Gold Level Scholarship Sponsor
I have a really exciting piece of news for you. But first, I need to get my traditional disclosure out of the way. For a number of years it was basically impossible to refinance your student loans to a lower rate. Then, a couple of years ago, a few small companies starting doing it again. The first of these I came into contact with was Darien Rowayton Bank. I was pretty excited and ran a post about it. Pretty soon I brought them on as an advertiser. Their competitors popped up and I brought them on as advertisers or as affiliate partners. If ever there was a win-win-win situation, this was it. My readers got lower interest rate student loans, saving thousands in interest on their student loan debt burdens. The lenders got some extra business (obviously making some money on it,) and I made some money from the ads and affiliate deals. There was truly no loser in the entire deal. Even the taxpayer did okay since he got his money back years before he expected. At any rate, I still have a financial relationship with all of these companies. If you refinance with them through links on this site, I make some money. However, you also get a special deal I negotiated for you from most of them- an extra $300 in addition to your lower rate (which is worth tens of thousands, but $300 is nice too.) Can’t beat that with a stick.
DRB is Refinancing Residents
Now, with that disclosure out of the way, on to the news. None of these companies are very big, and I talk with their marketing people and even their owners from time to time, including the DRB chairman of the board who bought me breakfast at a dumpy little diner when he was in town for a Park City ski trip. (Sorry Gary, I’ll pick a better restaurant next time where the waiter won’t steal your straw!) Each time I have urged them to come up with a product where somehow residents can refinance their loans prior to residency graduation. Several of them have promised to look into it and consider it, but I found out this week that DRB is the first to market with such a product.
Issues with Refinancing Residents
There are several issues with refinancing student loans as a resident.
The first is that your debt to income ratio is terrible. You might owe $300K and only be making $50K. Under any kind of standard underwriting rules, that’s pretty stupid to loan you money.
The second is that residents generally need a lower payment during residency. They literally cannot afford to even pay the interest on their debt. On $300K of student loans at 7%, under a standard 10 year plan, the monthly payments are nearly $3600, or about 85% of your salary. It just isn’t going to happen, sorry. For this reason docs have been using forbearance, or better yet, the IBR and PAYE programs.
The third issue is that the government has thrown out this great big moral hazard– the Public Service Loan Forgiveness program. Interns and even senior residents often haven’t yet decided whether they will do a fellowship or work at a 501(c)3, so they might delay refinancing until they know for sure. No sense in refinancing a loan that is going to be forgiven anyway.
The DRB Plan
DRB’s new policy (scroll to the bottom then come back and use one of the other links to get your $300) takes care of two of those three issues. They do your underwriting not based on your resident salary, but based on what the average attending in your specialty makes. Pretty cool huh. Then, in order to somewhat simulate the IBR/PAYE programs, they will allow you to make payments of just $100 throughout internship, residency, fellowship, and even six months into attendinghood. One other really cool thing about all this is that your interest isn’t going to capitalize while you’re making those $100 payments- no interest on interest compounding. Pretty sweet. Yes, if you read the fine print you have to get approved for this special program, but many of your colleagues have already been approved and you probably can be too.
Of course, DRB isn’t going to forgive your loans. So you still probably ought to wait until you are sure you’re not going for PSLF before refinancing with them. Did you get that?
DON’T REFINANCE LOANS THAT WILL BE FORGIVEN!
There, don’t say I didn’t warn you. But seriously, that is really the only catch. One of the biggest problems all of these refinancing companies run into is that people think it is too big to be true. They think it’s a scam or something. It’s not a scam! Refinance any loans that aren’t eligible for forgiveness.
Actually, there is one other minor catch for a few people, but that is getting smaller every year. Although there have been no subsidized medical school loans since 2012, there are still some residents out there with subsidized loans. You may not wish to refinance those ones until residency graduation since the government is currently covering the interest on them. But keep in mind it may be worth accumulating some additional interest in residency if you cannot refinance at these low rates when you graduate in a few years.
Some Caveats and Strategies
This announcement comes with a couple of caveats and a few unique angles. First, the caveats. These guys are still in business to make money. If you’re going to have $500K of loans and be a pediatrician, they’re not going to refinance you. You’re still a terrible bet, just like you will be upon residency completion. They’re going to go over all your documents with a fine tooth comb because now they won’t even start to get paid back for years. This isn’t the government, they’re not going to loan as much as you want just because you got into medical school.
