PRIMARY CARE INFORMATION SESSION

Kara Martin

Assistant Director of Financial Aid/Financial Literacy Coordinator

Tufts University School of Medicine

kara.martin@tufts.edu

medicine.tufts.edu/finaid

136 Harrison Ave, Boston, MA 02111

T: 617-636-6574

F: 617-636-3447

General email: med-finaid@tufts.edu

Top Points to Take Away

1. Don’t try to learn everything you wish to know about affording a career in primary care today—this is a primer.2. Come talk to us! We can walk you through a customized plan for your future.3. Don’t let the financials guide your career decisions.4. Understand that the financial plan you have in mind today may change many times over due to future legislation, your own desires, and the economy.

Indebtedness prevents most MD’s from choosing a specialty that they’re passionate about…

FALSE

MYTH #1: TRUE OR FALSE?

There are many options available to assist with the financial obligations of loan repayment and the expected salary of a primary care physician.

MYTH #1: OPTIONS ARE AVAILABLE

Indebtedness is one of the top factors in selecting a specialty:

FALSE

MYTH #2: TRUE OR FALSE?

According to the 2012 GQ, this was the least considered factor with moderate or strong influence.

Top five factors were: Personality fit• Specialty Content• Role model influence• Work/life balance• Future family plans

MYTH #2: DEBT SHOULD NOT BE THE DRIVING FACTOR

Loan Forgiveness programs are available so I may borrow whatever amount I want and not worry at all about the repayment amount.

FALSE

MYTH #3: TRUE OR FALSE?

Loan Forgiveness programs are available to assist borrowers who want to work in public service but they are not there to avoid repayment down the road. Borrowers must remain focused on the long term obligations of loans and be fiscally responsible to avoid unintended consequences

MYTH #3: YOU MUST PLAN TO REPAY WHAT YOU BORROW

National Health Service Corps (NHSC) Loan Repayment National Health Service Corps (NHSC) Student to Service Loan

Repayment National Health Service Corps (NHSC) Scholarship Primary Care Loans (PCL) Public service Loan forgiveness (PSLF) State loan repayment options Tufts LRAP Income based Repayment (IBR)/Pay As You Earn (PAYE)

Options Available to You

What Are These Programs?

NHSC: Primary care clinicians are eligible for loan repayment assistance in exchange for working in an HPSA (Health Professional Shortage Areas) and with underserved communities

PCL: The Primary Care Loan (PCL) program is a low cost federal loan program for medical students committed to primary health care practice

PSLF (Public Service Loan Forgiveness): Federal program that provides for forgiveness or cancellation of remaining balance due on eligible federal Direct student loans after the borrower has made 120 monthly payments to Direct Loans while employed in qualifying public service jobs.

Loan repayment plans can include IBR (Income Based Repayment) and PAYE (Pay As You Earn) based on income versus debt.

NHSC Loan Repayment Program Tax-free loan repayment assistance Apply at end of residency or as board certified physician Determined by HPSA score of employer (14+ and 0 – 13):

FT: $30K - $50K/ for 2 year period HT: $15K - $25K/ for 2 year period

Additional years 3 – 4: $20K/ for 1 year period Additional years 5 – 6: $10K/for 1 year period

Specialties Include: Family Medicine ∙ General Internal Medicine ∙ General Pediatrics ∙ Obstetrics/Gynecology ∙ Geriatrics ∙ Psychiatry

Eligible loans borrowed during undergrad, graduate, and/or during medical school include: Federal Stafford, Federal Direct, Private Loans, Institutional Loans PRIMARY CARE LOANS, RESIDENCY/RELOCATION LOANS, CREDIT

CARDS, LINES OF CREDIT ARE NOT ELIGIBLE

NHSC Loan Repayment Program Must pass credit check – no default on any federal

obligations Must show proof, funds utilized annually and still qualify

Less expensive to apply as a lump sum vs. monthly Must be employed at NHSC-approved service site at time

of application If working multiple jobs, all current employment sites MUST be

included and MUST be eligible Website for available jobs at approved sites: http://

nhscjobs.hrsa.gov/external/search/index.seam Priority will be granted to during application to those:

Likelihood of applicant to continue to work in HPSA and/or comes from disadvantaged background

Website: NHSC.hrsa.gov/loanrepayment

NHSC Loan Repayment Program

Pros Cons

Tax-free If working multiple jobs, then all positions must be included in application and be eligible

Can wait until end of or after residency to apply

Must pass credit check to be eligible

Includes private loans Will not include Primary Care Loans

Students can be employed FT or HT

NHSC Students to Service Program (S2S LRP) for 4th year students in return for serving in eligible

Health Professional Shortage Areas (HPSAs) of greatest need  The S2S LRP will provide loan repayment up to $120,000 (4

payments @ $30K/each) tax-free Three (3) years FT service (Six (6) years HT service may

be approved) Specialties Include: Family Medicine ∙ General Internal

Medicine ∙ General Pediatrics ∙ Obstetrics/Gynecology ∙ Geriatrics ∙ Psychiatry*

Eligible loans borrowed during undergrad, graduate, and/or during medical school include Federal Stafford, Federal Direct, Private Loans, Institutional Loans PRIMARY CARE LOANS, RESIDENCY/RELOCATION LOANS,

