"How does anyone actually pay for PA school?" I get asked this constantly, so I brought in someone who does this for a living.

Andrew Paulson from StudentLoanAdvice.com walks through how student loans work for graduate health professions students. Federal versus private, what the protections and repayment options actually mean, and where people get themselves into trouble.

I am not a financial advisor and nothing here is financial advice. This is a conversation with an expert so you know what questions to ask and what terms to look up before you sign anything.

The theme that stuck with me: borrow for the education, not for the lifestyle. The amount you take out in didactic year follows you for a decade.

What we cover:

• How graduate loans work and why federal ones come with protections
• What to think about before deciding how much to borrow
• Budgeting while you're in school with no income
• Repayment options and forgiveness programs at a high level
• Common mistakes students make with loans
• When it's worth talking to an expert

Andrew's site: https://studentloanadvice.com

Resources:

Free Application Timeline: https://www.thepaplatform.com/services/free-application-timeline

PA Program Map: https://www.thepaplatform.com/pa-platform-map

Pre-PA Counseling: https://www.thepaplatform.com/services/pre-pa-counseling

Pre-PA Academy: https://prepaclub.thepaplatform.com/landing/academy

Mentioned in this episode:

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How do people pay for PA school?

This is a question I get all the time and the quick answer is student loans.

But it's actually much more complicated than that when you actually start looking at loans.

So today we have an expert.

His name is Andrew Paulson from studentloanadvice.com and he's going to give us the basics and some tips.

Welcome to the Pre PA Club podcast.

If you want to learn how to become a physician assistant, you're in the right place.

I'm your host, Savannah Perry.

Let's get to it.

All right, who's ready to talk about money?

This isn't something we learn a lot about in PA school, but it's so important.

So I was really excited because I connected with Andrew Paulson, who you're going to hear from today.

And he works with studentloanadvice.com which is affiliated with the White Coat Investor.

It's actually a White coat investor company.

If you are unfamiliar with that, it's a great resource for learning about finances.

Highly recommend.

And if you have questions more specifically about student loans and refinancing and what that means and what you should be doing, then studentloanadvice.com is where you need to go.

And that's where you can schedule a consultation with Andrew and actually have a specific website through them.

It's studentloanadvice.com pap and so that will take you to the PA platform website for that.

We are an affiliate with them because we think it's a really great option.

Just if you have debt, which most PA students do, that you need help navigating with figuring out the best way to handle that.

You can get that one hour, one on one consultation with one of the experts or with Andrew to come up with a customized student loan plan and six months of email follow up.

So I know there are a lot of complicated situations and it is very overwhelming.

So that's a great place to start.

And you're about to hear from Andrew on mistakes people make when it comes to loans, what it means to refinance.

We're going to talk about some specific situations, but it's hard to cover everyone's situation.

But we're trying to make the money side of things a little more transparent.

So I hope you find this episode helpful.

All of the information is in the description.

You can also find Andrew on Instagram studentloanadvice.

And if you have any questions, feel free to send them his way.

And I hope you enjoyed this episode.

Thanks for listening.

Sure.

Thank you so much for having me on, Sven.

It's a pleasure to be here.

So sure.

Just a little bit about myself, how I got into this.

Growing up, I didn't always think I was going to be in the business world.

And for a time I actually wanted to be a professional golfer.

I know we talked about this as you're close to Augusta National.

I'm a huge fan of the Masters tournament.

Anyways, I wanted to be a pro golfer for a little while, but once I got to the collegiate level, I realized my mediocrity and decided to end up focusing on my studies.

But it was a lot of fun for a number of years for me.

And then from there I had always had an interest in business and so started to kind of focus on that and try to identify the things that I was good at and I enjoyed doing, working with people, how businesses run and how they continue to grow.

And then I'd always kind of had an interest in being an entrepreneur.

So studied finance and accounting in school to really learn the nuts and the bolts of organizations.

And from there, you know, I started to study the financial markets, how to invest retirement accounts.

And you know, friends would start asking me questions about, hey, how should I save my money, how should I budget?

How should I think about, you know, investing and whatnot.

And I just really liked helping them out.

And then from there I continued my studies.

Along the way, I met my wife and sweetheart and she studied nursing.

