Session 156

In today’s episode, Ryan talks with fellow Florida Gator, Daniel Wrenne, a financial planner who works specifically with people in the medical field, helping medical students, residents, and physicians tackle debts and make sure they are set financially

What things should you consider when applying for loans? How do you go about this? How do you handle undergrad loans when you’re already in medical school? What happens when you’re in residency? All these and more will be answered by Daniel, so listen in!

Here are the highlights of the conversation with Daniel:

What undergrads should consider about student loan options:

Understand the various types of loans available

• Federal loans (subsidized) – better terms
• Federal loans (unsubsidized)
• Private loans – may give higher interest rates due to higher risk

What are federal subsidized loans?

The government picks up the tab on interest; lower interest rates but need-based scholarships

The decision process for a non-traditional student transitioning from the work force back to medical school:

• Start the federal route first because they have better terms.
• Line out all your life circumstances and your goals (i.e. the cost of living in your area)
• Take out the right amount of loan.
• Start making a budget and live by it.
• Work on the discipline of keeping track of your finances
• Ryan recommends the book, I Will Teach You to Be Rich
• Make sure you skin through your contract for private loans

How do you handle loans from undergrad while you’re now in medical school:

Many private loans allow forbearance options. Call them and request what needs to happen.

Forbearance: Given you’re able to display financial hardship, you can have your payment drastically reduced or zero for a period of time (usually one year)

For loan agreements that don’t allow forbearance:

Refinancing can be done but it’s really challenging unless you have a good cosigner.

What you should think about when on the brink of starting residency but with loans hovering over you?

Avoid forbearance.

The downsides of forbearance:

1. Capitalizing interests.

This is the biggest issue with forbearance. Instead of saying you can’t pay anything, reduce the amount based on your income

Income-based repayment: An alternative to forbearance in residency where you only pay a reduced amount so the interest does not capitalize.

2. Government will not pick up the tab.

For subsidized loans, the government will pick up the tab for the first 3 years of residency if you opt for the income-based repayment. If you forbear, they’re not picking up the tab.

3. You lose eligibility for those years for the forgiveness program.

*Daniel estimates that 75% of residents are forbearing. He says, one of the best financial decisions you can make in your entire life is not forbearing.

How to create a loan payback plan:

1. It depends on what kind of loan situation in.
2. If you’re going for public service loan forgiveness, pay the least amount of payment possible for the time period.
3. Focus on paying it off as quickly as possible.

Some pieces of advice for premed students:

• Forbearance is not cool. Avoid it.
• Have control over your money and work on the habit as early as possible.

Links and Other Resources

• Know more about student loans and visit Daniel’s website at www.wrennefinancial.com and check out their blog.
• Check out our partner magazine, www.premedlife.com to learn more about awesome premed information.
• Free MCAT Gift: Free 30+ page guide with tips to help you maximize your MCAT score and which includes discount codes for MCAT prep as well.
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• Listen to our podcast for free at iTunes: medicalschoolhq.net/itunes and leave us a review there!
• Email me at ryan@medicalschoolhq.net or connect with me on Twitter @medicalschoolhq