If there is one subject that has no shortage of material to discuss, it is student debt. In part one we talked about public student loan forgiveness and the associated considerations. This month we take a look at refinance options. Back again for the second part of our deep dive into debt is Josh Lantz, CRPC® / Chief Investment Officer, Financial Advisor, at MD Financial Advisors.

About Mr. Lantz:

Josh Lantz, CRPC is a financial advisor at MD Financial a firm who helps physicians and dentists all across the country build and keep more of their wealth. Given their unique clientele, Josh has helped hundreds of doctors get out of debts, plan for their futures, and build and keep more of their hard earned wealth.

Quick Summary:

PSLF (public student loan forgiveness) is not always the right choice, consider your career goals, location, loan sizes as key factors in this decision.

As of September 2019 Private Loan rates are typically around:

• 5 yr @ 3.5%

• 7 yr @4%

• 10 yr @ 4.35%

• 15 yr @ 4.6%

• 20 yr @5.1 %

Federal loads 6.8-7%

If you have rates that are in excess of this, consider refinancing:

• Shopping rates means looking at rates (your professional financial advisor should be doing this for you) to be sure you have the best rates.

• Start by looking online and be sure you know your term before you start looking.

• Realize the rates stated on the website may not be what you are eligible for as lender considers:

  • debt to income ratio

  • credit history

  • credit score

Among other factors as they prepare their offer:

• You are not obligated to take the offer if provided to you

• Typically takes about 2 weeks to have a lender respond to your inquiry

• Be care not to do too often as pattern will be reflected on credit check and could be detrimental (2-3x per year acceptable)

Are student loans good debt or bad debt?

• Debt is debt

• General rule of thumb is you have anything on interest rate of over 5.5% it’s “bad debt”.

• Debt at lower rates are less burdensome and you can pay them off slower, i.e. mortgage

Key take home points:

• Lots of nuances to consider as you approach your decision

• Plan early (even when in med school!)

• Review your repayment options often to make sure you are still making the best decision