So what are the strategies? Well, the first is for someone who knows he isn’t going for PSLF as he comes out of medical school. He may now save literally tens of thousands of dollars in interest. Imagine a surgery intern going from $300K in loans at 7% to $300K in loans at 2%. Assuming nothing is paid toward those loans for 5 years (which is basically what happens,) and then they’re paid back over 10 years, the difference in interest paid is as shown below:
| Never Refinanced | $299,075 |
| Refinanced As Attending | $168,424 |
| Refinanced As Intern | $68,740 |
Now you understand why you’re getting another weekend post from WCI? Pretty awesome huh? It’s even less interest if you pay it back in 2-5 years instead of 10.
The next strategy is for somebody who might want to be part-time, maybe on the mommy track (or daddy track) for a little bit after completing residency. Since they’re refinancing you as a resident based on your average specialty salary, rather than what your salary is actually going to be, you might be able to refinance as a resident where you would not be able to refinance as an attending.
Another strategy is for a two-resident couple. Let’s say you’ve only got a resident salary but your spouse is making a little more. Perhaps your combined income is $100K. Your IBR/PAYE payments are going to be much higher than your residency classmate with the stay at home spouse. You don’t want to file your taxes Married Filing Separately because it costs you more in taxes. But you need those low payments. Well, now your payments are capped at $100. Cash flow problem solved.
Gold Level Scholarship Sponsor
Even better if your spouse is making a little more money and you actually wanted to start paying back your loans during residency. Now instead of having to sort out co-signer issues, you can qualify based just on future income for a lower rate. With that lower rate, you might even be out of debt by the time you graduate. How cool would that be?
Will the other lenders like SoFi, CommonBond, and CU Student Loans follow suit? I hope so, but until then, if you’re a resident and aren’t going for PSLF, get busy refinancing those loans with DRB.
What do you think? Do you find the idea of refinancing your loans as a resident attractive? Why or why not? Is your IBR/PAYE payment more or less than $100? Comment below!
I love this blog, but you should flag posts like this as advertisements and better delineate them from your regular content. For me, at least, presenting it the way you do seriously erodes your credibility.
Personally, I think the opportunity for some residents to save $100K in interest on their student loans qualifies as “news” not “advertisement.” As you’ll notice in the first paragraph, my financial relationship with DRB is quite clearly disclosed.
However, you will likely notice that all 750 pages of this website have ads on them. In fact, this is a for-profit website. Taken from a certain point of view, every thing I write is an advertisement. Consider yourself forewarned!
If you find a website out there that provides this information for free, let me know and I’ll go back to practicing medicine and climbing rocks on my days off. Otherwise, I’ll just stick with disclosing my financial conflicts of interest.
More info here: https://www.whitecoatinvestor.com/conflicts-of-interest/
On behalf of all of the “unconcerned readers”, please continue posting incredibly useful, practical, valuable and appropriately disclosed articles about the broad variety of topics that you do. 🙂 Anybody who thinks this is an advertisement and not truly useful financial advice obviously doesn’t have enough student loans. (In the interest of disclosure, DRB saved me thousands of dollars in interest, so I’m obviously biased).
Advertisement? Seriously have to reset your cynicism meter. This is an opportunity to do better for yourself if your rates are higher than those offered. It is very basic math and there is no trick so long as you can understand said basic math. No one is forcing you, just letting you know there is such an option.
This is the same attitude that keeps people from refinancing mortgages or anything else that will make life generally better due to being overly paranoid.
Of course the companies offering this are trying to make money, as we all are, very few people are out there just giving things away solely out of pure decency. It is literally a win win. You get lower rates and less overall money spent, and they get some interest they otherwise werent going to get if you stayed elsewhere.
Frankly, we should be thankful there are people offering rates like this as a business model. Who out there amongst us would do anything but laugh in someones face that offered you a 2-3% ROI, no thanks I will put the money elsewhere.
