#61: How to Manage Your Student Loan Debt with Jim Dahle

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Welcome to the Passive Income MD Podcast, where we talk about creating your ideal life through multiple streams of income. I'm your host, Peter Kim. If you enjoy hearing about this stuff, make sure to hit subscribe so I can bring it to you every week. Now let's get on with the show. Hey, everyone. Hope you've had a great week. Really lucky this episode to be talking to Dr. Jim Dolly. I don't think he needs a huge introduction, but he is the founder of the White Code Investor, which is well known to anybody who's read my site because he's a, you know, he's a partner of mine. I'm part of the White Coat Investor Network and have been for several years and it's been a fun partnership. And Obviously, you know Dr. Jim Dolly, that he talks a ton about student loan advice and about financial advice for physicians. And I would say he's the godfather of financial education for physicians out there today. So we're going to get an update from him. I like to bring him on the show every once in a while and find out what he's up to and all the new things he's doing, especially something called studentloanadvice.com and we'll get to that in a moment. Jim, how you doing?

Doing great. Thanks for having me on the podcast.

Yeah. You've had a busy last couple months. I think you've been traveling quite a bit, right?

Well, it wouldn't have been so bad if I hadn't spent three and a half weeks in the Grand Canyon. What were we doing? We had a great float trip. We floated the whole length of the Grand Canyon. 280 miles, 119 named rapids. Did about a dozen hikes while we were in there. It was phenomenal. It was phenomenal to just be out of contact, do no work whatsoever for three and a half weeks. It was a dream trip, a lifetime trip for sure.

That sounds amazing. But the White Coat investors are still doing stuff, right during that time.

Yeah, well, we've got a dozen people working for us now, so, yeah, we're still doing tons of stuff. And this spring has actually been incredibly busy. We have been doing a whole bunch of our outreach kind of stuff that we do. You know, we've been very, very fortunate in the success we've had with the White Coat Investor. We're super happy about that because it means we're also able to reach a lot more people. But some of these outreach things are our ways of giving back. So one of the things we did this year I published a new book. It's the White Coat Investors Guide for Students. I published that earlier this year and we actually gave a copy away to every first year medical and dental student in the country. If they were willing to say, yeah, I'll pass them out to my classmates. We sent them a box and so that was pretty fun. And then we did our Financial Educator award. We give that away every year to a doc who is doing a lot of work to educate their peers and trainees. And then of course, all summer long we're taking applications for the WCI Scholarship. I think we're going to be giving away about 70 grand in cash to professional students. So we're pretty excited about our outreach things. So that's one big category, what we've been doing this spring. We have a couple of online courses you probably heard of fire your financial advisor, Peter, you've mentioned that to your audiences in the past. We have a new version of that called Financial Wellness and burnout Prevention for medical Professionals. And what it really is is fire your financial advisor that qualifies for cme. So you get like eight hours of wellness content and you get the entire fire your financial advisor course. So now you can use your CME fund to buy this awesome course that helps you put a written financial plan in place. We started WCI store. You can buy T shirts and swag and all kinds of stuff. I'm still looking to get a passive income MD T shirt in there for people to buy, but, you know, so that's available. And then of course, what we're Talking about today, studentloanadvice.com is a big one and we're excited about that too.

I mean, I think when people look at you, you've got all these amazing things going on. Like what ultimately drives you to do all these things?

Well, I think a lot of it's just the passion for the mission. I mean, as you know, it took me a long time to figure out how to make money as a business with the White Coat Investor. I was basically doing this for free for three or four years until I really figured out the business of online entrepreneurship. And that's what drove me through that time period. You know, I'd been given help and docs on forums for years before I started the White Coat Investor and basically just got sick of typing the same thing in over and over again. So I started a blog so I could just provide a link to the blog to people. That passion's still there. It's been 10 years. We had our 10 year WCI anniversary this spring. I still feel just as passionately about helping docs not do dumb stuff with their money as I did a decade ago. So I think that's what keeps me at it, for sure.

