Brandon Barfield Co-founder Recruiting and retaining physicians using loan repayment and forgiveness programs Brandon Barfield Co-founder

Agenda Resident & Recruit Economics Public Service Loan Forgiveness PSLF Case Study Legislative concerns Refinancing Repayment Strategies Post-Training Exit case studies Salary Equivalent Demo DWOQ resources and Q&A

Changes in Student Debt Levels Debt levels have quadrupled in the last 20 years $300k ~$200k ~$89k ~$50k 1993 2000 2015

Repayment Options for Physicians Most Housestaff need payment relief during training Standard, Graduated or Extended Term MOST COSTLY! Only available during training Forbearance / Deferment Available with attractive underwriting profile Common approach with for-profit employment Refinancing 15% / 20% of discretionary income, 25 year taxable forgiveness IBR / ICR 10% of discretionary income, 20 year taxable forgiveness Only available if no loans outstanding on Oct 1, 2007 PAYE / New IBR 10% of discretionary income, 25 year taxable forgiveness (graduate level) 50% of accruing interest not charged, no borrowing restriction REPAYE Explain each in detail!

Liquidity during training Payments count toward PSLF Resident Economics Salary: $ 55,000 $56,650 $58,350 $60,000 $200k @ 5.88% 10-Year Standard Payment: $2,209 = $26,500k annual = $106k over 4 years Monthly Interest in Forbearance $980 = $11,760 annual = $47k in accrued interest PAYE / REPAYE Payment: $ 0 $76 $301 $303 $19,500 in interest savings Liquidity during training Payments count toward PSLF

A Physician’s Fork In The Road REFINANCING Private Sector High Household Income Federal Benefits not Needed FORGIVENESS PSLF Taxable Loan Forgiveness Payment Relief in Training

What is Public Service Loan Forgiveness? Eligible Loans: Direct Stafford, Direct Grad PLUS, Direct Consolidation FFEL, Perkins, HPSL and LDS can be consolidated for eligibility Eligible Payments: Borrower must use an IDR or standard 10 year payment plan Make 120 on-time payments (10 year minimum) Eligible Employment: Borrower must be directly employed by a federal, state, or local government entity, or 501(c)3 non-profit Employment contract must be full-time and 30hrs+ per week Most residents are PSLF qualified during training

PSLF Case Study Profile: 2014 Graduate Debt - $200k Specialty – OBGYN PSLF Eligible during training Future expected income - $250k Directly employed by a 501c3 hospital after training

Sample PSLF Case Study ($200k debt)

Proposed Changes, Trump and ED Expectations Current Budget Proposal re-introduced by Trump / DeVos in February Eliminating PSLF entirely Consolidate to one IDR plan 12.5% payment 30 yr taxable forgiveness for grad students Anyone who originated first loan before July 2019 will be grandfathered Reauthorization of Higher Education Act: aka The Prosper Act Direct Loan Program replaced by the First Loan Program Consolidate to one 10 year plan and one IDR (15%) plan No forgiveness, but interest costs cannot exceed those of the 10 year plan No MFS option for couples

Refinancing Opportunity Considerations Lending marketplace increasingly crowded and highly competitive Rates typically lower than Federal rates, fixed as low as 3.5% Payment terms from 5 to 20 years For graduates with $75k or less in federal debt, IDR’s and PSLF holds little value Transitioning residents with signed contract can apply 6-12 months prior to start date Considerations Loss of Federal benefits Liquidity, can you afford the payments? Fees may erode savings Fixed vs. variable rate loan types You CAN refinance an already refinanced loan

Recommended Refinancing Process 1. Identify if refinancing is suitable! Debt-to-income ratio considered No negative credit history, min 680 score Adding co-signer can improve results 2. Review existing financial and credit profile to determine if refinancing is available 3. Approach marketplace Work with an Advisor Deferment/Low payments in residency available Better rates available for shorter terms, but can you afford higher payment right after training? 4. Once terms and rates are quoted, select option in the context of your liquidity needs