Unless you have the ability to borrow a lot of money at 0.5-1%….like a bank may.
i think it’s great that you’re looking out for WCI’s credibility but in this case i think this is going too far. WCI has been pretty consistent over the years in his reporting of the refinancing options for med school student loans, and he’s always written in his posts about how he wished that there was an option for residents to refinance, prior to reaching an attending-level salary. The fact that this is now true and an option is a pretty big deal, one that could save a lot of residents a lot of money in interest, and represents, I think, something much more than just an ad. No one else as far as I know is reporting this to the extent that WCI is, and a lot of ppl would miss out otherwise.
in any case, I think it’s good overall that you’re concerned and trying to keep WCI honest, I think the intention was meant well. By the same token, I personally appreciate everything that WCI has done for me and the friends who I’ve referred to his site — he’s changed my financial outlook completely as a resident, and I’m much more disciplined and knowledgeable through him and the ppl at bogleheads. Keep it up!!
-a fan
I’m not sure that refinancing as a resident knowing one will work part time afterwards is a good idea. Sure, it makes an end run around their underwriting, but wouldn’t one be on the hook for the full 10 year schedule payment as if one were full time afterwards? Underwriting is there for a reason and that payment may well be unreasonable.
Clearly there is a risk there. Personally, I don’t think anyone should go part-time until their student loans are gone. The 2-5 years it takes to get your loans paid off are the exact same 2-5 years it takes to solidify your clinical skills as a new practitioner.
Wow.
1.90% ?!
Makes the decision to payoff instead of PSLF a lot more tempting…and comes a lot earlier when they likely have little idea where they will be working.
So glad that phase of my life is now over.
Me 2 man, me 2.
This does make refi even more attractive.. I’m starting as an intern in a surgical subspecialty next month (5year program) and have been weighing the decision to go for early repayment vs PSLF heavily. I’d place my odds of persuing a fellowship at <50%, and im not sure of the opportunities (or salary differentials) for nonprofit employment in my specialty after residency. I have approximately $205k in loans, all federal.
My wife's salary is $120k for a houshold income of ~$170k during residency and we will be living in a reasonably inexpensive area, so we should each be able to max our 403b/401k and roth contributions while still making a dent in the loans. We have no other consumer debt, (though we are considering buying a home), and approximately $100k saved in cash/taxable accounts.
Any thoughts? The idea of paying off my loans as a resident was very attractive when I thought theyd be costing me nearly 6.8% annually, refinancing makes that seem even more feasible yet considerably less urgent if I can refi to a rate only marginally above the rate of inflation, and then theres PSLF hovering out there in the ether… I had considered going against your advice and attempting a refi with my wife as a cosigner even prior to this news.
The sooner you can decide between a 501(c)3 job and a for-profit job, the better obviously. Now there is a price to keeping the door open. Personally, given your wife’s income, I’d probably try to get them paid off by the end of residency.
I’ll be a Family Medicine intern this summer with a spouse who makes about $95K, for a total household income of $145K (in southern California). Based on this, my IBR payments are close to $600/month. Granted, we had already planned to use my income to pay for additional childcare, max retirement accounts, and pay towards loans. I was just hoping the required IBR payments would be lower.
I’m going into primary care in California, well aware of the proverbial treat it will be. So, I’ve been researching repayments and forgiveness since before I started medical school. I *know* I should probably try to have my loans forgiven via PSLF, but the thought refinancing & paying them off early is tempting. My spouse’s job covers our medical/dental insurance at no cost to us (I know, we are extremely lucky). So this give me some freedom, in terms of employment, in order to maximize my hourly rate to throw towards loans to pay them off early. Refinancing makes this even more attractive & then I’m not obligated to a certain nonprofit or repayment program. I don’t like the feeling of someone else “owning” me. Paying these loans off is the best way I know to regain our financial independence and to be able to do what I want with my career. That said, I also want to do this in the most cost-beneficial way. Thoughts?
I guess contacting them to run numbers wouldn’t hurt.
Explore all your options, then make a decision. For you especially it really comes down to whether you’ll be working for a 501(c)3 or not. The sooner you decide, the better.
I’m a second year family medicine resident and think this idea is fantastic. My IBR payments are only $185 per month, but I have 3 kids, which drives it down significantly.
I have no intention of loan forgiveness at this point, but if anybody did, could you simply just split your federal loan in half and consolidate 1/2 or 2/3 or whatever ratio you calculate as appropriate for where you end up practicing?
