You Can Slay Student Debt, But There's No One-Size-Fits-All Approach

Many of our clients are young professionals—primarily physicians—starting new careers. In all but a few rare cases, they are leaving school or residency/fellowship with a mountain of student debt that would have been unimaginable 30 years ago. According to the most recent College Board Trends in Student Aid report, in 2016-17, average debt per bachelor’s degree recipient, including both those who borrowed and those who didn’t, was $16,700. Among just those who borrowed, the average debt was $28,500. Those are daunting debt levels for 22-year-old kids entering the workforce.

There are more than 2 million people, primarily with postgraduate degrees, carrying student loan balances of more than $100,000. At Aptus, we regularly work with couples who carry high-six-figure or even low-seven-figure student loan balances. Yep, we’ve worked with physician couples coming out of fellowship with more than $1 million in debt. It takes your breath away when you see it on paper.

The good news is that folks with postgraduate degrees and high levels of student debt can usually manage it down relatively quickly. It can seem overwhelming, but there are essentially two paths to slaying student debt. You can work in the public sector and pursue Public Service Loan Forgiveness (PSLF) or work in the private sector and refinance to a lower-rate consolidation loan that you pay down as quickly as possible.


The PSLF program had some alarming headlines in 2018 as the first cohort to have [theoretically] made the requisite 120 qualifying payments started to apply for forgiveness and, for the most part, were denied. In the first few months of 2018, 28,021 people applied for forgiveness and just 96 borrowers, or 0.3%, were approved for total forgiveness of $5.52 mil. Federal Student Aid (FSA) said the biggest reason for denial was not meeting program requirements like having a Direct Loan or making 120 qualifying payments. The federal government established the Temporary Expanded PSLF (TEPSLF) to help people who had made 120 payments but some or all of the payments were made under a nonqualifying repayment plan. This unfortunately was of little comfort to our client who thought he was 7 years into PSLF only to discover he was unknowingly in a nonqualifying repayment plan. As of now, that client would not qualify for TEPSLF.

To be fair, the initial applicants were [theoretically] starting to make qualifying payment when the PSLF program was in its infancy and not well understood. Many just didn’t follow the rules of the program. What we know for sure is that some people did indeed have loans forgiven under the plan, so that gives us hope.

If you have a job you love in the public sector, PSLF is still a great option. Make sure the income-based payments you will make until the loans are forgiven are less than your total qualifying loan balance. For instance, if your income-based payment—on a normal expected adjusted gross income—is $1,000 and you have 96 payments until forgiveness, you will pay $96,000. If your current qualifying loan balance is significantly more than $96,000, PSLF is probably a great deal.

Yes, there’s a strong possibility that the PSLF program will eventually be canceled or restructured, but most experts believe those already in the program will be grandfathered. The financial benefits of PSLF are typically large enough to justify the small risk of the program becoming a total bust.

If you are pursuing PSLF, we encourage you to think like a bureaucrat and cross all the “t”s and dot all the “i”s.

  • Make sure your loans are Federal Direct Loans, as defined by the Department of Education, and therefore qualify for forgiveness.

  • Make payments under a qualifying repayment plan, which will likely be Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE) or Income-Based Repayment (IBR). Take time to understand which repayment plan is most favorable given your circumstances (the flow chart at the bottom of this post might be helpful). Also consider ways to lower your Adjusted Gross Income and thus your income-based payments. For some couples, this might mean filing tax returns separately.

  • Complete and submit the Employment Certification for Public Service Loan Forgiveness form (Employment Certification Form) annually or when you change employers.

  • Make sure your loans are transferred to Fedloan Servicing.

  • Get tangible evidence from Fedloan Servicing—in a letter, online or on your billing statement—reflecting the correct number of qualifying payments. It may take time on the phone and you may have to fight to get this tangible proof, but get it and keep records.

  • After you make your 120th qualifying monthly payment, you will need to submit the PSLF application to receive loan forgiveness. Then wait and pray.


If you don’t have the desire or opportunity to work in the public sector, then the best way to slay debt is typically to refinance into a lower-interest consolidation loan. Graduate Direct Unsubsidized Loan rates are typically above 6% and often well above the rates available in the private market. With a high paying job and good credit, we’ve seen clients refinance into 5-year variable rate loans well below 3%.

We often talk about a waterfall of tax-efficient investing, and typically paying off low-interest debt may not be a high priority. With rare exception, though, our clients with student loan debt—even if refinanced at a low rate—despise that debt and prioritize its paydown higher than they would from a purely financial perspective. We are 100% cool with that approach.

As the White Coat Investor often preaches, continue to live like a resident after starting your first job as an attending until the debt is gone. Fortunately for many of our high-earning clients, they can often strike a balance of starting to save for retirement while also crushing student debt quickly.

If you decide to refinance, we’d head to the Student Loan Refinancing & Consolidation Guide on the White Coat Investor website and get rate quotes from at least three financial services companies plus Credible, a marketplace that aggregates quotes from lenders.

Hybrid Approaches

We’ve worked with clients on very tight budgets with near-term cash needs and no realistic ability to unbury from their student debt quickly. In those cases, we might recommend making income-based payments until the client is on firmer financial footing. For some people with high debt but modest income, it might be fine to make income-based payments over 20-25 years until eventual forgiveness. More likely, though, an individual might start with low, income-based payments but eventually refinance when higher income leads to higher loan repayments, making the slow-pay strategy less attractive.

There’s no one-size-fits-all approach to student loan management. We’ve worked with many clients who have both Direct and private loans and have refinanced some while pursuing PSLF on others. We’ve recommended that a client refinance, initially, into a 20-year loan to maintain flexibility until completing an expensive partnership buy in. We’ve worked with a client who went to medical school late in life, took a job in family practice and was paying some loans as slowly as possible with the hope that he’d die before he had to pay it all back. Thankfully, he was able to laugh about it.


We recommend reading “What Should I Do With My Student Loans? A Proposed Strategy for Educational Debt Management” in the February 2018 issue of the Journal of Graduate Medical Education, co-authored by Aptus founder Sarah Catherine Gutierrez. We think the flow chart below—from the JGME article—is a helpful aid in considering repayment plans through medical school, residency/fellowship and new attending positions. With some career planning, cash flow management and a strong will, you can slay debt and build wealth.

Tim Quillin