Benefits: Loan Deferment

University of Minnesota OPE ID: 396900.  The OPE ID is needed when filling out loan deferment documents for your trainees. 

Federal legislation prohibits the use of "student" status for medical residents/fellows to defer the repayment of federal educational loans.  Trainees may be eligible to receive deferments of federal loan repayment for up to three years, as provided through Title IV of the Higher Education Act based on economic hardship.  If you had a Stafford/Direct Loan prior to July 1993, you would be eligible for a two-year residency deferment.  There is no medical residency deferment for Federal Stafford and Federal Perkins Loans made on or after July 1, 1993.  Once all deferment options have been used or if not eligible for deferment, a student may request a "forbearance”, which delays repayment of loans; however, these loans continue to accrue interest and the repayment period may be lengthened.  It is important to note that while you have student status for certain University and federal purposes, you do not have student status for the purpose of loan deferments.

You must indicate on the form the dates for which you are requesting loan forbearance.  (This will vary for individual loans.)  The form should be sent to your department GME office for verification that the applicant was/will be a trainee during that time period.  Apply for forbearance only after using all available economic hardship deferments.

Enclose a stamped envelope addressed to the loan office to which the forbearance form should be returned.  A copy of the completed form(s) will be sent to you, which we strongly recommend you keep on file in case of a dispute with the loan agency.

Student Loan Terms and Forbearance Options
The following loans (received at any U of M campus except UMD) are serviced by the Student Financial Collections Office in room 200 Fraser Hall.  They will advise you to file a deferment form immediately upon entering your residency in July, and to file one every year after that.  You will be able to use one deferment form for all of these loans.  However, because of the varying lengths of the grace periods, toward the end of your deferment periods, you may have to file more than one form in a year to cover the remaining months of a deferment.

Perkins
For loans received at the U of MN Twin Cities, Crookston, and Morris Campuses only:

Interest: None charged during deferment and grace periods.  Interest is charged during forbearance.
After graduation: Nine-month grace period for Federal Perkins Loan.
Then: Deferments available in cases of extreme economic hardship.

Contact your previous school or Perkins Services for information about the timing and length of prior Perkins grace periods.

Primary Care Loan (PCL)
For loans received at the U of MN Twin Cities campus only:

Interest None charged during grace period and deferment.
After graduation: Twelve-month grace period.
Followed by: Deferred entire length of residency (up to three years).

Contact your previous school about the timing of the grace period for loans.

Loans for Disadvantaged Students (LDS)
Same terms as Primary Care Loans (see above).  Forbearance available in cases of extreme hardship.

University Trust Loan
For loans received at the U of MN Twin Cities, Crookston, and Morris Campuses only:

Interest:  Must be paid during three-month grace period

Repayment begins (no grace period) shortly after graduation.  Forbearance available in cases of extreme hardship. 

Contact the UMD Financial Collections Office about servicing of University Trust Loans received at UMD.

Federal Stafford/Direct Loan
Interest: None charged during deferment and grace periods.  Interest is charged during forbearance.
After graduation: Six-month grace period.
Followed by: Economic Hardship Deferment, if eligible for residency.
Then: Forbearance available while you are in a medical residency program; contact your lender for information.

Federal Unsubsidized Stafford/Direct Loan

Interest Accrues during in-school, deferment, and forbearance periods.
After graduation: Six-month grace period.
Followed by: An Economic Hardship deferment if eligible for residency.
Then: Forbearance available while you are in a medical residency program; contact your lender for information.

MEDLOANS Alternative Loan Program (ALP) and MEDEX or MedCAP Alternative Loan Program (MAL) and MedCAP-XTRA

Interest: Interest accrues during in-school, deferment and forbearance periods; it is capitalized once at graduation and annually thereafter.
After graduation: 36- to 48-month deferment depending on length of residency.
Followed by: Forbearance available for up to three years while you are in a medical residency program; contact your lender for information.

Student Educational Loan Fund (SELF)
Interest: Interest paid quarterly during in-school periods.
After graduation: Interest only paid monthly for 13 months after graduation.
Followed by: Repayment.  No other grace periods or deferments are available.

