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The Layman's Guide to Educational Debt Management

Step 1: Know what you borrowed, from whom you borrowed, and who services the loans.

Step 2: Know the "relative cost" of your student loans.

Step 3: Know your grace periods, deferment options, and forbearance options.

Step 4: Know your "decision points" and keep a calendar.

Step 5: Run the numbers before choosing a repayment option of consolidating your student loans.

Step 6: Commit to keeping good records.

Step 7: Keep a budget and know when you need the help of a financial professional.

Step 8: Know and use your support systems.

Introduction

The Laymans Guide to Educational Debt Management for Residents (second edition), is part of the AAMC's FIRST program, and is designed to help residents manage their student loans. It may also prove helpful for financial aid professionals, graduate medical education (GME) staff, and others who provide counsel to residents on how to manage their student loans.

The Guide is written in as simple terms as possible, specifically for those unfamiliar with the complexities of student financial assistance. It's not intended to be the definitive debt management document or resource manual for every conceivable question on student loans. However, it provides a sound, comprehensive look at the basic information needed to effectively manage student loans.

The Guide compliments other sources of information on resident debt management such as your medical school financial aid office, loan servicer(s), FIRST (the AAMC's debt management listserve for residents) and various financial aid offices associated with medical centers.

Before you start, keep a few things in mind:

This information is presented in logical order, starting relatively simply, then becoming more complicated. It's important to understand this information in its entirety, one Step at a time. For example, the section on grace, deferment, and forbearance provisions (Step 3) won't make much sense if you don't know the difference between subsidized and unsubsidized loans (Step 1) and how both interest rates and interest capitalization work (Step 2).
The Guide may sound similar to information received at your senior loan exit interview, especially if AAMC staff presented or if your financial aid officer used debt management materials available from our debt management program.
No phone numbers or URLs are listed in the Guide. There are far too many and they change frequently. Most borrower correspondence should indicate appropriate phone numbers and URLs for borrowers.
Use the Glossary of Frequently Used Terms to thoroughly understand the terms used. Send your feedback to Julie Fresne, AAMC Director of Student Financial Services, 202-828-0511 or jfresne@aamc.org.

Disclaimer

Information contained in The Layman's Guide is deemed as accurate as possible at the time of writing. However, due to the nature of financial aid, especially the legislative environment governing student financial aid and educational loans, information in the Guide is subject to change. We have tried to keep the Guide as thorough as possible, but also as general as possible so that the basic information on loans and debt management will be beneficial to you and not be outdated.

We encourage residents to subscribe to FIRST, the debt management listserve for residents, for the most up-to-date information