death grip of debt

I recently met a colleague in the surgical field, who’s in his 4th year of training, with 3 more years to go. His numbers may apply to many at the same level of training. I figure I can take this opportunity to run some numbers for those in his shoes.

PSLF eligible

Step I. Decide forgiveness or not.

If you are hoping for forgiveness and are willing to limit your job options to strictly 503c W2 (employee, not contractor) jobs, and are willing to take a pay cut working these jobs vs. working for non 503c jobs. Then go for forgiveness.

But if you don’t like the uncertainty of forgiveness program and you like to have more job options or 503c jobs are are in your field, then don’t go for forgiveness.

Step II. Refinance your student loans right NOW if you are not going for forgiveness.

Fixed interest rate goes as low as 3.5%, as low as 1.9% for variable 5-year term. This means one can save 350k*(6.8%-3.5%)= $12,250 per year in interest.  So 3 more years of training, one can save $36,750  in interest just by refinancing to a lower interest rate.

Alternatively, if you are willing to take the risk of the variable interest rate. You can potentially save 350k*(6.8%-1.9%)= $17,150 per year in interest, that’s $51,450 potential savings over the next 3 years.  This is not a guarantee since rates are variable, but you can run the numbers to see what’s the worst case scenario if the rate adjusts higher (there’s a cap on the max rate and the max number of times it can adjust up or down. read the fine print if you are considering this route.)

To refinance with DRB and get a $300 bonus when your loan close, use this link.  (If you want to research more about the company and others, be sure to use a different window. keep this link for the loan application so DRB can track your application and give you the bonus. You will be supporting DFD through this link too.)

Refinance Student Loans:


Apply to Earnest by clicking here, you will get $300 cash bonus and DWM will get a referral fee when you sign your contract. Win-win!


Apply to Common Bond by clicking here, you will get $300 cash bonus and DWM will get a referral fee when you sign your contract. Win-win!

One of the only 2 companies that will refinance residents and fellows (PGY income) during training. The other companies only refinance a typical attending (high income) with typical student loan burden.

Dr. Wise Money Image - DRB

Apply to DRB by clicking here, you will get $300 cash bonus and DWM will get a referral fee when you sign your contract. Win-win!

Email to get personal referral & $200 bonus when your loan closes. DWM gets a referral bonus too.
Email to get personal referral & $200 bonus when your loan closes. DWM gets a referral bonus too.

image courtesy of
image courtesy of


Step III. Prioritize your cash flow: where to put your dollar

Student loan vs. Roth IRA vs. mortgage vs. brokerage investing

With the limited income you have right now (50-80k in training vs. 300-500k as attending), where you put your dollars matter quite a bit. Rank your debts/investments in decreasing order and tackle the highest interest debt or fund the highest return investment first.

Personally, I didn’t feel comfortable investing (when return is not guaranteed) when there’s outstanding student debt (my student debt was snow-balling at 6.8% interest rate). Since I figure interest I save from paying down student loan is a GUARANTEED and TAX-free return. I channeled all my cash flow towards paying my student loan off first.

However, if you can refinance your student loan to a lower rate, it may not be as high a priority as funding your ROTH IRA.

Let’s say you refinance your 350k of student loans to 3.5%. Adjusted for inflation, this is a pretty low interest debt. You may then want to fund your ROTH IRA rather than paying your debt down faster than the minimum payment. (But you do need to pace yourself and be ready to pay off the entire student loan by the term’s end, be it a 5 year or 10 year term.)

A vanguard ROTH IRA index fund will give you conservatively 7-9% over the long run (30 decades). Plus, with ROTH, you pay taxes now (in the lowest tax bracket you will ever be because you make way more than now as an attending physician AND you probably have more annual income in retirement than now.) So you get to put in a post-tax dollars into ROTH, allowing it to grow at average 7-9% for the next 30 years (longer if your heir inherits it.) If you put $5,500 in this year. It gets to be $55,345 in 3 decades (assuming 8% average return) and you can enjoy this money tax-free!

As you can see, I limit the discussion to ROTH IRA vs. student loan because generally paying down mortgage ( 2-4%) or buying stocks OUTSIDE of tax-efficient vehicle (where you pay taxes on growth/return) usually are worth your money when there’s higher interest rate debt or ROTH space still available.



Step IV. Take advantage of interest free or negative interest money.

Open a citibank credit card (AFTER your student loan refinancing is done.) Citibank simplicity gives you 0% interest rate for 21 months! What would you do with interest free cash (I’m guessing you can get 10-20k credit limit if you have a resident’s income, remember to count moonlighting)?  I would all living expenses I can (I just charged my property taxes onto our credit card) onto the credit card, and funnel my paycheck towards my highest priority: be it 4.5% or 6 or 7 or 9% student loan or 20% credit card debt or funding ROTH).

Let’s say if you charge your 2k of living expenses onto your citibank card up to your 20k credit limit. Within the next 10 months, you would have freed up 20k of cash from your paychecks to throw at your student loan! And guess what, each time your throw that 2k at your student loan, the same interest rate is compounding on a smaller principle (for those with monthly interest more than 2k, at least your interest is compounded on a Less large principle). So after the initial 10 months of charging your card to the max and funneling 20k towards your student debt; you ride the credit card balance at 0% for the next 21 months. (Yes, you’ll likely be paying $200 monthly payment on a 20k revolving credit card debt.) So over the next 11 months, you will save $1,100 if your original student loan was 6%.  This is not accounting for what you save during the first 10 months.

This is pretty much effortless. You keep your current life-style, spending. You just charge your living expenses onto your credit card and put your cash towards debt/investment.

So imagine you have 2 cards. You’d easily saving a couple thousands on your student loan interest. Guaranteed tax-free savings.

What do you do when the 21 months of sweet 0% interest runs out? Read this other post.

In short, you can switch to another 0% interest or 2-3% interest deal on new credit card and ride this debt for another 1-2 years.


We work hard. Our money should at least work as hard as we do.

The easiest way to make our money work is to put it to work EARLY, like now, rather than wait till we become attending. Remember, once we are attending, we pay more taxes, a smaller proportion of our income will be truly ours to work for us. If you like the biggest bang of your buck, make a dollar work like 2 dollars for you, take advantage of the simple principle of time value of money.  Put your hard earn cash to where you get the highest return.


  • Have you refinanced your student loans? Why or why not?
  • Do you have a good credit card that’s helping you reduce your debt or fund your retirement?
  • Do you feel helpless with your finances as a resident/ fellow? Are you planning to take care of your finances AFTER you finish training? What are you doing NOW to address your debt/ savings?



What should I do? 350k @ 6.8% interest rate, 3 more years of training.

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