And while we were in school, she had to end up taking out some student loans.

And so it was kind of our first experience with figuring out what to do with student loans as it can be tricky and not that easy to manage.

And, you know, we tried to pay them off through working part time and full time and full time school.

While we were doing that, we weren't able to end up paying them off afterwards.

And then after that, when we both graduated, we moved to the east coast, originally from the western United States.

And I got a job in the investment industry working with large institutions and enjoyed it, but realized that I wanted to work more on an individual basis.

Kind of like what I had been doing in school, helping friends with their finances.

And last, end of last year, the White Coat Investor, another platform, financial platform for healthcare professionals, reached out and was looking for someone to help them run a student loan business and doing one on one consultations with people.

And my background in the financial investment industry really fit the profile.

They were looking for somebody a little bit younger and hungrier to kind of step into a role to start a business.

And then I had some background in healthcare given my wife's experience.

We had some student loans that we had experienced, you know, firsthand.

And so then from there I decided to co found this business with the White Coat Investor.

And then, you know, thereafter I earned a designation for student loan planning which is called the certified student Loan Planner, which is kind of like the gold standard for student loan advising.

And I've been helping doctors, PAs, dentists, other healthcare professionals and hires ever since the beginning of this year.

Nice.

That's exciting.

Yeah, pretty much everyone who wants to become a PA has to become somewhat familiar with loans because it you may have a true statistics but for my PA school class I think all but maybe two of us had to take out loans to pay for school and we couldn't work during school so there was no option to even try to make payments.

They just kind of sat there and this was, gosh, 10, wait, how many years ago when I was in PA school?

Nine years ago.

So I think since then there are maybe some more options kind of.

But it's still a very similar process with, you know, similar interest rates and all of those fun things.

But so I think it's really cool.

And White Coat investor, for anyone listening, if you're not familiar with that website, it's extremely helpful and it's not just for documents doctors, it's for really anyone in medicine.

I've found it extremely helpful for just understanding and finding out information about money and finances and things that PA school doesn't teach you.

And that is definitely, maybe there are some programs out there that do a better job.

But for the most part my program did not have any education on finances.

They were just kind of like, hey, you're a PA now, go do it.

That's it.

Pay your loans.

And so it's not soon after graduation when they start knocking on your door and sending emails and calls about, hey, how are you going to get this set up to pay your loans back?

We want our money and hopefully at that point you're getting a paycheck.

So let's talk about some of the basics surrounding loans for our audience which a lot of students are pre pa, pre med, trying to figure out things from an undergrad level.

And I think money is a stressful part of that because there's so much unknown.

If someone's looking into a post grad medical training program like PA school, what type of loans are they typically going to be looking at or considering?

Yeah.

So you know the way to think about that when you're getting to the point where you're entering PA school or some professional degree program, graduate program, you'll generally have two options to receive student loans.

One of those is going federal student loans, which is very, very common for most.

And there's also private student loans.

And you know what, how do you end up making the decision on one or the other?

Well, generally what you do is you'll meet with the financial aid office when you start with school, and they're going to give you some type of a package of, okay, here's your scholarships, here's your grants, and here's what you can get in terms of student aid.

And generally, people will do that for federal student loans.

And, you know, there used to be a certain threshold of federal students loans that you could borrow at the graduate level.

Now there is no you can graduate.

Rather, you can take out as much as you want in terms of federal student loans through this new graduate plus loan program.

So, you know, hypothetically, if you're.

If it was $50,000 a semester for school, you know, you could take out 20,000 of what's called direct staffer, and then anything above that that you need for the rest of tuition, and perhaps to help cover your living expenditures, you could take out an additional federal student loan.

Those do come at a higher interest rate.

And so I would say that most people should probably be taking out federal student loans instead of private student loans.

And some of the reasons for that is federal student loans have a number of protections and benefits that private don't.

And I know that later in the conversation, we'll talk about when does it make sense to get into private loans or private refinance and all that?

I know we'll talk about that.

But generally, when you're in school, you can get lower interest rates through federal student loans.

And then once you post graduation from your PA program or whatever graduate program that you do, there's a number of repayment programs that are offered for federal loans that can provide you a lot of payment support.

There's also a multitude of forgiveness programs that are pretty generous for healthcare professionals as well.