It seems like a no-brainer for me living through this financial crunch of residency. My current federal loan is at 7.25%, so ANYTHING less than that is just money saved.
I’ve also been looking around for potential jobs and some offer straight loan repayment as an incentive for signing with them, independent of federal or private loans. I would advise whoever is out there in my similar shoes to MAKE sure federal vs private loan before signing the dotted line though….
Thanks for the news WCI – Just made my weekend!
It doesn’t make sense to split it. Either go for forgiveness by doing PAYE/501(c)3 job/PSLF, or refinance and pay them off ASAP. It’s really that simple.
I think this would some potential for me. Thanks for keeping us updated on the latest opportunities to save money! I am starting an internal medicine residency in July and I’m leaning heavily towards fellowship, but not sure which one yet. Do they allow you to make the $100 payments throughout fellowship as well. Also do you know if there is any penalty for paying off your loan more quickly than the loan agreement once you are earning the salary of an attending?
No prepayment penalties with any of these companies that I know of.
This sounds like a great deal – finally, a break for residents! I have a hard time paying my monthly payments on my $250k loans even with PAYE program. One question though: is it worthwhile to refinance ALL my loans, including the subsidized ones, or only the non-subsidized and private loans?
I’d leave the subsidized ones out. You can refinance them upon residency completion. Better to have the government pay the interest when possible.
He WCI, I sent in an application for DRB and it was rejected, my credit score is 777 so I believe it was due to my debt to income ratio. I think The application asks for my job and salary, is that the part that I should put my average salary as an attending instead? I am just trying to be honest but if they know that I am filling my application with my potential future earning I think it would be accepted. Is it best to just apply over the phone since this policy for residents is new? I second Matt by the way. if other people don’t like that you make money for your services they can go somewhere else, but I know this website will save me tens, if not hundreds, of thousands of dollars over the course of my career. Thanks again for all you do!
That’s a good question. I bet you probably do need to call for now on this as it is so new. I’m sure the software will catch up soon.
This sounds like a great option. The PSLF doesn’t work for me for a few reasons and this finally gives a good option. Does anyone know if refinancing would keep me from deducting student loan interest on my taxes? My med school loans are all federal
No. The interest is still deductible to most residents and not deductible to most attendings.
Great, thanks. As an update I just saw a DRB booth at the hospital I work at and there is an extra discount for house officers (on top of the checking discount), so it may help some residents to get in touch with any unions or reps in charge of employee benefits.
Disclosure, I’m not a doctor but I’m married to one. Actually she will be starting her residency this summer. Love your website, came across it the first time hunting for physician loan programs. I think it contains good information for the general mass as well. This article just coincidentally popped up in my google now cards this morning and my eyes were buzzing. Sounds like great news overall. Here’s where I had some comments/questions.
1. I got confused when I read “subsidized loans” and interest would be paid by government during residency. Is this true? I thought all her loans were in payment period once she graduates medical school this summer. She has one subsidized loan that was issued in 2011.
2. We have a unique situation (albiet not unheard of), I have a full time job and I earn a decent paycheck. We can live off my paycheck and was planning on using hers to pay off the med loans. I was actually planning on refi her loans this year until I read this article. Makes me think that we would have never been to refi. Is this true? Does our unique situation benefit us with DRB or other refi companies? Her total loan amount is also very low compared to the typical med student (mom and dad paid her tuition).
3. Assuming this option wasn’t available, would I have been able to refinance her loans at the end of this year?
Part of the IBR/PAYE program is payment of subsidized loan interest (but not unsubsidized loan interest) by the government. That’s my understanding anyway. I’m sure someone will be along shortly to correct me if I’m wrong.
I’m not sure what else you’re asking.
In terms of subsidized loans, I thought the interest was only paid through the end of your deferment time, which is typically 6 months following the end of medical school. Granted I am not electing for IBR/PAYE so I don’t know what their policy is, but I can’t imagine they would continue to cover the interest costs on your subsidized loan?…
Actually this is from ibrinfo’s website:
“If your reduced payment under IBR does not cover the interest on your loans, the government will pay that interest on your Subsidized Stafford Loans during your first three years in IBR. After three years, and for all other loan types, the interest will accrue but not compound. That means it will be added to your principal, but interest will continue to accrue only on the original principal amount. Anything you still owe after 25 years of qualifying payments will be forgiven. “
So if I understand this correctly, if you start IBR right after graduating medical school, subsidized loans will start accruing interest after your PGY-3 year? And if you are in that position, you’re better off refinancing even your “subsidized” loans?
