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Ask Carmen: Dropping dead weight

Police watch as doctors and other medical professionals stand outside the U.S. Supreme Court.

Money is on our minds this time of year, between holiday spending and New Year's resolutions, many of us are geared up to cut where we can and start 2014 fresh. With that in mind, it's time to answer your money questions.

Joining Carmen today is CBS News business analyst Jill Schlesinger.

Suzanne from Boston, a long-time Money listener, lives with her husband who works at a tech startup. She's a resident in psychiatry, and graduated from medical school in 2011 with about $200,000 in student debt.

She currently makes about $60,000 a year and her husband makes more. They're both contributing to pay down her loans because her husband doesn't have any. She's enrolled in an income-based payment plan, so her payments are pretty small.

Suzanne is also enrolled in a public service loan forgiveness program that she's skeptical about. Allegedly, after 120 payments her student debt is forgiven. She wants to know if this is true, since the law was only enacted in 2007. Right now, she's paying the minimum payment every month, but interest is accruing like crazy. If the debt isn't really forgiven, she's going to have racked up a huge amount of debt. 

Suzanne and her husband can contribute more to her student loans, should they? Her residency is 5 years, after which she hopes to continue working in a non-profit -- but her salary will likely double.

The Public Service Loan Forgiveness program does exist, but it comes with a few caveats. "Qualifying employment is any employment with a federal, state, or local government agency, entity, or organization or a not-for-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3) of the Internal Revenue Code (IRC)," which Jill Schlessinger notes is "pretty much every hospital out there."

"The reality is if you see yourself continuing to work, you're going to have your residency and then maybe you're going to be an attending physician ... then it should work," Schlessinger says. Carmen adds it's also important that these loans are federal, as the forgiveness program only covers federal loans. 

"What you need to do is head to the administrative offices of the hosopital you are at, and talk to them about what you need in terms of paper work and information and make sure you qualify for this program," Carmen says.

To hear more advice on how to reduce day-to-day spending and other listener questions, click the play button above.

About the author

Carmen Wong Ulrich is the former host of Marketplace Money, APM’s weekend personal finance program.
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Great Advice....just a little too late. I heard your above report and was nauseated and ill for the rest of the day. I am going into my 7th year of post medical school training and realized that if I would have been paying the minimum after just 3 more years I could have my debt forgiven. Unfortunately, I didn't get that advice but will be sure to pass it on. Now I'm faced with a very really issue of having to limit my job search to positions that enable me to pay back my loans which has left out a job that is very high on my wish list.

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