And then there's also death and disability discharge with federal student loans that you can't receive generally through private student loans, son.

Interesting.

Okay.

Would all of that kind of be laid out in the terms of the loans?

Like, is that something that someone should look for before they accept a loan, is kind of looking at all these things to see what's involved?

If they're comparing, like a federal versus a private loan?

Yeah, Exactly.

So when you go to, you know, when you're getting loans in undergrad and perhaps in PA school, they always have some type of legal agreement that lays out terms and of, okay, here's your obligation to pay, here's what the interest rates would be, and, you know, here's the expected payoff once you graduate.

And there's, there's a ton of them.

It's.

It's not very straightforward for federal student loans, so it's a little bit trickier, but there, there's more, definitely more options, and they do lay out the terms for you.

And, and I will say a lot of federal student loans are fixed interest rate, whereas sometimes variable interest rates that are offered tend to be higher rates and variable.

So what that means is that as interest rates fluctuate, we know that interest rates are really low right now, but if they end up going up and you get a variable interest rate, your rate can go up with that as well.

Okay.

So with this process, I mean, we've kind of established that most PA students are going to need loans unless you're in a more unique situation.

Oh, just at what, what point are you connecting with and working with students?

Is that more before they have signed these documents or once they've kind of gotten to the end of training and go, oh, I have loans.

What now?

What do I do?

Yeah, you know, I think that most of the time people are contacting me when they're finishing up school and they're starting to wrap their head around, okay, I actually really need to figure out what to do with these lo.

Because when you're in PA school, you know, when you're going through that process of your training, you are so busy that you don't have enough time to really spend.

You know, it's ample enough to figure out what to do with your loans and what to do with your finances generally.

Right.

You're strapped with time, you know, having this condensed period of school didactic and training.

But I would say that sometimes people also reach out to me while they're in school trying to understand, you know, should I take out private loans or federal student loans?

And, you know, and how does that end up aligning with my goals?

Because a lot of times you're still trying to figure out what you want to do for a career once you postgraduate.

And I think that there's a number of programs that, you know, if you're looking into, maybe you go into a training program or fellowship program, right.

When you graduate for a year or two years, or maybe you are looking to work in a non for profit or a 501C3.

And those are very important things that can end up changing the course of the payout of your loans.

And I feel like when people are early on in PA school, they might not know.

Well, I mean, some people probably know right away what they want to do and others it might take a little while.

So I like to kind of get in at the stage of when you have an idea of what you want to do.

Gotcha.

Okay, so since you've been able to work with students and kind of figuring out these paths and timelines and what they need to be doing, what are some of the bigger kind of pitfalls or mistakes you've seen students make?

And I guess the flip side of that is what tips do you have to make sure that people are setting themselves up for success versus digging a hole?

Yeah, you know, and I think I'll preface this with the reason why a lot of people make mistakes is the information that's available out there is not that great.

And the student loans are complex and you go and they give you the financial aid, they bend over backwards to, you know, help you get into school, but then you're on your own once you, once you start school and get through school and have half to pay them back in terms of figuring out how to do that.

And there's no cookie cutter answer that's right for everybody.

It's unique and nuanced for situations.

So I'd say like number one is people taking out too many student loans.

Right?

Yeah.

And why is that?

Oftentimes, you know, you, you can kind of think of it like monopoly money.

What's another 20 grand?

You know, and I'll just pay that off, you know, I'm going to earn a really good salary.

And you know, you don't know that.

Hey, your loans are probably growing at 7 or 8%.

And you know, if you take out, you know, another $50,000 of student loans, you know, every single year, that's, that's growing at a couple thousand dollars a year that you just don't understand.

And so I'd say on that point, what can you do there is just try to make a plan in terms of how much you need to take out.

Okay, what's my living expense?

Just creating a budget, which you talk about and having that.

Whereas an idea where people are, try to live closer to campus perhaps so that you don't have to get a car loan and you can take public transit or walk or ride a bike.

That's one way that you could, you know, save money.

But there's a multitude of things that you could do.

So that would be the first thing, try to take out the least amount of loans you have to.

But I understand most will need to take out loans and most are going to be in that 100 or $200,000 range.

