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  • Refinancing loans

    My wife is currently finishing up her first year of residency in Internal Medicine. Her plan is to finish in 2 more years and then seek a fellowship in Rheumatology, which will be an additional 2 years. Following, she is almost certain that she will go into private practice, so the 10 year forgiveness option is really out of the picture.

    I handle all of our finances because I am in the field myself with my job (banking) and my wife really would rather have me handle it all. So, that being said as our background, I have questions regarding refinancing my wife's med school loans. I have read all that I could find on WCI regarding the topic, but as most still feel somewhat confused on our best plan. We would like to continue to pay on the overall debt at a pretty good clip, without breaking the monthly bank account (we currently have 1 baby - 19 months and another coming in September).

    So, all that being said, I am about to start the process of reaching out to lenders about refinancing the debt currently owed, which is about $187,000. As I have read, there are I think only two companies that refinance residents (DRB and Link Capital), but I think we can expand from just those 2 as I would provide a guarantee on the loan also.

    Currently, my wife makes around $50,000/annually, but has very little left over as she contributes the max to state retirement (13% I believe) and she generally covers most all of our expenses for the baby, including childcare. Additionally she pays her own health insurance as it is cheaper through her employer than adding her to my bank policy.

    I make $77,000 annually; however should be receiving a pay bump to $100,000 within the next few months. I pay all our monthly expenses including mortgage, utilities, etc.

    As stated above, she currently has around $187,000 in total loans, of which 5 of the 6 loans are priced at 6.8% and the last one is 5.41%. We currently pay $992/month, which I think is based on the graduated extended program (?). At this point, I would say around $1,000-$1,500 is where we need to keep our payment. Obviously, the lower the payment the better and I could pay the difference in additional principal every month.

    I apologize for the long post, but I appreciate any insight from someone who has "been there, done that". I wanted to make sure to have my bearings somewhat straight before I start the refinance talk with various lenders.

    Thanks!

  • #2
    Hey Mr. Hayward,

    Student loan management and Refi is a topic that is near and dear to my own mission in working to help edify others on the journey to FI. As you mentioned DRB and Link capital do work with residents.

    There are other players that are entering the market that will work with residents and fellows whilst in training. One that is coming to mind I work with is GradSchoolLoans.com

    I also like the companies that work as a form of "kayak" or "expedia" like credible or lendkey, as they will find you comparable rates with multiple lenders with only a soft pull on your credit history. As you will be having a little more time and expecting the bump in income, may as well take the time to review the best options for you which in some cases may be maintaining and then attacking the 187k once your wife is also making an attending salary.

    In addition to the articles here on WCI, I would suggest you also look through the reviews I have put together to this end as well. The Credible and Lendkey links have videos of how their system works and value proposition to borrowers.

    Here is the link:

    Review on Sofi: http://www.medschoolfinancial.com/student-loan-refinancing/sofi-student-loan-refi/

    Review on Credible: http://www.medschoolfinancial.com/student-loan-refinancing/credible-student-loan-refinancing/

    Review on LendKey: http://www.medschoolfinancial.com/student-loan-refinancing/lendkey-student-loan-refi/

    Best regards,

    Dr. J

     

    Comment


    • #3
      Hey Mr. Hayward,

      Student loan management and Refi is a topic that is near and dear to my own mission in working to help edify others on the journey to FI. As you mentioned DRB and Link capital do work with residents.

      There are other players that are entering the market that will work with residents and fellows whilst in training. One that is coming to mind I work with is GradSchoolLoans.com

      I also like the companies that work as a form of "kayak" or "expedia" like credible or lendkey, as they will find you comparable rates with multiple lenders with only a soft pull on your credit history. As you will be having a little more time and expecting the bump in income, may as well take the time to review the best options for you which in some cases may be maintaining and then attacking the 187k once your wife is also making an attending salary.

      I would suggest you also look through the reviews I have put together to this end as well. The Credible and Lendkey links have videos of how their system works and value proposition to borrowers.

      Here is the link:

      Review on Sofi: http://www.medschoolfinancial.com/student-loan-refinancing/sofi-student-loan-refi/

      Review on Credible: http://www.medschoolfinancial.com/student-loan-refinancing/credible-student-loan-refinancing/

      Review on LendKey: http://www.medschoolfinancial.com/student-loan-refinancing/lendkey-student-loan-refi/

      Best regards,

      Dr. J

       

      Comment


      • #4
        I think it will be tough to keep your payment between $1,000-$1,500 and lower your interest rate significantly because in order to keep the payment that low you will have to extend the length of repayment which bumps the interest rates up.  Even with the best variable rate from SoFi (link to calculator) you will have a payment of $1,800 a month for 10 years.  Extending it out to 15 years would get a lowest possible payment of $1,320 but then you are exposing yourselves to a variable rate for an extended period of time.

        If you are expecting your income to increase by $23,000 this year with effective tax rate of 15%? Then you should see an additional $19k a year.  That alone would be enough to cover a $1500 a month payment.  If I were you, I'd wait to see if that pay increase actually happens and if it does, refinance with a plan to use all of the additional income.

        Try out a few options on the linked calculator.

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