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Medical graduates are the most qualified for the government programs that exist. Most medical graduates are required to go to a residency program. At this point they have a large balance of student loans but in residency are not gaining a high enough income to start making the $1,000 monthly payments or more back to their lenders per month. This is the perfect time to be sure to sign up for the IBR or PAYE program. With these programs, the resident will be able to reduce their monthly payments on their student loans, qualify for a subsidy payment from the government if they have subsidized loans and qualify for public service loan forgiveness (PSLF).

The way it works is the government looks at income, family size, student loan balances, and rates to determine the payment a person should make based on the current poverty line. Since doctors in residency are only making on average between $45,000-$55,000 per year with debt that traditionally exceeds $200,000 in student loans, they would qualify for much lower student loan payments.

For example, assuming this person has a family size of 1 with an income of $50,000 and a balance of $200,000 at a weighted rate of 6%, their payments currently would be about $623.61. But with the IBR program it would be reduced to about $479.13. This saves $1,733.88 in the first year alone. This graduate will also enjoy subsidy payments each month to cover some interest that accrues on the loans and if they decide to be a doctor for a hospital or other non-profit organization, they will enjoy forgiveness on the loans after only 10 years of being in repayment.

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*Above excerpted from Take Back Control: Manage Your Student Loan Debt.