Boston University Medical Campus
Student Financial Services

OUTSIDE LOAN PROGRAM TERMS

Massachusetts Medical Society Loans and Repayment Terms: Loan recipients are obliged to pay 1% interest while in medical school, and three years after; 2% for the two years following; and 6% for the next four years. The annual interest due shall be payable on June 30th of each year following the date the loan was received, including the time the student remains in medical school.

Loan principal shall be payable commencing the first year after the student obtains their M.D. degree, in nine annual installments, due on June 30th of each year, as outlined in the table below.

If a medical student does not complete their studies and leaves school, then the repayment schedule for both principal and interest shall commence one year after the date upon which the student ceased matriculation.

Federal Subsidized Stafford Loans and Federal Subsidized Direct Loans have different interest rates depending on when they were disbursed. The Federal Student Aid website contains information about the new interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, Direct Subsidized Consolidation Loans, and Direct Unsubsidized Consolidation Loans, as well as Direct PLUS Loans and Direct PLUS Consolidation Loans that were disbursed on or after July 1, 1998.

For any single borrower, all Stafford loans will have the same grace period and deferment provisions. These terms are based on the regulations in effect when the first loan for that borrower was disbursed. Borrowers whose first Stafford loan was issued before July 1, 1993 and still have a balance on the loan(s) are able to defer payments on all Stafford loans while they are participating in a residency or internship program (two years); are in school or participating in a graduate fellowship; are serving with the Public Health Service, the Peace Corps or the ACTION Program (three years); are volunteering with a tax-exempt organization; have become totally disabled (three years); have become unemployed (two years); have enrolled in a rehabilitation training program; and, in some cases, are on parental leave.

All other borrowers may defer payments only if they are in school or participating in a graduate fellowship at least half-time; are enrolled in a rehabilitation training program; are unemployed (three years); or are experiencing economic hardship (three years). The proportion of income consumed by Federal education loan payments determines economic hardship. As an example, if your monthly gross income is $3,115 (the average for first-year residents in 2002), your monthly Federal (i.e. Perkins, Stafford, HEAL, etc.) loan obligation would have to be at least $1,030 in order for you to qualify for an economic hardship deferment. Your lender can confirm whether you are eligible for this or any other deferment.

There is a six month grace period immediately after graduation or withdrawal before repayment begins. If the grace period is not used at this time, it is lost. Any approved deferment periods may further delay repayment. The standard repayment period is 10 years, with a minimum monthly payment of $50. Various other repayment schedules designed to lower monthly payments are available.

Federal Unsubsidized Stafford Loans and Federal Unsubsidized Direct Loans have the same terms and conditions as Federal Stafford and Direct Loans. However, the borrower is responsible for repaying the interest that accrued during the in-school period as well as during grace and deferment periods. Please complete the On-line Direct Loan Exit Counseling Session if you borrowed a Federal Direct Loan.

Federal Supplemental Loans for Students (SLS) do not have any grace period available. However, borrowers may request a six month forbearance that would correspond with the Federal Stafford program’s six month grace period. Otherwise, payments begin 45 days after graduation. The interest rate for loans disbursed between July 1, 1987, and September 30, 1992, is calculated by adding 3.25% to the 52-Week U.S. Treasury Bill, with a cap of 12%. The rate for loans disbursed on/after October 1, 1992, is 3.1% above the 52-Week T-Bill, with a cap of 11%. Like the Unsubsidized Stafford loan, the borrower is responsible for interest that accrued during the in-school period. Repayment and deferment provisions are the same as for Stafford loans. Depending upon the lender, you may or may not have to pay interest charges during deferment.

Health Education Assistance Loans (HEAL) have an interest rate ranging from 1.5% – 3% above the 13-Week U.S. Treasury Bill rate, depending on the lender. Repayment begins nine months after the borrower ceases to be a full-time student. If the borrower requests a deferment while participating in an internship or residency (maximum of four years), repayment will begin nine months following the conclusion of the internship or residency. Payments may also be deferred while in school full-time, in a fellowship program (two years, if income is within certain limits), serving in the U.S. Armed Forces, the National Health Service Corps, the Peace Corps or VISTA (three years) or practicing in a primary health care field (three years). Repayment must be completed within 25 years excluding deferment and forbearance periods, but always within 33 years from the date of disbursement of the borrower’s first HEAL. Delinquent loans are aggressively pursued and referred to collection agencies and/or the Department of Justice for legal action. Please complete the Health Education Assistance Loan (HEAL) Exit if you borrowed a HEAL and bring the material with you to your Exit Counseling Session.

Market-rate loans have varying repayment requirements and deferment provisions. It is recommended that you call your lender(s) to verify what your rights and responsibilities are under these programs. Telephone numbers and other information about lenders will be provided to you at your Exit Counseling Session.

RELATED LINKS