It is not cheap to go and get this education, this specialized education.

The other thing I would say is, you know, really people graduating and not starting to make payments where they see a large monthly payment that they need to make.

And instead of going into perhaps an income driven repayment Plan or a 25 year payment term, they see a three or $4,000 monthly payment and they just decide to not pay it for a little while.

And you can do that.

But little do you know that your loan will continue to grow.

So what I would say on that is to just learn about what your repayment plan options are and that even when perhaps you're having a hard time getting a job after you graduate or maybe you end up working part time or life happens and you have a lot of costs coming in, there's income driven repayment through federal student loans which will base your payments based on your income.

And so I would say that that would be kind of the remedy there to start on that path.

Another large thing that I see is people refinancing their student loan, not refinancing when they should, and then refinancing at the wrong time.

Questions about, and I am, that I am not an expert in loans or finances and I try to send people to the correct resources.

But that's one question that comes up a lot is should I refinance?

When should I refinance?

What does that mean?

And yeah, if you could give us some info on that, that would be very helpful.

Yeah, so let's, let's go to kind of the basics.

What really what is this private refinance?

And you can do it with a federal loan or a private loan.

And let's say that you have 10 federal loans.

What you can do is you can private refinance those 10, five federal loans into one private loan.

So effectively this private loan will pay off your federal loans and they'll issue you terms, you know, an interest rate, you know, a term like a 10 year payoff and then what your monthly payment would be.

And you can do that with one loan, you can do that with 50 loans.

And a lot of the loan the private loan servicers out there will work with, you know, if you have $10,000 of student loans upwards to, you know, somewhere in the million dollar range.

I met with clients that have had a private refinance, very, very large student loans.

Yeah, I know.

And you know, how should you think about private refinance?

When is it, when is it the right time?

And usually if you're, if you're going to graduate from school and let's say that you're not going to take a, if you're going to go into a private type position, you're not looking into nonprofit clinics or positions and your debt is about, is less than two times your income.

So let's say you have $200,000 student loans and you come out of school with $100,000 of income.

So that would be a debt to income of 2 to 1.

So if it's that or better, I would generally say that private refinancing is going to help you save money.

And why is that?

It's because you can get your interest rate, which federal interest rates when they issue those are usually somewhere between 6 and 10%.

Whereas a private student loans you could get those rates down almost to 2%, probably maybe even lower somewhere in that 2 to 4% range.

So if you're paying 3% instead of 9%, you know, you're paying one third of the interest charge every single year.

So that is usually one of the largest reasons why people would private refinance.

And you know, why do people, when is a time when somebody private refinances at the wrong time?

I think sometimes they try to do it too early before they have significant income or credit built up because they look at all those things.

They look at your debt, they look at your income, they look at your credit history.

You know, if you have a spouse and you can all they can co sign on it and they sometimes private refinance their student loans from federal student loans.

So they were paying 7% and they ended up refinancing into 7% and they just lost some of the federal protections.

So I think kind of rule of thumb, the way to think about private refinance is probably something you should look into if you're planning on working in a private type practice position and you can get a lower interest rate through private refinance.

Interesting.

I didn't realize it could be that much lower because so for reference my federal rate was 6.7% and so that was very encouraging to me to get it paid off because as I was watching the interest accrue it was a lot.

And it was a lot every Day.

I have a slightly obsessive personality and I was checking my interest daily at times and it was intimidating.

But I remember at my first job talking to one of the physicians about my plan to get my loans paid off.

And she was like, why?

Like, don't worry about it, your interest rate can't be that high.

And when she went to medical school, her interest rate was 1.5%, which is wild to me.

I was like, oh my gosh, yeah, if my interest rate was 1.5%, I wouldn't be worried.

But were, you know, much higher than that now.

So I think, yeah, I didn't realize it could be that much lower.

With, with private loan options, with loans.

Is there any, I don't know how to phrase this correctly.

Is there any time where it could be a good plan for someone to base their job on some of those repayment options?

I mean, looking at like the NHSC Scholar program or I mean, how does that play in like your actual job into what you should do with your loans?

Is that something that you look at when you're talking to clients?

I guess, yeah.

When I'm doing one, one on one consultations with, with people.