Medical School Loan Forgiveness for Underserved Urban Communities

Forgiveness Criteria
Applicants selected into the Loan Forgiveness Program may designate an agreed on amount not to exceed $17,000 of qualified loans for each year of medical school, up to four years.  For each year that a participant serves as a physician in a designated underserved urban area up to a maximum of four years, the Higher Education Coordinating Board (HECB) annually repays an amount not to exceed $17,000 of a qualified loan.  Participants who move practice from one designated area to another remain eligible for loan forgiveness.  To be eligible for loan forgiveness, the participant must serve at least three of the first four years following graduation from the program in a designated area.  The HECB will periodically require participants to verify they are serving as a physician in a designated urban area.

Eligibility Requirements
This program is designed for medical students who plan to practice in underserved urban communities.  To be eligible, a prospective participant must submit a letter of interest to the Office of Rural Health in Primary Care:

Amy Vallery
Office of Rural Health Primary Care
P.O. Box 64975
St. Paul, MN 55164
651-201-3870
e-mail: amy.vallery@health.state.mn.us

The Office of Rural Health in Primary Care may accept up to four participants per year.  Selected participants are trainees in any year of residency training.  A year is the period from July 1 through June 30.

An underserved urban community means a Minnesota urban area or population included in the List of Designated Primary Medical Care Health Professional Shortage Areas (HPSAs), Medical Underserved Areas (MUAs), or Medically Underserved Populations (MUPs) maintained and updated by the United States Department of Health and Human Services.

Eligible Loans
Applicants are responsible for securing their own educational loans.  Eligible loans are: Perkins Loans; Stafford Loans; Student Educational Loan Fund (SELF); Primary Care Loans (PCL); Parent Loans for Undergraduate Students (PLUSs); Mayo Foundation Loans; Minnesota Medical Foundation Loans (MMFs); University of Minnesota Trust Fund Loans (UTFLs); and federally approved student loan consolidation programs.

Penalty for Non-fulfillment
Participants who do not fulfill the service commitment agreed to for full repayment of all qualified loans must repay all payments made in their behalf plus interest.

MedicalSchoolLoan Forgiveness for Rural Communities

Forgiveness Criteria
Applicants selected into the Loan Forgiveness Program may designate an agreed on amount not to exceed $17,000 of qualified loans for each year of medical school, up to four years.  For each year that a participant serves as a physician in a designated rural area up to a maximum of four years, the Office of Rural Health in Primary Care annually repays an amount not to exceed $17,000 of a qualified loan.  Participants who move practice from one designated rural area to another remain eligible for loan forgiveness. To be eligible for loan forgiveness, the participant must serve at least three of the first five years following graduation from the program in a designated rural area.

In addition, a trainee who is licensed as a physician and is participating in the loan forgiveness program may designate up to an additional $2,000 in loans above the $10,000 maximum for each year of residency during which the trainee substitutes for a rural physician for four or more weeks.  The Office of Rural Health in Primary Care will periodically require that the participant verify that they are serving as a physician in a designated rural area.

Eligibility Requirements
This program is designed for medical students and trainees who plan to practice in a designated rural area.  To be eligible, a prospective physician must submit a letter of interest to the Office of Rural Health in Primary Care:

Amy Vallery
Office of Rural Health Primary Care
P.O. Box 64975
St. Paul, MN 55164
651-201-3870
e-mail: Amy.vallery@health.state.mn.us

The Office of Rural Health in Primary Care may accept up to 12 participants per year.  A year is the period from July 1 through June 30.

A “designated rural area” is all of Minnesota except the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington; and the cities of Duluth, Mankato, Moorhead, Rochester and St. Cloud.

Eligible Loans
Applicants are responsible for securing their own educational loans.  Eligible loans are: Perkins Loans; Stafford Loans; Student Educational Loan Fund (SELF); Primary Care Loan (PCL); Parent Loans for Undergraduate Students (PLUSs); Mayo Foundation Loans, Minnesota Medical Foundation Loans (MMFs); University of Minnesota Trust Fund Loans (UTFLs); and federally approved student loan consolidation programs. 

Penalty For Non-Fulfillment
Participants who do not fulfill the service commitment agreed to for full repayment of all qualified loans must repay all payments made in their behalf plus interest.