Not Going for Loan Forgiveness?


By Weston Manley
February 12, 2020




For many physicians, going for loan forgiveness is not the best approach to payoff student loan debt.  In some cases, that’s because they are in a specialty where private practice is still this best way to go.  For others, they have relatively low loan balance.   Finally, there are those who just don’t want to mess with going for loan forgiveness and would rather pay off loans in less than ten years.  Whatever the reason, there are multiple options to consider depending on whether you are in training or an attending.  

For those in in training here are two options to consider:

Option 1: REPAYE

Since your calculated payment is likely less than the monthly interest, you receive a 50% subsidy.  Sticking with federal debt also provides the most flexibility as you can switch plans or go on forbearance if needed.

Option 2: Medical Resident Refinance

 The two main players in this space are Laurel Road (also offers AMA discount) and SoFi.  During training you pay $100/month.  After training, interest capitalizes (adds to principal) and the payment is calculated based on the selected term and interest rate.  

Deciding between the two comes down to comfort and the interest subsidy.   If you aren’t receiving much of an interest subsidy due to your income and are comfortable losing the flexibility of federal debt, the medical resident refinance is a great option. 

For attendings, it almost always makes sense to refinance your loans to lower the interest rate.  Payment terms are flexible, and you can always pay more than the minimum to pay down the loans quicker if cash flow allows. 

Check out 
https://www.credible.com/ and
https://www.laurelroad.com/

Credible is like Travelocity for student loans and Laurel Road offers an AMA discount as noted above.  See who offers you the best rate.  Don’t worry about your credit score during the initial process as it’s only a soft credit pull and doesn’t affect your credit.  Once you select which lender to go with and submit an application, then a hard credit pull occurs.  Don’t be alarmed though as it’s only a nominal temporary decline in your credit score.  Check out my post on “credit score” for more information.

Feel free to sign up below for a free loan consultation if you want additional guidance.

WM


Weston is a Certified Public Accountant, Certified Financial PlannerTM, and holds the Chartered Financial Analyst designation. In addition, Weston earned his master’s degree in accountancy from the University of Missouri – Columbia. Weston is active in the St. Louis community and board member of the Anti-Defamation League.

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