Career and Life Planning Guidebook for Medical Residents

"Perhaps the most important question is whether you should refinance as a resident at all. Remember that any loan you refinance is no longer eligible for Public Service Loan Forgiveness and the other benefits of the federal programs.” – James Dahle, MD F I E L D N O T E S REASON #2: ORIGINATION FEES Check out the origination fees below! It’s higher than credit card balance transaction fees. The balance transfer offers I received throughout medical school included a 1% transaction fee for 15 months and balance transfer checks at 0% APR. To put in plain language, private bankswere charging me 1% up front to borrow money for 15 months interest-free. So, what is the true cost/effective interest of such a loan? One percent divided by 1.25 years = 0.8%. There are two different ways to compare this to other forms of refinancing: 1. The balance transfer has a $0 origination fee and effective 0.8% interest annually vs. a student loan with 4.27% transaction fee (which becomes your principle the moment your loan disburses) and a 6.8% interest rate. 2. The balance transfer has 0.8% origination fee and effective 0% interest annually vs. a student loan with 4.27% transaction fee (which becomes your principle the moment your loan disburses) and a 6.8% interest rate. No matter which way you look at it - how are student loans a better deal than credit card debt? Nowadays, my balance transfer offers are either 0% transaction fee for 15 months of 0% interest rate, or 2% transaction fee for 14 months of 0% interest rate. Still beats the federal student loans! Federal Student Loan Origination Fees October 1, 2019 - September 30, 2020 October 1, 2019 - September 30, 2020 Undergrad Direct Stafford Loan – Subsidized 1.059% 1.06% Undergrad Direct Stafford Loan – Unsubsidized 1.059% 1.062% Graduate Direct Stafford Loan – Unsubsidized 1.059% 1.062% Direct Parent PLUS Loan 4.236% 4.248% Direct Graduate/Professional PLUS Loan 4.236% 4.248% HPSL (Health Professions Loan) 0.00% 0.00% Managing Your Student Debt 381 WWW.PHYSICIANCAREERPLANNING.COM