Presentation for medical residents, need suggestions about loan topic

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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bostondan
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Presentation for medical residents, need suggestions about loan topic

Post by bostondan » Tue Sep 12, 2017 8:42 pm

I give an annual talk to the Internal Medicine residents about personal finance for the graduating resident. It is basically just a typical Bogleheads presentation with a few extra discussion points on disability insurance.

I only very superficially bring up student loans, since it is difficult to generalize information for everyone. I mention PSLF (Public Service Loan Forgiveness) and some nuances they should be aware of. I also make sure they understand the basic concept of income-based repayment without getting into the details.

I no longer have any student loans, so I have not stayed very up to date with loan issues. If you were talking to medical residents now, what would be some key points you might bring up when discussing student loans?

Thanks in advance!
“There may be times when we are powerless to prevent injustice, but there must never be a time when we fail to protest.” - Elie Wiesel

mhalley
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Re: Presentation for medical residents, need suggestions about loan topic

Post by mhalley » Tue Sep 12, 2017 9:30 pm

You might check out wci flowchart. I would probably stress living like a resident until payed off, refinancing to get low rate.
You might also talk about paying off loans vs investing.
https://www.whitecoatinvestor.com/what- ... ent-loans/
https://www.whitecoatinvestor.com/stude ... investing/
Last edited by mhalley on Tue Sep 12, 2017 9:34 pm, edited 1 time in total.

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bostondan
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Re: Presentation for medical residents, need suggestions about loan topic

Post by bostondan » Tue Sep 12, 2017 9:32 pm

mhalley wrote:
Tue Sep 12, 2017 9:30 pm
You might check out wci flowchart.
https://www.whitecoatinvestor.com/what- ... ent-loans/
Great flowchart! Thanks.
“There may be times when we are powerless to prevent injustice, but there must never be a time when we fail to protest.” - Elie Wiesel

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Watty
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Re: Presentation for medical residents, need suggestions about loan topic

Post by Watty » Tue Sep 12, 2017 10:30 pm

Just for brainstorming you might consider if the loans and sequence of returns risk might fit into your presentation. The problem is that they might have a loan at X% and think that they can invest money and expect to earn XX%, their numbers might even be right. They might be tempted to keep the loans for longer than necessary so they can invest the money instead and earn the difference. The problem is that they could get unlucky and get poor investment returns early on that would be hard to recover from.

Here is what I have posted before about sequence of returns risk and mortgages but it would be similar to loans.
 If you do not pay it off then you will have more sequence of returns risk. For example in rough numbers if you just kept a $100K mortgage and also put $100K into a separate investing account which you also pay a $500 a month mortgage out of then;

a) If you get unlucky and get a modest 10% decline in the portfolio the first year then it would be down to $90K
b) You would also need to pay the $500 a month mortgage($6,000) so your portfolio would be down to $84K
c) To break even the next year you would need to gain back the $16K and another $6,000 for the next years mortgage payments which is $22K. That would take a 25.6% return on the remaining $84K just to break even.

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