I mean, that's awesome. I know that student loans is one of the biggest topics when it comes to physicians especially. I mean, honestly, it seems like it's going in the wrong direction, right? Things are changing. You can tell me if I'm speaking wrong, but it's become more and more of a burden for physicians coming out today, young physicians. I mean, what is the landscape right now when it comes to student loans? How are you seeing how people are dealing with this and what is the big problem with them?

Well, I mean, you shouldn't feel too bad for the physicians once you look at the other professions out there. I mean, the attorneys are coming out owing $180,000 or something on average. And many of them are getting jobs that pay 50,000 dol. You know, the veterinarians, similar story, right? Pharmacists, it looks pretty bad too. And so, you know, dentists are usually have worse ratios than physicians do. The physicians are actually doing pretty good in their debt to income ratio, but it's definitely getting worse. If you look at the data from graduating seniors, the average MD student is owing something like $205,000 coming out of school. The average DO student, it's more like 2:50, 2:60. The average dentist is like 270. And remember, those are averages. So half the people have more, you know, and it's not unusual at all to have people in the 300s, 400s. You know, I'm seeing some of these dental specialists with 1.1 million in student loans, you know, because remember, their residencies don't pay them. They're actually paying tuition in residencies for endodontists and orthodontists and those sorts of things. So just the sheer debt to income ratio problem is a big deal. But the other issue is it's becoming more and more complex, right? You got all these income driven repayment programs, you got these forgiveness programs, you got the federal government one administration doing one thing, the next administration doing something else. And it turns out there's all these strategies that involve how you, what retirement accounts you use, what, how you file your taxes, you know, when you get married and all this stuff affects your student loan payments and how much you can get forgiven and those sorts of things. So it's just really complex. It's a big problem. It's a big part of Doc's financial lives and the management of them can be complex. And if you screw it up, you can leave tens of thousands, even hundreds of thousands of dollars on the table. And so that's kind of the problem.

I mean, what do you think are some of the biggest mistakes or the common mistakes that you see physicians make when it comes to handling these student loans?

Okay, well, a real common one you run into is people that should not have refinanced and did. If you could do three year residency, you do a three year fellowship, and now you're an academic doc, you're a perfect candidate for public service loan forgiveness. And if you refinance your federal loans, you can no longer get them forgiven. That's a huge mistake, is refinancing when you should, but vice versa, if you don't refinance when you should, and you're paying 6 or 7 or 8% interest on loans that could be at 2 and a half, that's a huge mistake too. So getting the refinancing decision right is a big deal. Enrolling in an income driven repayment program as early as you can, if you're going for forgiveness, the sooner you get enrolled into those programs, the more you can get forgiven. Sometimes people choose the wrong income driven repayment program. That's a mistake people often make. One of the biggest ones is going into forbearance. And I had somebody send me something yesterday from the aamc. This is a pamphlet they give out to fourth year medical students. It's pretty encouraging of going into forbearance. And forbearance is the wrong move. 99.9% of the time you should not be in forbearance. If you're in a situation where you need forbearance, you are almost surely better off in an income driven repayment program. And you probably have payments of like $0. And so forbearance is a big mistake. Lots of docs are making. I mentioned not refinancing. That's a big one. Maybe choosing the wrong term or type of loan when refinancing. Right. You refinance into a 15 year fixed when maybe you should have done a five year variable. That's a more minor problem. But occasionally people make that mistake as well. But it can be complex. So if you're in a complicated situation, it's worth spending a little bit of time and a little bit of money making sure you're doing it right now.

Is it one of these situations where if you made a mistake, you did something like a refinance that you can go back on that mistake and adjust things going retrospectively.

Some mistakes you can correct and some you can't. And it's really depressing, actually, to tell people, no, you screwed this up, and this is going to cost you a lot of money. You know, it's almost like when people come to me and having bought a whole life insurance policy, and they're like, how do I get that $30,000? I'm underwater. That's pretty much gone. Sorry about that. But it can be the same thing with student loan management. If you screw it up, it can cost you a lot of money. You know, some mistakes don't cost you that much, but there's certainly potential for really large mistakes in a complicated situation.

So. So what are people's options right now when it comes to learning this stuff? Obviously, you have your site in your book, but how. How specifically tailored is the information on your side and all that stuff to somebody's situation, or do they have to still go hunting and figure out what's best for them?

