Student Loan Refinancing Offer seems... odd.

[RustedFox]

Hey all,

I work for a big CMG. Recently in the mail, I got an offer with my CMG's logo on it offering to "refinance my loans and save me tens of thousands over the course of my loan". I considered it, but doing the math 'takes time', and I've been busy with a thousand other thing this summer (seems every single one of my friends picked NOW to have a kid/get married/whatever). Anyone else get something like this and look into it more? I'm wondering if it doesn't have some kind of catch like - "yes, but now we have you under contract for a long time/whatever since we refinanced you."

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[BoardingDoc]

No idea what they are offering to ReFi at for you but I'm guessing because you're an attending now, you probably already have some decent rates as opposed to the 6.8% garbage my peers and I have been swallowing for 4 years. That said, if you're simply looking to shop around there are other companies out there who do med student loan refinancing e.g. drbank.

 

[The White Coat Investor]

It would be nice to get the details. I know of several firms doing physician student loan refinancing- DRB, Sofi, CommonBond, and CU Student Loans (all of which I either have a financial relationship with or am actively trying to recruit them as an advertiser). Most attendings who aren't going to get PSLF probably ought to refinance upon residency graduation. No sense in paying 8% when you can pay 5% fixed or even 3% variable. If you graduated with me, you're probably already at 0.9-2.9% though. No point in refinancing those.

 

[scummie]

Not to thread hijack, but how common is it to negotiate student loan repayment as part of your contract? I guess in the perfect situation you could negotiate a company Corvette and a black American Express, but would like to know if anyone has been successful getting their employer to pay off some of their loans.

 

[BoardingDoc]

Not to thread hijack, but how common is it to negotiate student loan repayment as part of your contract? I guess in the perfect situation you could negotiate a company Corvette and a black American Express, but would like to know if anyone has been successful getting their employer to pay off some of their loans.

This issue has been addressed before.

http://forums.studentdoctor.net/thr...of-employment-contract.1039037/#post-14565580

Edit: and here: http://forums.studentdoctor.net/threads/loan-repayment.994221/#post-13857620

 

[The White Coat Investor]

You can negotiate anything you want. It's all just money to the employer. Want to make less salary and get more loan payback? No problem. Oh...you wanted that in addition to the offered salary. Good luck with that.

 

[Birdstrike]

Not to thread hijack, but how common is it to negotiate student loan repayment as part of your contract? I guess in the perfect situation you could negotiate a company Corvette and a black American Express, but would like to know if anyone has been successful getting their employer to pay off some of their loans.

Very few (if any) jobs are so desperate they're going to add anything extra in without just deleting it from some other line item.

Sure. I'll do all that for ya'...

Corvette? No problemo ($60,000 taken out of previous offer).

$50,000 in loans paid off? Sure. (Reduce previous offer by $50,000)


Also, any group is going to really wonder about someone asking for some random Corvette to be thrown in on their contract. Like, "We're offering this guy a job for thousands of dollars per month. Why can't this guy go sign the lease papers on his 'vette himself. We're not paying him enough to afford a car for Pete's sake?"

In the military you may get some loan repayment, or some private practice job/location that sucks so bad no one will agree to work there. In either case it's money, earned and not a "freebie."

There's no free lunch.

 

[RustedFox]

Good replies, all.

My point with my original post was really more... "Hmm... awfully funny to see a CMGLogo! on this offer for refinancing."

 

[scummie]

Thanks guys. Saw those other threads right after I posted. Just trying to think of any and all possible ways to pay off $450K+ in student loans as quickly as possible. I have friends that graduated this year who went out and bought new Lexuses (sp??) and condos. Pretty sure that is the opposite of what you should do. Looks like I'll be sticking with the White Coat Investor for financial advice.

 

[JMC2010]

I'm pretty close to pulling the trigger with SOFI and going for the 3% variable rate and paying aggressively. I've been back and forth on it for about a month now but it seems to be the right move.

 

[The White Coat Investor]

Make sure they actually offer you that 3%. I've heard it's tough to qualify for their lowest rates. Probably still better than what you've got now though.

