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New Re-Fi Options Can Half Your Student Loan Interest Rate


If you don't want to (or can't) participate in a debt forgiveness program, you still may be eligible for a substantial cut in your interest rate.

Student loan forgiveness programs can be a great way for doctors to clear away student debt. But those programs aren't for everyone.

You may be wondering… What if I don’t work for a non-profit?

You may be wondering… Why couldn’t I just pay off my debt quicker on my own?

Ever since the banks were thrown into the pits in the depths of the debt crisis, we’ve seen a tremendous change in the way student loans have operated.

Practically every single resident or fellow is paying somewhere between 6% and 7% in interest rate. On $200,000 worth of debt, we’re talking about $13,000 a year in interest or nearly $1,000 a month!

If you think about virtually any loan, like a mortgage or a car loan, if you have a high interest rate today and tomorrow interest rates drop, you could get it refinanced somewhere. Your 6% loan can become a 5% loan.

Yet, for student loans, there became this vacuum. You couldn’t get them refinanced. Docs have been stuck with these crazy high interest rates even though the Fed has driven interest rates to be crazy crazy low. And we couldn’t make it happen!

In this void, private equity and some small banks have started to step in and make refinancing possible today for many physicians.

SoFi (Social Finance) backed by private equity investors became one of the early entrants into this space.

In a recent podcast on, founder Dan Macklin said, “I was at Stanford Business School… it’s one of the best business schools in the country. These are very smart people, very employable people, but we saw that our classmates were paying really, really high rates for their loans. First, a lot of people were borrowing and secondly, they were paying ridiculously high rates for their loans, six, seven, eight percent. We thought it was strange that once you graduated you couldn’t then refinance that debt.”

Today, SoFi specializes in refinancing loans AFTER a physician has transitioned to practice. They currently do NOT have a program while a physician is in residency.

Most physicians are paying 6%, 7%, or even 8%. SoFi’s rates have varied as low as 3.5% on a fixed rate and on 1.9% on a variable rate.

Physicians could save 2%, 3%, 4%, or 5% and slash their cost in half and as result saving tens of thousands of dollars in the process.

The interest rates quoted by SoFi can be different from physician to physician. Dan Macklin noted that, “There's no exact debt-income ratio that we're looking for. There isn’t a perfect number that I can tell you… it’s slightly different for everybody because we look at a number of things including the credit history, what school you went to, what kind of profession you're doing, where you major, etc., but among those things the salary is very important.”

The amazing this is that regardless of who you choose

whether it is SoFi or DRB or another company, there is NO cost to doing a refinancing. With mortgages, I usually think of mortgage refinancing and points. There are NO origination fees, refinancing costs, or points currently with the loan refinancers. There’s also no repayment penalty. So, you could pay back your loans earlier if you desired to.

How many people can qualify with SoFi’s lowest interest rate?

“It’s pretty much a bell shaped curve in terms of our rates," Dan Macklin said. "So, if I take out five-year rate… it goes from 1.9% to 4.1%. The average person that gets approved by SoFi somewhere in the middle…. physicians [are] among the kind of a demographic who many of them get that highest rate, not everybody gets there of course but a very, very high number of people do get it.”

You can get a $250 refinancing bonus by going to to refinance your loans with SoFi.

Another company that specializes in refinancing medical student loans is Darien Rowayton Bank (DRB). They started a little bit later in the debt refinancing game than SoFi, but are aggressively moving into their territory.

DRB has very similar interest rates and offers. However, they did note in a recent interview on that they DO NOT utilize their rates on a bell shaped curve and instead tend to offer lower competitive rates with many physicians.

In addition, they recently launched a program that residents can refinance their loans WHILE in residency or fellowship. This is completely new and unique to the marketplace.

DRB has tried to model the Public Service Loan Forgiveness Program (PSLF) and income-based repayment program (IBR) as closely as possible by limiting the maximum monthly payment to $100/mo while in residency.

In the meantime, with interest rates getting locked in at historic rates, your interest is accruing at likely half of what the used to be. Rather than a $1,000 a month, you may only be owing $400 or $500 a month.

This is tremendous when you consider the value of compounding!

The bummer is that you can NO LONGER participate in PSLF. No debt forgiveness, only debt pay-off that you create for yourself!

However, you’ll be in control of your own destiny rather than relying on the government which is worth considering.

There is something to be said for being at the wheel of your own ship navigating debt-free waters...

Dave Denniston, Chartered Financial Analyst (CFA), is an author and authority for physicians providing a voice and an advocate for all of the financial issues that doctors deal with. He is the author of 5 Steps to Get out of Debt for Physicians, The Insurance Guide for Doctors, The Tax Reduction Prescription, and his new book, The Freedom Formula for Physicians.

He’s glad to answer any questions about insurance policies or other financial matters. You can contact him at (800) 548-1820, at, or visit his website at to get a copy of The Freedom Formula for Physicians.

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