Well, I mean, you know, it's a blog and it's a podcast, right? So I'm trying to give away the information for free as much as I can, but at the same time, it's not necessarily personalized. Right. When I'm writing a blog post, there might be 30,000 people reading it. And so I can't necessarily talk about your exact situation because everyone's situation is a little bit different, and so the information's out there. You can certainly become an expert in student loans yourself, and you can do a lot of research and figure out how the programs work and. And figure it out. Maybe an easier method is to actually hire someone who's already an expert in it, because in just a few minutes of looking at your situation, they can help you run the numbers and help you make a decision as to what IDR program you should be in, when you should refinance, if you should, you know, how you should file your taxes, even what retirement accounts you should use while you're paying off those loans, you know, and those are the big decisions to make, and you want to get them right.

I mean, is that what student loan advice, the. The company that you started, is that what it does? Because I remember hearing about the company kind of wishing that it was there when, you know, I was trying to figure out what to do with my student loans. I know a lot of people wish they had it then as well. Like, what exactly does a company like that do?

Okay, so this is actually pretty Straightforward what it does, it is not going to be your financial advisor, it's not going to manage your assets, it's not going to manage your real estate properties. You know, it's not going to give you an investing plan. Right? It is just student loan advice. That's why it's called studentloan advice.com so it's basically you get to meet with an expert in student loans, a certified student loan planner, someone who's done that training, which takes most people, you know, working, working full time at it, a month or two to do, to get through that training and really understand student loans and how they work. And then of course, just like medicine, the more you do it, the better you get at it to the point where you can look at somebody's situation and right there you know exactly what they should be doing. Our expert there is Andrew Paulson and he will basically look at your stuff before you meet. You know, you got to gather the information, of course, about your student loans and your situation, your tax situation, all that. And then he meets with you for an hour, spends about 15 minutes reviewing your goals, reviewing what questions you have about your student loans and your concerns, and then about 30 minutes of discussing the customized calculations for your situation that relate to repayment plans, that relate to loan forgiveness, that relate to refinancing, et cetera. And then they spend 15 minutes answering any remaining questions you have and present, you know, some clear, actionable steps about what you should do to manage your student loans. Refinance them now, refinance them at this point, you know, enroll in this program, file your taxes this way, et cetera. And then you pay a flat fee. So it's just a flat fee for that time and that work. And that fee is 479. So it's pretty straightforward. It's just one flat fee for everybody. And then you also get six more months of access to Andrew by email. So you have follow up questions you can for six months you can ask them any follow up. And that's all covered in that one time fee. So that's basically the value proposition. So anyone who just needs some reassurance they're doing it right, or if they have a complicated student loan situation, you know, it's well worth your time to spend 479 rather than blowing it how you do it and wasting tens of thousands of dollars.

Is there a certain time that it's best for someone to come talk to, like you know, Andrew or the company, like when they're still in residency? What if they're also, what if they're years out and they've already kind of been on one path? Is that something that's worth reevaluating?

Yeah, I think anybody who is not sure they're doing it right, it's well worth the money. Right? If, if you're like, yeah, my situation is super straightforward. I got this, I know how to do it. No, don't go spend 479. Save your money. You know, put that 479 toward your loans. But if you have any doubt whatsoever, I think this is money well spent. I mean, as, as any sort of financial advice goes as, you know, you know you're basically going to be spending thousands of dollars getting financial advice from someone. And this was part of the reason we founded the company was because, you know, people were using this as a lead in to their financial advising company. You know, they'd bring you in to give you student loan advice and then they wanted to manage your assets and they wanted to create a financial plan for you, which is fine if you needed all that. But if you just had a few questions about your student loans and now you're spending eight grand for a financial advisor, well, that's not exactly what you're looking for. So this is a way to basically get one piece of financial advice a la carte and make sure you're doing it right. So when's the best time? Well, whenever you have questions is a good time. But I would say the biggest bang for your buck is honestly probably at the beginning of residency. That's when you make a lot of these decisions and that's when they're most complicated. And so coming out of medical school, I think, is a great time to get advice. It's also, unfortunately, a time when you don't have much money. But this is pretty high bang for your buck, you know, at the beginning of residency to make sure you're enrolled in the right idr, make sure you know how the forgiveness programs work. If you need to be refinancing, you get advice on how and when and all that. And so that's probably a good time. Another good time is the end of residency when you become a new attending. You know, you got some changes in your life then, and that's not a bad time to get advice either. I don't think it's quite as big a bang for your buck as in the very beginning. Hopefully you're already doing it right, but if you're doing it wrong, certainly it's, it's a good time to get advice Anytime you're not doing it right. So I think those are probably the biggest bang for your buck times. But, you know, if you have just been struggling and struggling and struggling with student loans for years and years and years and years, you might be well served to get some advice as well. You may find out you're eligible for some programs you didn't know about. And I'm always amazed that I meet these docs who are planning on paying their student loans back and still haven't refinanced them. You know, eight, ten years out of residency, and it's like you could be paying 2 or 3% instead of 6 or 8%. So I think anytime you need the advice, it's worth getting.