I’m an intern who has plans to eventually go into cardiology. I went to my state school and am paying slightly over the monthly standard repayment rate for my loans, which are now just under 80k. Would you recommend refinancing and paying the same amount over the $100/mo, or do you anticipate that they would require me to continue on a traditional payment plan since I am already doing the standard repayment?
If you aren’t going to go for PSLF, and DRB refinanced you, I think the only requirement is $100 a month.
Go through the application process and see what the numbers are that they tell you.
You are way ahead of the game and will easily win.
This is definitely very good news for us current residents, but it also makes the question of PSLF vs refinance/repayment more difficult to answer.
Especially for those of us early in training, with middle of the road debt and future anticipated earning, etc (in contrast to the hypothetical FM resident who is 300K in the hole).
Dr. D – this may be a good topic to explore in a future article if you have time
I’m not sure there is much more to it than whether or not you are willing to work for a 501(c)3. If so, then you’ll come out ahead. If not, refinance ASAP.
I just used DRB to refinance my remaining (160k worth) loans. They were fairly easy to work with but there is quite a bit of back and forth, stick it out though. After about a month of scanning, faxing, and replying to emails I was approved for a variable 2.17% that will be reduced to 1.92% if I open a DRB checking account. My previous loans were at 4.5 and 6.6 %. So, even though this is an “advertisement” it’s also mutually beneficial for many of the readers. Thanks WCI for saving me thousands.
1.92%….the Holy Grail of student loans in 2015. Congratulations! A lot of readers would be curious to know your DTI ratio, your state, and your credit score.
What’s your take on whether one should go for variable vs fixed. Fixed is still less than my 7.1% or whatever but not as dramatic as the variable
I would like to know this also. I was under the impression that you shouldn’t ever sign up for any kind of variable financing.
I can’t think of anything more stressful than signing up for a variable rate a couple of months prior to an interest rate hike knowing that the banks may not let me re-finance again and I will be stuck watching that number go up and up and up. 4.5% fixed is better than the Gov. offered me and I would not consider the lower and sexier rates because they won’t be as sexy in 1-2 years.
Sure, they may not be as sexy in 1-2 years, but hopefully your debt is almost gone in a few years. The longer rates stay low, the better off you are with a variable rate. Even just a year at a low rate and you may be better off in the long run.
WCI-
I am 3 months out from finishing my fellowship and have a contract with a nice base salary in place starting in August. My questions is: should I just wait these last few months so I can apply to all of the companies (SoFi, Common Bond, DRB etc) and look for the best rate or should I just go ahead and apply to DRB now to see what they will give me right now? My inclination is to just wait these last few months to get the best rate possible at an attending salary. Thoughts? Thanks for all you do.
At this point, they’ll all refinance you based on your attending salary using your contract. If your contract isn’t with a 501(c)3, no sense in waiting any longer.
I am in the same boat, graduating in 3 months. I have 150K in student loans with a contract in place for a base of 200K. I was under the impression that all other student loans companies would not re-finance you until you began making the attending salary. As the companies want you to start repaying the loans immediately and do not have a grace period, similar to the monthly $100 DRB is advertising now. Am I incorrect? I just applied to DRB only currently.
Most will refinance you when you have an attending contract- but no lower payments. I wouldn’t be surprised to see that change very quickly though. This is a competitive space.
If I were to be very unlucky and be hit by a bus and die my federal student loans would be forgiven. My understanding is that loans that are refinances to private companies do not have this benefit and my family would be on the hook for $100 K of debt. Is that true? Would you need to have a life insurance policy to cover that possibility?
Read the fine print. I’m not sure the policy is the same with all companies. But even if you are on the hook, it’s still a better deal even if you also have to buy a 5 year level term life insurance policy for a few hundred thousand.
Appreciate the very helpful post! While this refi option is definitely a better option over current fed loan rates for residents, I was wondering what happens if a resident is unable to complete residency (thus being under/unemployed) for whatever reason? Do they still get to make $100/mo payment? Feds usually will take your current income into account for IBR/PAYE so, this situation impacts required monthly payment.
