I have read and learned extensively on the topic of student loans, especially for someone who has wiped off all her educational debt as a PGY1. After learning all the factoids and nuances, loops and hoops, the singular solid conclusion I have arrived at is that student loan management plan is a personal choice.
I have heard some co-residents said they would stick with IBR and PSLF for now solely because they would regret forgoing PSLF before they know its not feasible (for example: after 6 years on IBR/PSLF, they can not find a 503c W2 job after completing training.)
I have also heard others say they’d rather have the peace of mind by refinancing now. Getting a fixed interest rate (lower than fed rates), freeing up some cash flow in training ($0-$100 minimum/month payment with LinkCapital, DRB), and keeping job options open instead of limiting them by forgiveness-eligibility.
This survey is intended to break down the complex decision matrix of student loan management. YOUR answers will guide you to what is best for you. Feel free to change the point assignments or add/subtract questions as you see fit. It is meant to get you thinking what matters to you.
Remember how you went a round of large-volume professional speed-dating during MS4 interview season before the Match? You considered as many aspects as you wished/could tolerate, and did some soul searching, then deliberated YOUR rank list.
Student loan management strategy, like many other complex and high-impact decisions in your life, is your choice. You’ve got the power.
I’m just trying to present facts and considerations. My ultimate goal is that you make a plan and you are happy with it Today. And that you are empowered to change your plan/action as you see fit down the road.
The following survey will guide you through an intentionally more personalized/ specific approach to your student loan management strategy. This post was inspired by Dr. James Dahle aka White Coat Investor, specifically his very informative flow chart below on student loan management. You can check out his original article here.
Your task: add up the points assigned to your answers for the following questions. You will see what the these points mean at the end.
- How much total student loan do I have?
- <100k (1 point)
- 100-200k (2 points)
- 200-300k (3 points)
- 300+k (4 points)
- What interest rates do I have on my student loans?
- 1-2% (4 points)
- 5-7% (3 points)
- 8-11% (2 points)
- 11+% (1 point)
- What is the stage of my medical career?
- MS 1-3 (0 point)
- MS4 (0 point)
- Early PGY (1 point)
- Late PGY/Fellow (0 point)
- Non Profit W2 employee attending (2 points)
- Private practice attending (0 point)
- Have I consolidated all my federal student loans? (Are they all eligible for forgiveness via either PSLF or 20-25 year payment plan.)
- All my student loans are consolidated and forgiveness-eligible. (3 points)
- I have NOT consolidated but I only have federal loans. (2 points)
- I have NOT consolidated & I have private loans in addition to fed loans. (1 point)
- Do I have any private loans not issued by the federal government and hence not forgiveness-eligible?
- No, all my loans are consolidated and forgiveness-eligible. (3 points)
- No, although I have not consolidated all my fed loans, I don’t have any private loans. (2 points)
- I have private loans. (1 point)
- How important is more cash flow to me TODAY? (for example, 200k debt, 70k pgy income, filing single in AZ: $652/month IBR payment vs. $0-100/month with LinkCapital/DRB)
- It’s essential for my current needs. (0 point)
- I’d like to max out my ROTH IRA knowing that it’s a tax efficient move in PGY years. (0 point)
- I will use this money to take advantage of my company 401k match. (0 point)
- I want to enjoy that cash now. (0 point)
- Not important. I’d rather pay that couple hundred more/month in student loans if it gets me greater savings on interest in the long term. (2 points)
- How important is long term interest savings to me?
- #1 priority. I’ll do everything necessary to keep interests minimal. (2 points)
- Not as important as cash flow right now. I’d rather have more money monthly right now. (0 point)
- I like to balance cash flow with long term interest savings. (1 points)
- What will my income be as an attending physician?
- 100k (3 points)
- 200k (2 points)
- 300k (1 point)
- 400k+ (0 point)
- How much do I like to work for academic hospitals or VA/governmental agencies?
- I only want to work for academic hospitals. (3 points)
- I only want to work for VA. (3 points)
- I only want to work for one of the 2 above. (4 points)
- I am open to all career settings. (3 points)
- I want to be my own boss. (0 point)
- Do I like to be my own boss?
- Yes, I enjoy setting the pace of work. (0 point)
- Yes, I like the flexibility of 1099 contractor vs. a W2 employee. (0 point)
- No, I want a fixed salary and set of options in benefits and retirement saving defined for me. (3 points)
- Am I willing to limit my career options to get PSLF?
- Yes, plus my PGY training is long; there are more 503c than private practice jobs in my practice. (3 points)
- Yes, plus my PGY training is long (so fewer years in non-profit as attending is needed); there are more private practice than 503c jobs in my practice. (2 points)
- Yes, plus my PGY training is short (so more years in non-profit as attending is needed); there are more private practice than 503c jobs in my practice. (1 points)
- No, I don’t want to say no to job simply because it is not forgiveness-eligible. (0 point)
The higher your cumulative score, the better deal PSLF (public service loan forgiveness) will be for you.
The lower your cumulative score, you will do better by refinancing your loans right now (and sequentially whenever you can get a lower rate since there’s no costs involved, so no break-even points and just simple straight forward interest savings) and pay off your refinanced loan at the pace you choose.
Did the points assigned to the answers make sense to you? What would you have done differently if you made this survey? Any question about REPAYE vs. IBR vs. Refinance? Suggestion on how to improve this survey to help our colleagues?