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!

Speech-Language Pathologist Salary Guide - Regular BannerSpeech-Language Pathologist Salary Guide - 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.
  • Hole in the Hull: Can One Bad Review Sink Your Practice's Reputation? Image

    articleAug 7, 2017 | 5 min. read

    Hole in the Hull: Can One Bad Review Sink Your Practice's Reputation?

    Let’s face it: little problems, when left ignored, can quickly turn into really, really big problems. Anyone who’s dealt with a leaky set of pipes can attest to that. These little leaks start off innocuous enough—an occasional drip is nothing a well-placed bucket can’t solve. However, if you fail to address the underlying issue, you could find yourself in a lot of hot water—literally. Much like leaks in your plumbing, negative reviews of your rehab therapy practice …

  • Live from the Direct Access Front Lines: The Story of Your Front Office Image

    articleOct 16, 2014 | 6 min. read

    Live from the Direct Access Front Lines: The Story of Your Front Office

    A self-referred patient walks into a PT clinic. Is this the start of a joke or a story with a happy ending? Well, that’s up to you. Your direct access marketing efforts will inspire patients to pick up the phone and dial your clinic. But then what? Your front office team is your direct access front line, and if they’re not prepared to interact with self-referred patients (i.e., those with no referral from another healthcare provider), then …

  • 4 Strategies for Proving the ROI of Outcomes Data Collection Image

    articleJan 19, 2017 | 5 min. read

    4 Strategies for Proving the ROI of Outcomes Data Collection

    You already know that outcomes data is important —and it’s becoming more important by the day as our healthcare system continues to shift from a fee-for-service model to a pay-for-performance one. And if you’ve read this post , this one , or this one , you already know the best ways to implement outcomes data collection in your practice. But, do you know how to use your outcomes data to your advantage—to ensure you’re getting the very …

  • 4 Signs Your PT Patient is About to Drop Out Image

    articleMay 29, 2018 | 6 min. read

    4 Signs Your PT Patient is About to Drop Out

    We physical therapists pride ourselves on being able to truly impact our patients’ lives. There’s really no better feeling than helping a patient reduce his or her pain and increase his or her independence. But, as most of us know, there are always those few patients who fall off the radar, bailing on therapy for good before they meet their goals. It’s a frustrating feeling for everyone involved, but luckily, there are tell-tale signs that patients are …

  • Drop the Doc: Using Direct Access to Build a More Profitable PT Practice Image

    articleJan 10, 2018 | 6 min. read

    Drop the Doc: Using Direct Access to Build a More Profitable PT Practice

    For most physical therapy clinics, physician referrals have provided a steady trickle of new patients over the years—enough to keep the doors open, at least. But, when you expand your patient acquisition efforts beyond marketing to local physicians—specifically, by turning your focus to the patients themselves—you could exponentially increase the number of new patients walking through your door. Remember, today’s patients are researching their care options before they even talk to their doctors—which means there's a huge …

  • What Independent PT Practices Can Learn from POPTS Image

    articleJul 12, 2018 | 7 min. read

    What Independent PT Practices Can Learn from POPTS

    Physician-owned physical therapy services (POPTS) get a bad rap in the private practice world. After all, many independent PTs blame them for dwindling referrals and revenues. But, those physicians are doing what every healthcare provider is doing in this challenging healthcare environment: trying to take over the world. Just kidding—trying to remain profitable by adding additional revenue streams that benefit their patients. So, rather than complain about what others are doing—and what is and isn’t fair—PTs might …

  • Improving Home Exercise Program Adherence in Physical Therapy Image

    articleJun 20, 2013 | 4 min. read

    Improving Home Exercise Program Adherence in Physical Therapy

    Research shows that only 35% of physical therapy patients fully adhere to their plans of care. I’ll let that sink in for a moment, because that number is staggeringly low. It turns out that most patients simply aren’t doing their prescribed physical therapy home exercise programs —and the most common reasons cited are lack of motivation, questions regarding self-efficacy, and perceived barriers to exercise. While it’s true that our patients are ultimately responsible for being actively engaged …

  • Scale for Success Image

    articleMar 20, 2014 | 4 min. read

    Scale for Success

    Managing growth within a multi-location organization through standardization, communication, and inclusion In today’s ultra-competitive healthcare environment, it is crucial to the success of your organization to take advantage of every possible opportunity to grow despite competitive threats from much larger players. One of the main reasons organizations attempt to grow is to take advantage of the many benefits (otherwise known as “economies of scale”) that result from such growth. As clinic owners, when we think of growth, …

  • From Staff Therapist to CEO: What’s the Right Career Path?  Image

    articleJul 20, 2016 | 6 min. read

    From Staff Therapist to CEO: What’s the Right Career Path?

    So—you’re a PT, PTA, or therapy tech, and you’ve got a nice gig at a hospital, an outpatient clinic, or an inpatient facility. You’re happy, but you can’t help but wonder what else is out there over the rainbow. In other words, you’re not sure where your career is going—or what path you should take. Well, you’re in luck, because I have a plan for you. All you need to do is follow the yellow brick road; …

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