Good point. That’s a real risk. I’d be curious to hear DRB’s take on it, but no, there is no forgiveness and no $100 a month forever deal when you refinance. If you’re worried about flushing out of residency, stick with the government programs.
Thanks for the post – I’m new to thinking about all of this (unfortunately). I am in my fourth year of orthopedics residency with a spine fellowship to follow. Therefore, I have two more full years. My wife is an anesthesiology resident finishing in a couple months and then doing a pain mgt fellowship. We both have about $380,000 in loans and both of us have been in forebearance. I like the thought of this as we are both at 6.8% interest compounding. I wonder thoguh if we will be able to pay it all off in 5 years to get the best rate as we carry so much debt rather than take longer.. Any thoughts?
Yea, I wonder too. You guys owe nearly 3/4 of a million bucks and growing rapidly. Can it be done in 5 years by an orthopod and anesthesiologist? Absolutely. But it’s going to require some sacrifice. That’s a lot of debt. But if you’re throwing $20K a month at it….it won’t last long.
I guess looking into it now it is only $318,000 a piece, but still…. I’ll have to do the math to determine which is better, maybe the 10 year option is better. Considering we would have 2.5 years and 1.5 years of no capitalization, that would be solid. Either way still saves a lot of money on the decrease in interest points.
I should clarify —- 380,000 EACH
Sure, you could pay it off in 3 years. It depends on how willing you are to live like a resident for a little while longer. You have a lot of income coming your way. Just study a bit here on how to chill with your spending and you will be rosy.
So you say 3 years… this is assuming two more years of residency/fellowship, right? So these loans are actually much shorter at your “attending” salary if you knock off the time left in residecy?
I’m a little confused on what rates are being offered here.
If you refinance a resident, with payments capped at $100 or whatever, what rate will DRB give you? By the looks of their website, their 2% rate is only for notes amortized over 5 years (not notes that are capped at $100/mo for 5 years during residency, and then paid off in 10 after that).
Seems like such a loan would be, at best, considered a 15 year loan, which carries a minimum 3.01% rate according to DRB.
Rates vary. You have to at least partially apply to find out what rate you’ll get. That’s the same with any company.
Understood. Your article makes it sound like you can refinance as a resident for 2%, paying a monthly payment of $100 for 5 years, and then make full payments to payoff in 10 years. DRB’s website appears to show that is impossible, no matter how creditworthy the applicant.
Thanks WCI for this new update. I’ve been following you since I got in to med school 5 years ago and really appreciate the personal finance advice. I’m about to start a military internship this coming July and have been weighing the options of refinancing my students loans, especially now that DRB is open to residents. I joined HPSP in my 2nd year but accrued $55k federal student loans in my first year as well as undergrad. In your opinion, would it make more sense to refinance the loan to a lower rate and pay it off early (~2-3) or look for PSLF given my service commitment?
How long is your commitment? A 5 year residency + 5 year military payback and you’re done! Of course, it’s also only $55K. Probably half that by the time it’s forgiven.
Commitment is 4 years active duty + 4 years reserves after residency is completed. As a single resident with no dependents, I’m anticipating I could pay it all off in 2-3 years while still in my residency training, like you said its only $55K. I just was curious whether you see a clear benefit of waiting for loan forgiveness vs becoming debt free (hold no other credit card/loan debts). My current plan is to refi and pay it off.
If you run the numbers, you probably still come out ahead getting some forgiveness since you’re going to be in a 501(c)3 or government job for at least 7 years, you would only need 3 more. That said, it’s only $55K, and it’s nice not to have any student loans at all, especially by the time you come out of residency. Seems silly to drag such a small debt out for 7-8 years longer than necessary, especially when PSLF could go away.
I appreciate your input. Certainly I could bet on loan forgiveness but its starting to seem like more sound advice to just pay it off as soon as possible and put the remaining into Roth IRA/TSP. Also, PSLF would make more since if I could do IBR payments and forgive the remainder after 10 years, but military pay wouldn’t put me in that income bracket so I would have to choose with one of the 10 year plans which would eventually pay it off after 120 payments regardless. My plan was to maximize paying off principle while leaving $5500 in Roth IRA (I’ve done my research and this seems to be more advantageous and certainly more flexible than dumping money into the Roth TSP). Since I’m likely going GMO I hadn’t planned on taking on any more debt such as owning a home or buying a car. Thanks again for the response!
