbs.org/affluenza

Government Agencies

• U.S. Department of Education: http://www.ed.gov
  • Sponsored financial aid programs can be obtained from: http://studentaid.ed.gov
  • Information on the Free Application for Federal Student Aid, including the online application, can be accessed at: http://www.fafsa.ed.gov and http://www.fafsa.gov
• U.S. Department of Health and Human Services: http:www.dhhs.gov
• U.S. Department of Health and Human Services financial aid programs for medical students can be accessed at http://bhpr.hrsa.gov
• Information on the National Health Service Corps Scholarship Program is available at: https://nhsc.hrsa.gov/scholarships/
• Information on the Primary Care Loan Program can be found at: https://bhw.hrsa.gov/loansscholarships/schoolbasedloans

Commercial Sites

• This is considered one of the best scholarship search engines available: http://www.fastweb.com
• Information on credit scoring is available at: http://www.myfico.com and http://wwww.bankrate.com
• The web sites for the three leading credit bureaus are: http://www.equifax.com; http://www.experian.com; and http://www.transunion.com
• You can obtain a free copy of your credit report at: http://www.annualcreditreport.com
• Information on personal finances is available at: http://www.fool.com

Recommended Readings

(MD) 2: Monetary Decisions for Medical Doctors is an electronic publication of the Association of American Medical Colleges (AAMC) intended to provide financial planning information for pre-medical students, enrolled medical students, and physicians in residency training.

The Student Guide  is a free publication on federal financial aid from the U.S. Department of Education. The publication has sections providing general information on federal student aid and on the Direct and Federal Family Education Loan Programs, as well as on other federal financial aid programs administered by the U.S. Department of Education. Other sections address borrower rights and responsibilities and loan deferments.

The manual also has a section defining important terms used in federal financial aid. A hard copy of the Student Guide can be obtained by writing to the Federal Student Aid Information Center, P.O. Box 84, Washington, DC 20044-0084 or by calling 1-800-433-3243.

 

Credit Worthiness

Approval of GradPLUS and private loans is based on creditworthiness, not financial need as determined by need analysis.

Lenders require a good credit report on the applicant and cosigner, if applicable. If your credit is deemed unsatisfactory, GradPLUS and private loans will not be approved. Although lenders may vary slightly in their criteria for good credit, most agree that a credit report cannot include bankruptcies, foreclosures, repossessions, charge-offs, open judgments, or excessive past due accounts within the past two years.

In addition, there must be no prior educational loan defaults, unless they have been paid in full or satisfactory arrangements for repayment of same have been made. Moreover, for co-signers, GradPLUS and private lenders will calculate a debt-to-income ratio, including the amount of the loan being applied for. If the debt-to-income ratio exceeds a certain index, the loan may be denied.