At FitBUX, we provide advice to many student PTs (SPTs) and new physical therapists (i.e., recent-grad DPTs) who are confused about refinancing their student loans. That confusion usually stems from advertising and advice from unqualified acquaintances (my dentist still tells me what investments I should make even though he’s the worst investor I’ve ever met). But, this article is not your typical “how to refinance” post.  Instead, I’ll cover four topics that, though not often discussed, are essential to deciding if and how you will refinance. However, the bottom line is that the decision to refinance typically comes down to two criteria: savings and flexibility. Before we get started, if you need a primer on what refinancing is, I recommend reading this article first. Okay, here we go!

Top of Mind, Top of Search: 4 Ways to Help Patients Find Your PT Practice Online - Regular BannerTop of Mind, Top of Search: 4 Ways to Help Patients Find Your PT Practice Online - Small Banner

Refinancing Doesn’t Have to Be an All-or-Nothing Decision

One of the top reasons people choose not to refinance is they’re under the impression that they have to refinance all of their loans at once. For example, they believe that if they have five student loans totaling $100,000, they would have to refinance all five loans into one new loan. Although quantitatively this may save them money, it’s also a deterrent to pulling the trigger. People are so scared of making the wrong call on such a huge decision that they ultimately choose to do nothing at all.   

So, what’s so scary about refinancing multiple loans at the same time? Well, in doing so, you lose flexibility. Going back to our previous example of five loans totaling $100,000: We can assume that each loan has a different rate and a different monthly payment amount. Let’s say the required minimum payments are $242, $232, $222, $212, and $202, which is a combined total monthly payment of $1,110. Let’s also say you are prepaying $500 per month and paying off the loan with the highest interest rate first. Therefore, your total monthly payment is $1,610 ($1,110 + $500). After you pay off your high interest rate loan (in our example, it’s the loan with the $242 required monthly payment), your required monthly payment drops to $868. You can now decide to make a prepayment of $742 per month ($500 plus the $242 from the loan you just paid off) to the loan with the next-highest interest rate, or you can save that money instead.

Now, if you were to refinance everything into one loan, your required monthly payment would remain consistent throughout the term of the loan. In other words, you wouldn’t have the option of decreasing that total amount, as was the case in the example above. Therefore, when weighing the pros and cons of refinancing, you must decide whether the savings is worth the loss of flexibility.

The good news is that you don’t have to refinance all of your loans into one. For example, if you are unsure about refinancing, and one of the loans you have is $10,000 at 7.2%, you can choose to refinance only that loan and keep the others as-is. Also, you can decide to use a combination of products—such as fixed rate loans, variable rate loans, and income share agreements—and/or multiple companies to keep some of the flexibility that having multiple loans affords you.

Shortening the Term is Not Always Optional

Most people who choose to refinance are making prepayments on their loans. Therefore, they are usually scheduled to pay those loans off sooner than the terms dictate. For example, after you graduate, if you make only the required loan payments, you’ll pay them off in ten years (assuming the standard federal government loan). However, if you make a monthly prepayment, you can pay your loans off sooner—in five years, for example.

In this situation, many private lenders will try to persuade you to refinance into a five-year loan. Their reasoning is that it’ll save you the most money. In a sense, they are right, because the shorter the term is, the lower the interest rate will be.

Consider this, though: Let’s say that before you refinance, your required monthly payment is $500 and your prepayment is $600. If you choose to refinance, your new required payment would be close to $1,100. Thus, you would lose the flexibility to make a monthly prepayment of $600 on a discretionary basis. In other words, you’d no longer be able to decide whether or not you want to make that extra payment; you would have no choice but to pay the additional amount.

This isn’t to say you shouldn’t refinance; you just have to decide whether the amount of savings is worth losing that flexibility. For additional guidance, check out this video.

Refinancing May Not Fit Into Your Goals

Speaking of flexibility, one benefit of having a federal loan is the ability to change your repayment plan from 10 years to 25 years or to use a federal income-driven repayment plan. These options—which can help you lower your required monthly payment—may end up costing you more in the long-run. However, they may be beneficial to you based on evolving financial strategies or life circumstances. For example, you may want to lower your payments before starting your own private practice or having a child. In these circumstances, having the option to reduce your required monthly payment and allocate the money saved somewhere else may hold a greater qualitative benefit to you than the quantitative benefit of paying off your student loans sooner. When you refinance with a traditional lender, you no longer have these options.

There’s a Refinancing Alternative That is Often Overlooked

One refinancing alternative that’s becoming increasingly popular is refinancing a portion of your student loans with the Bank of Mom and Dad. It’s not a viable option for everyone, but it is something to consider. For example, if your parents—or another relative or friend—have an extra $10 or $20 thousand dollars in a bank account earning 0.25% interest, they could make more interest in the long run by refinancing the loan themselves and charging you a lower rate than your current loan (let’s say 4%). They are then making more money, you are saving money, and all of that money stays in the family instead of going to the government.


Are you considering refinancing your student loans? What questions do you have? Share your thoughts in the comment section below.