 

[Old_Mil]

I tend to buy dividend yield when I invest - I prefer to do that than to rely on share price appreciation alone. Right or wrong, the way I see it is in a mature business I would rather have a dollar in corporate profit in my brokerage account than in the tank of a board member's Lear. The absolute best yield I have in my portfolio right now is 7.8%. That should put a 6.8% rate into perspective... buying that sort of return in thIs market is no easy task. If you can lower it to a FIXED rate early in repayment do it. Even better is to continue living like a resident following graduation and cut a 10,000 a month check to your student loan company and watch those loans disappear...

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[The White Coat Investor]

The problem with focusing on yield is that the financial industry preys on you. There are plenty of investments out there with high yields but poor returns. Consider private REITs. They paid 8% a year for years....until they didn't, and those who held these very illiquid investments discovered they could only sell them for 60 cents on the dollar that they thought they were worth.

Dividend investing sounds nice, but total return is truly what matters. You can always declare your own dividend.

But your point, that a 6.8% guaranteed after-tax return is a fantastic investment, absolutely stands.

 

[deleted480308]

side question...is there a financial benefit to taking salary as loan repayment? (is loan repayment money taxable?)

 

[Hair Police]

That's an interesting idea - have your employers pay down your debt. Yes, it is all money to them, so $260,000 to you is equivalent to $240,000 to you and $20,000 to Sallie Mae. But since that $20,000 isn't income, wouldn't you be using pre-tax dollars to pay down debt and decrease your income tax exposure?

 

[DocEspana]

In non EM fields (I really just mean hospitalist IM, but I've actually seen it in urology too) you'll see a lot of middle America private hospitals offering loan repayment (up to 250,000) for signing rather brief contracts with them. And the salaries are competitive with nearby hospitals.

Attendings and third years signing contracts always told me it was a byproduct of the hospital losing physicians and needing to replace them fast. So they'd rather pay out an extra 250k over 4 or 5 years and potentially have you set down roots, then have people keep coming and going. Of course you could say the same place would pay you $50k more if they didn't do that, but that ignores that they are offering you straight salary that's at market value already on top of the loan forgiveness.

I think that's the etiology of the original question. But I've never heard anything like it offered in EM.

 

[neusu]

In non EM fields (I really just mean hospitalist IM, but I've actually seen it in urology too) you'll see a lot of middle America private hospitals offering loan repayment (up to 250,000) for signing rather brief contracts with them. And the salaries are competitive with nearby hospitals.

Attendings and third years signing contracts always told me it was a byproduct of the hospital losing physicians and needing to replace them fast. So they'd rather pay out an extra 250k over 4 or 5 years and potentially have you set down roots, then have people keep coming and going. Of course you could say the same place would pay you $50k more if they didn't do that, but that ignores that they are offering you straight salary that's at market value already on top of the loan forgiveness.

I think that's the etiology of the original question. But I've never heard anything like it offered in EM.

I stumbled in to your forum again for whatever reason. Currently entertaining fellowships or PP contracts w/ full loan forgiveness, competitive salary for 2-years, 5-year guarantee practice buy-in.. Not sure what you guys do/get but there's that

 

[EctopicFetus]

I would imagine that student loan repayment is totally taxable. I may be wrong on this but it would defy logic since it is monetary compensation. I know there are some excpetions like 401kobviously and health insurance but I highly doubt student loan repayment is on that list.

Also, there are some good stable stocks that pay really nice dividends. I bought some shares of DNP which has for a very long time traded right around $10. I bought it under this and it pays 6.5 cents per month and has done so for a long long time. thats 78 cents per yr or right about 7.8%. I would wait until it went down to 9.70 or so to buy (like I did).

They also have a DTF which is a tax free fund. It pays 5-5.5% tax free.

I am in no way advising buying these but just putting it out there.

 

[Old_Mil]

Student loan payment is absolutely taxable. They will give you a lump sum up front and deduct the taxes for the amount forgiven at each paycheck from your paycheck. if you leave prior to the end of your contract, of course you are responsible for the balance.

As of today, health insurance benefits aren't taxable. However 2013 W2 forms were the first to assign monetary value to those benefits.

Under Obamacare, health insurance benefits are taxable income as of 2018. If the law is not repealed - And if this is implemented - this may change the IC vs employee calculus significantly.

And yes, when investing total return is important.

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