I have to ask, like, what is the land? Is the landscape changing quite a bit when it comes to student loans? Like, in terms of programs, is it something that constantly needs, you know, monitoring for somebody? Just wondering how much that's changing in terms of, in terms of timing.

I mean, I don't think it changes every month by any means, but certainly every few years they seem to come out with a new program. You know, if you remember, there was the ICR program and then the new and improved version IBR came out, then the new and improved version pay came out, then revised pay came out, which was in some ways better, in some ways worse than pay. So each of those came out, I don't know, three or four years apart. Certainly over the last 18 months. While federal student loans have been at zero percent with no payments due, it feels like things are changing a lot more frequently than they have in the past. And you keep seeing things about student loan forgiveness out there and cancellation. You know, I was reading an article today in Forbes about President Biden having canceled, you know, two or three billion dollars in student loans. People get their hopes up that theirs are going to be canceled. You know, they don't realize that all those were people who their schools were basically fraudulent in taking their money or they were disabled people, and that's why they got their student loans canceled. And so a lot of people just don't understand what's going on in student loans. And of course, Congress can change the rules at any time. So in that respect, yeah, it is constantly changing. But I wouldn't say this is something you need advice for every year. And maybe you need to get it once or twice in your, in your lifetime is probably all you need. I'm hoping people are paying off their student loans within two to five years of coming out of training. You know, whether they're getting them forgiven or whether they are paying them off themselves. So I would hope if you're mid career that you're hopefully past this point. But not everybody is obviously all right.

For anyone who's interested in checking out Jim's new company, Studentload Advice.com we also do have a special link for it. You know, I'm a big advocate for it. Www. Passiveincomemd.com studentloanadvice. We'll have some, some resources there for you to find out more about, you know, your options when it comes to student loans and also how to get to Jim's company and hopefully he'll be able to help you out. Like I said, it's been an amazing ride. My hope is that when people get their student loans under, under control, they'll have more income on the backside to figure out how to create more passive income. That's like my motivation for this, Jim, is to get people to get these under, under their belt so they can start creating income to ultimately honestly take control of their financial futures. So, Jim, I want to thank you for, for your time. Thank you for what you're building here. Obviously thank you for your mission and every time I get to talk to you publicly like this, I just want to say thank you for the white coat investor and everything you've done to advance kind of like the financial futures of physicians out there. So thanks, thanks a lot, Jim. Is there anything else you want to leave us with?

No, it's my pleasure. And thank you for your support and I'm looking forward to, to seeing your audience this fall at PIM Decon.

Awesome. Yeah, I'm sure you'll be a part of it and I know you've got conferences coming up and I can't wait to do it live again. So anyways, Jim, thanks so much. Take care. Have a great week everyone. Enjoy the show. Let me know by dropping a review in the podcast app you're listening to us in. And if you haven't already, make sure to hit subscribe. Are you a part of our community yet? Join thousands of physicians who are also on this journey to creating their ideal lives through multiple streams of income. You can join us on our Facebook group Passive Income Docs and you can always learn more at our website, passiveincomemd.com thanks again for allowing me to be a part of your journey. See you next time.