Jim the true Holy Grail of student loan refinancing exists in North Dakota. We have the only state owned bank in America and thus special deals to residents or people who have gone to school here.
I just refinanced at 1.77% variable and will get a 0.25% reduction for using automatic payment for a grand total of 1.52%! Rate increase can not exceed more than 1% a year. My previous 200K in loans was fixed under 4% but with plans to have them gone in about 3 years was a no brainer.
If currently a ND resident or have loans from the Bank of ND due to being a prior resident or having gone to school in ND worth a look to see if you qualify. Just Google DEAL loan from Bank of ND and you’ll find it.
Cool, that’s one I’ve never heard of. Unfortunately, it’s obviously only available to very small fraction of docs.
WCI,
I have been an on and off again reader (more on lately as I am about to graduate med school and this finance situation is becoming all too real) for the past 2 years. I have referred almost every med school friend of mine to this blog and even some finance people who work with docs. I love it! Working through your book now as well as I have this month off before graduation and residency starts up.
This resident refinance option seems too good to be true. My wife and I were just sitting down the other day going over my loans (undergrad and med school, she fortunately has no loans from undergrad and did not do any graduate education), and there is no way we would be able to pay the monthly payments. I have about 250k of debt (currently 297k with interest added in), going to go intern in CA for below 50K. My wife does not have a steady/consistent income as she is an artist so we cant really rely much on her income to compensate for my lack of income to pay down these loans. I was reading through the post and you mentioned that obviously they will not refinance a peds residents loans…which makes some sense.
My question is, with my above stats, and going into Physical Medicine and Rehab, would DRB be willing to refinance my loans? Im not sure they even know about PM&R (its not even listed on Medscapes current compensation report) as its a relatively unknown specialty for most? Thoughts?! Oh, I also dont plan on going 501c3, so the PSLF is out of my plans at the moment.
Again thanks for all these posts and keeping us medical students informed!
Sincerely,
Broke Medical Student up to my epiglottis in debt!
Only one way to know, but it certainly sounds like it is worth your time to apply. Remember not to refinance subsidized loans and also remember you may change your mind about the 501(c)3 thing, and if so, you’ll kind of be hosed.
Hi WCI,
I’m an IM resident with 211K of debt (consolidated at 6.7% for both direct and indirect), about to finish residency in ~1 year and will look for a hospitalist job at ~180K AGI. My current IBR payments are 323/month.
I had never thought about refinancing until I started playing with the studentloans.gov repayment calculator today. Don’t ask why I haven’t done it before – some combination of ignorance, denial, and not having found your site, I suppose. I was never sure I’d do PSLF (and haven’t signed up yet), but I always thought IBR would be a cost-effective payment plan. As it turns out, I won’t have any amount forgiven. The total amount I’d pay through IBR (307K according to the calculator) would be significantly greater than with a 10-year standard repayment plan (256K if refinanced at 4%). So I’ll definitely take a look at possibly refinancing. Thanks for this post!
For anyone curious about forgiveness in the event of death here is an email I received from a banker that works with the program.
“For new loans we forgive debt in all states in the event of borrower death. Let me know if you have other questions.” “Yes, same with permanent disability.”
Aryea Aranoff, CFA [Contact info for Mr. Aranoff removed at his request-you wouldn’t want your cell phone on the internet either probably.Contact info for DRB is very easy to find.-ed]
I’ve spoken with the bank about this, but I’m a little concerned about where all this money is coming from to finance this program. I’ve been reassured that there is no need to worry, yet we’re talking some serious money here!
Exactly- I know they have been refinancing loans for several years but I’ve only found terrible reviews bashing their service (understand these are more likely to be reported) or other reviews claiming how much lower the interest rates were than others. What about reviews from people that have paid off all or a significant portion of their loans using this company? How is/was repayment experience compared to direct loans (which seem pretty hands off). In other words, if I’m going to be spending a significant extra amount of time every month dealing with paperwork during a resident schedule, that may not be worth my time.
I’m starting residency this July and was definitely thinking about using this offer so I will probably end up giving them a call soon and will post if I found out anything new.