CREDIT CARDS, LINES OF CREDIT ARE NOT ELIGIBLE

NHSC Students to Service Program

Application process is typically mid-Sept – mid-Nov Looking for applicants with commitment to PC in HPSAs and are

willing to relocate based on the needs of the NHSC, however: Specific fellowships may be allowed (approval necessary) Specialization may cause default Will need to find employment that meets requirements within 3

mos of residency completion or will be placed by NHSC Eligible employer must have HPSA score of 14+ (currently over

100 in or around Boston) Priority will also be granted to applicants who have:

Likelihood of applicant to continue to work in HPSA and/or comes from disadvantaged background

Applicants should expect to fulfill 3 year repayment at one site – transfer may be granted with approval

NHSC anticipates making 100 awards annually through this program Additional information about the S2S LRP program can be found at:

http://nhsc.hrsa.gov/loanrepayment/studentstoserviceprogram/index.html

NHSC Students to Service ProgramPros Cons

Includes private loans Will not include Primary Care Loans

Students can commit to the program in their 4th year

For those not fully sure, commitment may be a negative factor

Tax-free Must find employment within 3 mos of residency completion

Significant upfront loan repayment amount (up to $120k)

Participants must be willing to relocate

Primary Care Loan Program

Low-interest loan for those dedicated to primary care 0% interest during school/residency 5% interest rate in repayment

Students may apply for loan beginning in 3rd year of medical school.

Students in 4th year may request a SuperPCL to pay off all loan obligations from medical school. Funds are limited - school must approve each individual requests.

Must demonstrate financial need Parental information may be required.

Students who are 24 years+ and have not been claimed on parents tax return for at least 3 years may be considered independent and waive parental data

Primary Care Loan Program

When compared to other federal student loans and private loans, the PCL provides significant savings

Deferment of principal and interest while in residency Must certify service requirement being met every year for duration of loan

balance or max of 10 years (residency counts) If annual certification doesn’t occur, borrower will be considered to be in

service default Residency must be completed within 4 years of graduation Eligible residency programs include: family medicine, internal medicine,

pediatrics, combined medicine/pediatrics, preventive medicine Eligible specialties include: Clinical Preventive Medicine, Occupational

Medicine, Public Health Public Policy Fellowship, Senior Residencies in one of the above, Faculty administrators/policy makers certified in one of the primary health care disciplines, Geriatrics, Adolescent Medicine, Adolescent Pediatrics, Sports Medicine

OB/GYN not eligible specialty If you fail to meet obligation, there is a 7% interest penalty

Primary Care Loan Program

Pros Cons

No interest accumulation while in school or in residency

Parent information may be required

Low interest rate of 5% in repayment

If you fail to meet obligation, there is a 7% penalty

A SuperPCL may pay off all other federal loans

School has a limited amount of funds to award

Provides substantial savings over other federal loans

Must certify that service is being met each year for duration of repayment or maximum of ten years

OB/GYN not eligible

Public Service Loan Forgiveness Eligibility

120 ON-TIME full payments required while working FT (30 hrs/wk) in a qualifying public service position At the time you apply for forgiveness At the time principal and interest are forgiven

Payments do not need to be consecutive

Payments must be in qualified repayment plan (IBR, PAYE) Forbearance/Deferment do not count but $0 payments do

501(c)(3) = Nonprofit Who issues your paycheck? Hospital vs. physician association

Loans Eligible for PSLF

Federal Direct Stafford (Subsidized and Unsubsidized Loans)

Federal Direct Grad PLUS Loans Federal Direct Consolidation LoansLoans must be with a Direct Loan Servicer

Primary Care Loans are NOT eligible

Federal Perkins and FFEL loans (Staffords/GradPLUS borrowed from lender) are NOT ELIGIBLE but may be included in consolidation loan to become eligible

PSLF Strategy – Income Based Repayment Plans

Income based repayment (IBR) Repayment Plan – Based on income and family size to provide an affordable

monthly payment amount; determined annually Pros:

Affordable payments, specifically in residency – caps payments at 10% of discretionary income

Monthly payment never exceeds Standard 10-year repayment Partial subsidy for first consecutive 3 years Capitalization occurrence is limited After 25 years, balance is forgiven but taxable

Cons: Must show partial financial hardship and reapply annually Negative amortization occurs so more interest accrues over life of loan More expensive in the long run if loan amounts not forgiven Longer than 10 years to repay

www.ibrinfo.org

PSLF Strategy – Income Based Repayment Plans

Pay As You Earn (PAYE) Repayment Plan – Based on income and family size to provide an affordable monthly payment

amount; determined annually. Only Federal Direct Loans eligible to be repaid using PAYE. Must be new borrower as of 10/1/07 AND received disbursement after 10/1/11 Pros:

Affordable payments, specifically in residency – caps payments at 10% of discretionary income

Monthly payment never exceeds Standard 10-year repayment Partial subsidy for first consecutive 3 years Capitalization occurrence is limited and limited to 10% of original principal balance After 20 years, balance is forgiven but taxable

Cons: Must show partial financial hardship and reapply annually Negative amortization occurs so more interest accrues over life of loan More expensive in the long run if loan amounts not forgiven Longer than 10 years to repay

http://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn#advantages

PSLF Logistics and Strategies

Married—joint tax return Total AGI and total debt

Separate filers Student only

Apply annually & provide disclosure of tax info from IRS

Begin payments in residency Forgiveness is untaxable event May be especially helpful for borrowers with

lower income, higher debt and/or longer residencies

Massachusetts State Loan Repayment Program

The State Loan Repayment Program (SLRP) is a federally-funded grant program to States and Territories that provides cost-sharing grants to assist them in operating their own state educational loan repayment programs for primary care providers working in Health Professional Shortage Areas (HPSAs) within their state

MA = $25K/yr for 2 years ($50K total) Can’t be participating in another program with service

obligation For additional information, please see attached RFP and visit:

http://www.mass.gov/eohhs/docs/dph/com-health/primary-care/mlrp-program-guidelines.pdf

Other states may participate: http://nhsc.hrsa.gov/loanrepayment/stateloanrepaymentprogram/index.html

Tufts LRAP

The Tufts Loan Repayment Assistance Program (LRAP) is a university-wide program that helps selected Tufts graduates working in public service repay a portion of their annual Tufts incurred education loan debt. 

TUSM: 47 awards in FY14; ranged from $1K to $4K; average award $2K

TUSM awards represent grads from MD, MBS, Masters and PhD recipients in Health Science programs. To include PA grads in future.

Awards based on number of applicants, IBR/PAYE minimum payment, funds available, and overall indebtedness.

Must apply annually

Description Repayment Years

Monthly Payment

Interest Cost Total Repayment

PAYE for full repayment; $170 starting salary after residency

Residency: 3

Post-residency: 17

$290 - $340

$1,400 - $2,200

$376,000 $377,000

Forgiven: $293,000

Forbearance during residency, then extended repayment

Residency: 3

Post-residency: 25

$0

$2,300

$451,000 $701,000

Forbearance during residency, then extended repayment with 2 year NHSC ($50k)

Residency: 3

Post-residency: 17.5

$0

$2,300

$244,000 $494,000

NHSC S2S: $120k S2S award paid out as $30k four times during residency

Residency: 3

Post-residency: 10

$0

$2,400

$161,000 $291,000Forgiven: $120,000

3 years of S2S service after residency, & you could do NHSC LR after that to repay the rest of the balance while staying at the same S2S site

PSLF with $170k starting salary after residency (PAYE)

Residency: 3

Post-residency: 7

$270-$320

$1,250-$1,700

$141,000 $141,000, then $351,000 forgiven

PCL of $150k with salary of $170k

Post-residency: 10 $1,591 $40,918 $190,418

Sample Repayment: PSLF through IBR/PAYE & NHSC w/ $250k in Federal Direct Loan debt

Please Remember:

You should first pursue the specialty that you are passionate about and is a good fit for other reasons than just financials (i.e. family, lifestyle)

There are several options available – PSLF, Income driven repayment options, lower interest loans, loan repayment programs, etc.

Nothing is guaranteed in the future – we can simply inform you of options today based on current law. PSLF is a concern for many of our students and alumni but we feel it will remain a viable option for many as the law is written and with the addition of the Affordable Care Act

PLEASE BORROW RESPONSIBLY – you need to assume you’ll repay everything borrowed or at least equivalent to original principal borrowed

We are here to assist you while you are a student and after graduation Utilize the Medloans Calculator and Organizer often to review scenarios 4th years attend group session and most sit with us to do a one-on-one. All students are welcomed and encouraged to speak with us individually along the way

We believe that financial planners are a necessity for those with significant debt and higher incomes

Additional Resources State Loan Repayment:

http://nhsc.hrsa.gov/loanrepayment/stateloanrepaymentprogram/index.html

MA State Loan Repayment: http://www.mass.gov/eohhs/docs/dph/com-health/primary-care/mlrp-program-guidelines.pdf

Tufts LRAP: http://lrap.tufts.edu/default.asp

TUSM Office of Financial Aid: http://medicine.tufts.edu/finaid

NHSC: www.nhsc.hrsa.gov

NHSC jobs: http://nhscjobs.hrsa.gov/external/search/index.seam

PSLF FAQs: http://studentaid.ed.gov/students/attachments/siteresources/PSLF_QAs_final_02%2012%2010.pdf

IBR FAQs: http://studentaid.ed.gov/students/attachments/siteresources/IBR_QA_Final2-2011.pdf

PAYE FAQs: http://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn

AAMC FIRST: https://www.aamc.org/services/first/first_for_students/

AAMC Medloans Calculator/Organizor: https://www.aamc.org/services/first/medloans/