I definitely think that we factor that in, in terms of, you know, in hse, you know, are you, are you looking at the public Service Loan forgiveness program potentially?

And you know, what's your income going to be one way or the other?

If you're working in a non for profit environment, perhaps that you're not going to get paid as much as if you were in a for profit type position, but you know, what are your goals?

How does that align with things?

So I definitely think that is, is a factor that you can consider.

I wouldn't say it would be the determining factor of making the decision.

Whereas, you know, if, if you're in the position where Your debt is 2, 3, 4 times your income, it's probably going to be a good idea to look at some of the loan forgiveness options that are out there.

And there, there's really, there's two main ones aside from, you know, other, other programs that are offered through the, through your employer and grants that you can receive like NHSC that you've talked about.

And there's a number of them in each state.

So I would say that you can look into those.

But one of them is Public Service Loan Forgiveness.

And I see, you know, a number of people doing this if, if they go into PA school and then perhaps they go into a training period where they're not getting paid quite as Much and they want to go into a non for profit type position and their debts may be Maybe they're making 100,000 and their debts 200 or 250 or more than that.

It's not uncommon for me to see those numbers.

And over time they can end up making small payments over 10 years and getting their loans forgiven tax free.

There's another one that is called long term income driven repayment forgiveness, which is, it's similar to the loan forgiveness program I just talked about, but it's 20 to 25 years.

But there's more flexibility in terms of which you know the type of employment you take.

You can work full time, part time, private, you know, whatever type of employment that you want to pick, but it is a longer payoff term.

And so those are two situations that I would consider.

If your debt is two times, three times or more, your, your income and that's when you could factor that in.

But I wouldn't say it would be, you know, if your debt is two times your income, you don't have to do a loan forgiveness.

But it's just nice to see what your options are because it can end up saving you quite a bit of money in the long run.

That's what somebody told me one time, that.

And I'm interested to know if this is correct or maybe it's something that varies by state that after a certain period of time, no matter what loans are forgiven.

Is that true or is that a miss.

Oh, like in terms of making payments on your loans.

Like yeah, like they're like after, after, you know, after.

If we just keep paying for 20 years, then we won't have to pay anymore.

And I was like, are you sure?

Okay, so you're talking about the long term income driven.

Maybe that's what it is.

Do you have to like set yourself up for that or does that just happen?

So what happens is when you have federal student loans, what's going to happen is one of the federal loan servicers is going to reach out to you and say you need to make payments, enroll into a repayment plan.

So there's a number of payment plans that you can pick.

Like a 10 year plan, a 20, 25 year, which is just based on the loan size.

And they also have these payment plans that are called income driven repayment.

Talked a little bit about where it's based on your income, where if you're making 10 grand a month, your payment will be about $1,000 a month, you know, and, or you know, and so what happens is after being in one of those income driven repayment plans for about 20 years and making payments, perhaps you haven't paid down the entire loan balance, but at that time you could get your loans forgiven.

But the the catch with the long term forgiveness is that whatever your loan balance is after you've made 20 years of payments, you do get taxed on that.

Currently is what the law is.

So interesting.

See that all of that just goes over my head.

I was like, I just got paid.

I got to pay these bad boys back.

This is.

We got to get rid of this.

So awesome.

Well, where can everybody find more information about student loans and follow along with you and contact you if they have any questions or need that kind of one on one guidance?

Yeah, I'd say that if you're in the camp of you have a complex loan situation or you have no idea where to go, or you are frankly you just want an expert kind of opinion and advice in terms of if you're on the right track.

Feel free to visit our website, it's studentloanadvice.com or you can just directly email me at andrewtudentloanadvice.com we have a blog, a number of resources that you can read to look into if you have more of a simple situation.

But if you do really want somebody to help you out and give you some one on one help, feel free to book a meeting with us.

All right, well we'll have all of that information in the description and on social media so people can find you.

But thanks for sharing your expertise.

Awesome.

Thanks so much for having me.

I hope you enjoyed this episode.

If you did share it with a friend, share it on social media, leave a review and I look forward to it.

Forward to seeing you next week when we'll have another episode of the Pre PA Club.

In the meantime, you can find me in the Pre Pa Club on Facebook, on thepaplatform.com and on Instagram at the PA platform.

Bye guys.