My school just offered a loan refinancing program for DO 21s who are doing primary care?

[hsk013]

My school is offering the following option for DO 21 only. This actually sounds like a bad deal to me, so I wanted to ask everyone here before doing anything. Even if we have 350k debt, I feel like REPAYE during residency, refinance after-residency + signup bonus from a hospital, and aggressive loan repayment should give me a better interest rate than this. Any thoughts?

Available to 4th year D.O. students who agree to complete a primary care residency and practice in primary care until the loan is paid in full. This is a federal government loan that is based on exceptional financial need. Interest rate is fixed at 5 percent and interest does not accrue during school or residency. Loan amount is up to $100,000 and loan proceeds are used to pay off prior years medical school loans. Limited funds

• You cannot consolidate the Super PCL with other loans. Once you accept this money, you must perform the required service.
• The Super PCL cannot be included in the Department of Education Income Driven Repayment plans. It also does not qualify for the Department of Education Public Service Loan Forgiveness Program. For more information: https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven

Penalties: Should you fail to fulfill the service obligation, the outstanding loan balance will be computed annually at an interest rate of 2 percent greater than the rate you would pay if compliant (7%). If you are not firmly committed to the practice of primary health care, you should not accept a Primary Care Loan.

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[AMEHigh]

No that doesn’t seem like a great idea. So the loan interest goes down to 5%? How long would it take to pay off the 100k? I would think a long time. I wouldn’t want to be locked in to that.

Also, there are benefits to federal loans such as being able to put them in forbearance or pause them as needed based on financial circumstances. Also all federal loans are now paused until Oct. I know it’s good to pay them, but you never know what ones financial situation is going to be.

I had to stop paying mine a couple of years ago and was so glad it was a quick phone call to stop the payments for 3 months.

 

[TwistedTea]

My school is offering the following option for DO 21 only. This actually sounds like a bad deal to me, so I wanted to ask everyone here before doing anything. Even if we have 350k debt, I feel like REPAYE during residency, refinance after-residency + signup bonus from a hospital, and aggressive loan repayment should give me a better interest rate than this. Any thoughts?

Available to 4th year D.O. students who agree to complete a primary care residency and practice in primary care until the loan is paid in full. This is a federal government loan that is based on exceptional financial need. Interest rate is fixed at 5 percent and interest does not accrue during school or residency. Loan amount is up to $100,000 and loan proceeds are used to pay off prior years medical school loans. Limited funds

• You cannot consolidate the Super PCL with other loans. Once you accept this money, you must perform the required service.
• The Super PCL cannot be included in the Department of Education Income Driven Repayment plans. It also does not qualify for the Department of Education Public Service Loan Forgiveness Program. For more information: https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven

Penalties: Should you fail to fulfill the service obligation, the outstanding loan balance will be computed annually at an interest rate of 2 percent greater than the rate you would pay if compliant (7%). If you are not firmly committed to the practice of primary health care, you should not accept a Primary Care Loan.

Does your school really think its doing you favors by offering a LOAN in return for a primary care obligation? I bet they were patting themselves on the back for this one.


The terms are awful, the rate is not good, and the (at least what looks like) loss of governmental loan benefits makes this dead in the water.

Tell them to give you 100k straight up and you will think about it.


What a joke, which school is this? Id like to call them to laugh at their offer.

 

[medstar11]

If your schools loan is anything like my school, you are interest and payment deferred until after residency. I took this opportunity at my school and my financial advisor brother calculated how much money I will save. It was a substantial chunk considering some of my loans were at the 7% range because fed loans suck. You can also pay it off as fast as you want without penalty so if you find a job that offers loan repayment you can have it set to that loan and get rid of it quickly. Who knows what interest refinance rates will be like in 4 years but having a loan at 0% interest for 3-4 years was well worth it for me.