Student loan repayment during residency

[Guest matsqui]

Hi,

 

Has anyone been able to get interest relief for their student loans during residency?

 

I called the National Canada Student Loan Centre yesterday and was told that I'll be making too much money and therefore would not be eligible for interest relief. Apparently the only way to be eligible would be if my student loan payments were at least $2000/month. Do people actually have loan payments of this amount?!? If so, I guess I shouldn't be whining.

 

I had been under the impression that residents were eligible for the interest relief program?

 

Any suggestions? I'm afraid I'll eating baked beans for the next 5 years if I can't sort something out! Thanks.

[Guest UWOMED2005]

I think this question is province-specific.

 

For those of us from Ontario, I believe OSAP forgiveness was replaced by the Ontario Student Opportunities Grant or something. There should be an assessment each year in your file abour forgiveness.

[Guest DrSahsi]

Generally with bank-provided lines of credit, you are responsible for paying back only interest (ie: no principal) until the conclusion of your residency. For the most part, the provincial and national government student loan programs don't recognize residency as an extension of your "student" status.

[Guest satsumargirl]

I am not 100% sure but I think that you can only get interest relief for up to 6 months. So it probably wouldn't help you even if you could get it.

 

I guess that is why many students end up paying their OSAP with their line of credits while in residency.

[Guest bridge]

I have heard that certain provinces (e.g. Nova Scotia and Saskatchewan) have residents maintaining full-time student status throughout residency so that their student loans stay in remission. Does anyone know whether Quebec does this? (Haven't been able to find any info on their PGME site.)

 

Cheers,

Bridge

[Guest kosmo14]

I just filled out my residency forms and here in Saskatchewan we are registered as a student at the University of Saskatchewan and therefore considered a full time student and therefore maintain our interest free status throughout our residency. I believe NFLD is the only other province in Canada to do this, with exception of Quebec (who knows what goes on there).

[Hillary]

Hi,

 

 

1st year resident salaries for Ontario residents are about $46000 this coming year. Can anyone from Ontario tell me how much of this is gross and how much goes to taxes? It will help me figure out how much I can put aside for loan repayments.

 

Thanks

 

Hillary

[Kirsteen]

Hi,

 

I will be starting to repay a $38000 Ontario Student Loan when I graduate in May.

 

Is it best to transfer to a line of credit for this amount? If I don't, I can still gain tax deductibles from the interest paid on it.

 

How fast could I pay it off?

 

1st year resident salaries for Ontario residents are about $46000 this coming year. Can anyone from Ontario tell me how much of this is gross and how much goes to taxes? It will help me figure out how much I can put aside for loan repayments.

 

Hi,

 

First, I was under the impression that loan interest was deductible only if the loan was for investment purposes. Do you have another angle on this?

 

As for Ontario resident salaries, the $46K will also be supplemented by the call fee which is $100 per shift. So, during first year, if you're doing 1 in 4 call, then you're looking at making approximately an additional $800 per month or $9600 per annum, bumping your gross pay to about $55K. Basic federal tax rates for this amount start at 22%, but you have to add Ontario tax to that too. Here's a website that contains all of these rates: http://www.taxtips.ca/fedtax.htm That might help you calculate, given your other expenditures, how quickly you can pay off your loan.

 

Cheers,

Kirsteen

[Satsuma]

First, I was under the impression that loan interest was deductible only if the loan was for investment purposes. Do you have another angle on this?

 

Interest paid on your government student loans is tax deductable.

To my knowledge, if you transfer this amount to your LOC, you will not be able to claim that interest paid despite it being for your education.

 

As for OSAP repayment...one piece of advice. Choose the longest possible amount of time to repay the loan (when I consolidated my loans the max time was 10 years). There is no penalty if you repay the loan earlier (so you can pay it back in 3 or 5 or whatever you want). However, if you choose to consolidate saying you will pay it back in a shorter amount of time (say 5 years) you cannot then decide to pay it back in 10 years. Personally, I liked the flexibility of knowing I could pay it back sooner or later.

[aneliz]

At UofT we are payed bimonthly (15th and 30th of each month). Your net take home pay is ~$1300 each pay cheque. So, you will have $2600 in the bank account monthly on which to live/pay debts with.

 

Right now, I pay the following each month in 'debts'

 

$220 - CMPA malpractice insurance (can't work without it)

~$400 - interest only on line of credit with bank

$300 - OSAP payment

 

So, ~$900 of your earnings each month will go straight out the door to debt/insurance fees.

 

This leaves you with ~$1700 to pay rent, buy food, pay for transportation, personal expences, clothes, etc, etc.

 

Even though the $46000 gross salary sounds pretty good, it doesn't leave you with a lot of spare cash when you factor in the debt management.

[TimmyMax]

Hey,

 

Even though the $46000 gross salary sounds pretty good, it doesn't leave you with a lot of spare cash when you factor in the debt management.