Joseph Reinke is the CEO and Founder of FitBUX.
  • Founder Letter: Why Data is Only One Part of the Value Story Image

    articleMar 9, 2016 | 7 min. read

    Founder Letter: Why Data is Only One Part of the Value Story

    Over the past several months, I’ve talked a lot about how therapists can prove their value (namely, through tracking outcomes data ). But, even though data provides the value proof we need, it’s not the end of the story. It’s up to us to turn that data into something meaningful—something we can act on that will actually help us demonstrate the value of our care. And that means using data in conjunction with defensible documentation to inform …

  • Why I Paid $75 Per PT Visit for Two Months Image

    articleAug 24, 2018 | 9 min. read

    Why I Paid $75 Per PT Visit for Two Months

    When I woke up after a night of boot-scootin’ my way down Lower Broadway—Nashville’s famous honky-tonk alley—my head wasn’t the only thing that hurt. In fact, the moment I stepped out of bed, I knew I was in serious trouble, even if I wasn’t quite ready to admit it to myself. Part of me was in denial that I could actually injure myself from swinging through one too many do-si-dos. But, the shooting pain I felt on …

  • Internet or In-Person: The Pros and Cons of Online CEU Courses Image

    articleNov 14, 2017 | 6 min. read

    Internet or In-Person: The Pros and Cons of Online CEU Courses

    If you’ve got a professional license, then continuing competency requirements in the form of continuing education units (CEUs) or contact hours are a fact of life—if you’d like to keep that license of yours, that is. Because so many professionals are required to complete CEUs—healthcare providers, psychologists, and lawyers, to name a few—the debate as to whether to take those courses online or in-person is alive and well. While there’s no across-the-board right answer as to which …

  • How to Hire the Best PT Image

    articleSep 13, 2016 | 8 min. read

    How to Hire the Best PT

    (Looking to hire the best  OT or SLP ? We have articles addressing both. Click the respective links to learn how to fill those positions with the best, too.) Okay, so your practice is growing—and you need to hire a new physical therapist to join your ranks. Congratulations! That’s a great problem to have. But now, you have to figure out how to go about hiring the best—because whether you’ve experienced the fallout from a bad hire …

  • How the Affordable Care Act Impacts Patient Payment Collection Image

    articleMay 16, 2016 | 5 min. read

    How the Affordable Care Act Impacts Patient Payment Collection

    You take the good; you take the bad. You take ’em both, and you have healthcare reform. Like most government-led initiatives, healthcare reform in general—and the Affordable Care Act (ACA) in particular—has inspired a lot of passionate debate. And that’s because, while it has expanded health coverage to millions of previously uninsured people (woo-hoo!), it also has given way to some less-than-positive consequences. One such effect: the trend toward increased patient financial responsibility (whomp, whomp). Out-of-Pocket Overload …

  • The Pros and Cons of Selling Your PT Practice Image

    articleJan 13, 2015 | 4 min. read

    The Pros and Cons of Selling Your PT Practice

    The start of a new year typically inspires resolutions, and you want to make it the year you tackle that list of things you’ve always talked about doing—joining a gym (and actually going), watching less TV, spending more time with loved ones, or finally taking that trip to Europe. If your list includes selling your physical therapy practice—or if you’re just starting to consider it—you’ve got a lot to think about. You probably thought long and hard …

  • 4 Subtle Ways You're Killing the Patient Experience Image

    articleJun 22, 2018 | 6 min. read

    4 Subtle Ways You're Killing the Patient Experience

    A positive patient experience is essential for instilling confidence and security in your patients—and for sustaining a healthy practice. When patients feel rushed, dismissed, or expendable, they’ll often drop out prematurely —and possibly seek care from a different PT (or move on to a whole other discipline). With that in mind, here are some of the common ways you’re subtly sabotaging the patient experience that you work so hard to create in your practice: 1. Providing a …

  • 6 Icebreakers for New PT, OT, and SLP Patients Image

    articleFeb 16, 2018 | 6 min. read

    6 Icebreakers for New PT, OT, and SLP Patients

    While beginning a new patient’s first appointment by asking why that patient is seeking your services may be the most efficient route to developing his or her treatment plan, such a direct approach can leave your patients feeling brushed off. Now, more than ever, patients want to feel connected to their healthcare providers, and that requires excellent patient communication skills on your part—communication skills that you’ll need to apply before you jump into the clinical stuff. Think …

  • Things to Consider When Taking Out a Loan to Start Your PT Practice Image

    articleAug 6, 2018 | 5 min. read

    Things to Consider When Taking Out a Loan to Start Your PT Practice

    So, you graduated from PT school—congrats! At this point, you may be thinking, “Now what?” A DPT education can take you down many paths, but if you have dreams of starting a physical therapy private practice, there’s one item you’ll need to check off your list first: securing the money to get started. And if you’ve considered taking out a business loan, there are some things you need to know. PT is a fast-growing industry, and private …

Achieve greatness in practice with the ultimate EMR for PTs, OTs, and SLPs.