For new residents: better to keep student loans or pay everything off with LOC?

[AndrewWithMedTax.ca]

Hi, my name is Andrew. I am part of the MedTax team here in Canada and can help with your question.

Student loan interest is tax-deductible. The amount of the deduction is relatively low. You typically pay a higher rate of interest on these loans compared to a professional LOC. It generally makes sense to refinance your student debt with a LOC, but everyone's situation may be slightly different. I would recommend speaking with a professional to ensure it is the right move for you.

If you have other questions, just reach out, and I will be happy to help.

[quacksflaptogether]

On 4/29/2021 at 11:49 AM, JohnGrisham said:

This - FM and Psych residents, and those that are attendings working rurally can often get debt forgiveness for GOVT loans (not private Locs)

Also, some provinces are zero % interest already for provincial portion(such as Manitoba AND British Columbia) and now Federal is 0%.  So it makes no sense for anyone to discharge their GOVT student loans now. Pay the minimal amount.

 

@JohnGrisham I've never heard of this for psych (can only find this online for FM!) Do you have any more info/sources?

[JohnGrisham]

3 hours ago, quacksflaptogether said:

@JohnGrisham I've never heard of this for psych (can only find this online for FM!) Do you have any more info/sources?

depends on your province. Ask your home program, if you can do rural outreach rotations, and if your provinces loan forgeiveness program covers it.

[NewClerk]

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[itsgoingtibiaokay7]

On 5/15/2021 at 1:28 AM, lolz3 said:

Given the heavy skew towards federal which is interest free until March 31, 2022, I would just do exactly what @Persephonesaid and extend the amortization period for now. You don't need to "contact" NSLSC - you should just be able to reduce the payment on the online portal.

When it comes time that the federal portion starts accruing interest, I would then do a "Revision of Terms" to make interest-only payments for 6 months (renewable once for a total of 12 months). Note that this is different than the Repayment Assistance Program which most residents won't qualify for based on income. Alternatively, you can also start your Revision of Terms right in November if you really want your payments to be low for a year, but then you'll go up quickly after Revision is done and federal starts getting interest again.

Is there a limit to how many times you can use the Revision of Terms (interest only payments)? I understand you’d have to renew it q6mos but could you theoretically renew this throughout a 5yr residency? 

[itsgoingtibiaokay7]

On 5/15/2021 at 1:28 AM, lolz3 said:

Given the heavy skew towards federal which is interest free until March 31, 2022, I would just do exactly what @Persephonesaid and extend the amortization period for now. You don't need to "contact" NSLSC - you should just be able to reduce the payment on the online portal.

When it comes time that the federal portion starts accruing interest, I would then do a "Revision of Terms" to make interest-only payments for 6 months (renewable once for a total of 12 months). Note that this is different than the Repayment Assistance Program which most residents won't qualify for based on income. Alternatively, you can also start your Revision of Terms right in November if you really want your payments to be low for a year, but then you'll go up quickly after Revision is done and federal starts getting interest again.

Is there a limit to how many times you can use the Revision of Terms (interest only payments)? I understand you’d have to renew it q6mos but could you theoretically renew this throughout a 5yr residency?