It sure doesn't! It also throws a serious monkeywrench into your plans to buy something nice (but expensive) as well! Stupid medical school debt...(grumble)

[Hillary]

Thanks to all who've responded. Aneliz, I was wondering how much money I should have in the bank for the start of residency? I will have a small amount of unused student loans in my bank account. I would like to put some of that into a block payment on my student loans right after my last day of classes, but don't know how much I should keep in my account. I am going to need money for rent, travel etc. Someone else mentioned a big upfront malpractice fee- I've heard it is around $1200 for residents. Any other big surprises at the start of residency!? I am thinking I might try to keep about $3000 in my account.

 

Thanks again

 

Hillary

[haiku_guy]

I'm no expert, but tution credits carry forward indefinately. If you didn't give them away (to parents, etc), and assuming you didn't have a huge amount of income while attending med school then you should still be eligible to claim them at any time.

 

Over 10,000 per year in tution fees, education amounts, etc adds up over 4 years, add in any moving expenses incurred for moving, intrest on loans, etc, and you probably need not pay so much tax.

 

As such, you may be able to ask an administrator to lower the amount of taxes you are paying in order to free up more income and have more cash flow. You can figure this out for yourself, since you know how much money you will make this year. Just download a T-1 from CRA's website and run though all the calculations.

 

Or, hire an accountant for a few hundred bucks and have them do a plan for your residency years. You'll probably find that it saves you a large amount of dollars in the long run...

[muchdutch]

Yes tax credits do carry forward until you use them all up. I was told that I have enough to earn for several years (at a modest wage) and not pay any taxes and that's just from undergrad.

 

As such, you may be able to ask an administrator to lower the amount of taxes you are paying in order to free up more income and have more cash flow.

 

Or you can just get a big a$$ return come that time of year.

[haiku_guy]

Yep, big a$$ returns are great, especially for buying something expensive like Timmy suggested. However, if you can't make ends meet each month, then steady cash flows are better.

 

Alternatively: Take the extra cash each month, invest it in something, gain compound interest for 12 months, instead of waiting for the government to send you a cheque. You then end up with the same amount of cash in the bank plus the interest (Assuming you can keep your hands off. Bad hands! leave that money alone...)

 

It may not be much, but in the end, it makes a difference, especially if you hide it away in an RSP and hold on to a larger chunk of your pay by sheltering more of it from taxation.

 

(edit) Oh god...I'm turning into my father. Disregard all advice above, take a cheque return, and spend it on frivolous things! (/edit)

[quickdraw_mcgraw]

Interesting ideas, all of them.

 

Most residents get the biggest LOC they can and enjoy their life. You will always have steady pay. You will never be downsized or laid off or fired, unless you really screw up. Enjoy some cash while you're young because nothing is sadder than a middle aged guy in a sports car. Own your sports car before you go bald.

[UBCmed09]

Does anyone know if residents at Quebec schools (specifically McGill) are considered students and are able to maintain interest-free status on ALL their student loans (ie. not just Quebec loans) during residency?

 

Thanks for your help,

UBCmed09

[Satsuma]

Does anyone know if residents at Quebec schools (specifically McGill) are considered students and are able to maintain interest-free status on ALL their student loans (ie. not just Quebec loans) during residency?

 

Thanks for your help,

UBCmed09

 

I asked this while at my McGill interview and while they are considered students and have access to university resources...they are not students in the eyes of student loans and so are required to make payments on the loans. It is kind of too bad. I was hoping that being considered a student and not having to repay loans would balance out their much lower pay.

[UBCmed09]

That's interesting Satsuma. I contacted the program assistant and she replied that after contacting their Postgrad Ed dept she "was told that you maintain student status for loans." I'm going to follow this up by phone early this week and will post here if I get the definite answer on this.

 

I'm also looking to confirm that this is the case in Saskatoon - has anyone done this already. Suffice to say that with my student loan debt, this is a HUGE, HUGE factor.

 

Cheers,

UBCmed09

[ubcredfox]

That's actually quite interesting. I recall that there was talk that the Alberta Student Loan program had granted such interest-free/no principle payment status to all residents of that province.

 

If you're looking into it, a comprehensive list would be a great resource for all of us I'm sure. It's a huge deal...

[noncestvrai]

I don't have to repay my student loans since in Qc I'm considered a student (as a resident) until 6 mos post residency...

 

Which I would have lost had I end up outside of Qc.

 

Plus, interest on student loans is tax deductible...

 

noncestvrai

[UBCmed09]

ncv, do you know if this applies to students from outside Quebec (ie. with other provincial loans and federal loans) who come to la belle province for residency?

 

thanks,

UBCmed09

[Satsuma]

Yeah, clarification would be useful. The residents I spoke with said they were making payments on their loans...is it possible somehow they missed out on the student thing??

[Angela]

Hi there,

 

I was reading this thread, and I was wondering if generally residents just get by paying interest and not until they complete residency do they actually may payments on the principle of their debts?

[noncestvrai]

ncv, do you know if this applies to students from outside Quebec (ie. with other provincial loans and federal loans) who come to la belle province for residency?

 

thanks,

UBCmed09

 

Not sure, but you can ask your financial aid advisor, or Canada student loans. I would assume you have to ask the organism giving out the actual loan for this issue.

 

noncestvrai