Repayment Strategies Post-Training The Fork In The Road Specialty Trends Impact of The Training Years Salary Equivalent Analysis

“setting” may not qualify as Public Service Impact of Specialty Specialties with higher likelihood of for-profit employment after training: Emergency Medicine Anesthesia Radiology Paths with higher non-profit opportunity: Family Medicine Psychiatry Pediatrics Academic Non-profit “setting” may not qualify as Public Service

Exit Case Study: Forbearance During Training After 3 years of training, a graduating resident contemplates the next step in her career. She forbeared her loans during training. Is PSLF still worth the effort? What are her options? Original Debt: $300k @ 7% / Debt after training: $361k / Salary $200k Standard 10 Year payment: $4200 monthly and $506k total Refinance: 10 Years @ 4.65%: $3770 monthly and $452k total $100k bonus ($70k after tax): $3,040 monthly and $365k total PSLF: Max Payment = $1,870 monthly and $176k total

Exit Case Study: Forbearance During Training After 3 years of training, a graduating resident contemplates the next step in her career. She forbeared her loans during training. Is PSLF still worth the effort? What are her options? Original Debt: $150k @ 6% / Debt after training: $177k / Salary $300k Standard 10 Year payment: $1,967 monthly and $236k total Refinance: 10 Years @ 4.65%: $1,847 monthly and $222k total $100k bonus, 5yr Refi @ 3.5%: $1,947 monthly and $117k total PSLF: Max Payment = $2,911 monthly and $235k total

Exit Case Study After 4 years of training, a graduating resident contemplates the next step in her career. She used an IDR plan during training. How does loan forgiveness impact the economics of working for a non-profit? Original Debt: $220,000 (7.09%) Debt after training: $266,000 PAYE / $243,000 REPAYE Non-profit salary offer: $175,000 For-profit salary offer: $200,000 $162k@6.8% $58k@7.9% Discount rate = 5% Tax rate = 25% Residency starting salary = $50k increasing at 3%

Exit Case Study

Salary Equivalent Annual economic benefit of PSLF

New Resource for PSLF Employers PSLF Salary Boost & Refinancing Suitability Calculator Preliminary calculator to identify is PSLF is worth discussing The recruiter or the candidate can run basic PSLF projections in five minutes If PSLF value isn’t there, refinancing (with or without bonus) likely warranted Currently available to interested hospital partners at no fee Advisory Services offered through Larson Financial Group, LLC, a Registered Investment Advisor. Securities offered through Larson Financial Securities, LLC, Member FINRA/SIPC

Resources for Your Organization On-site training for recruitment, GME and support staff Workshops for residents, fellows, and attendings Resident / Intern orientation Grand Rounds Didactic Lectures Transition To Practice and Practice Management Courses Individual Counseling with Recruits or Housestaff Office Hours Comprehensive loan consultations (web-based or on-site) Dedicated and branded registration page Hospital-branded summaries sent to you or the physician Clear cost projections you can use to help craft your offer Direct Payment Assistance Cover the IDR payments for recruits or current staff

DWOQ Services for Borrowers FREE Refinancing Suitability Analysis, Lender Introduction and Support Individual Loan Consultations with Annual Support $295 then $60 quarterly ($495 / $75 for couples) Complete review of federal and private loan portfolio Annual repayment options overview, including Income-Driven options and loan forgiveness opportunities Overview or completion of consolidation and repayment application Review loans for refinancing opportunities Develop strategy to allocate income towards savings, retirement, home purchase and income protection Develop a timeline of action items Ongoing access to a DWOQ advisor

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Doctors Without Quarters Wishing You The Best of Luck With Your Career in Medicine Doctors Without Quarters “Till debt do us part” Brandon Barfield brandon@DWOQ.com www. DWOQ.com