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    ADA announces student loan refinance option

    The arrangement with Darien Rowayton Bank may offer relief to many dentists overwhelmed with student loans.

    As of September 10th, 2015 the American Dental Association (ADA) and Darien Rowayton Bank (DRB) agreed to an exclusive arrangement to allow ADA members an opportunity to refinance existing federal and private student loans at a potentially lower interest rate. To understand why this might be of interest to you, it would be helpful have a brief overview of the recent history of student loans.

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    Historically, student loan interest rates had a cap interest rate, but when rates fell, the loan rates fell and could be locked in at lower rates. Dentists graduating during the recession of 2000 – 2001 were able to lock in fixed rates through the government at 3.12% and with incentives, even lower.1 Things changed on July 1, 2006 when the federal government fixed the interest rates on student loan debts. For dentists, this meant that federal loans were issued at a fixed rate of 6.8% and graduate plus loans were fixed at 7.9%.1  During the financial crisis of 2008-2009, the fed cut interest rates dramatically, but with the new loan rules, student loan interest rates remained fixed and did not decrease. 

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    Over the last few years, a number of private companies have begun taking advantage of today’s lower rates and offering to consolidate student loans at rates lower than the current fixed rate offered by the federal government. One option getting attention recently that can potentially benefit dentists is the exclusive agreement between the ADA and DRB.

    Continue to page two for more...

     

    Marshall Gifford
    Marshall Gifford, CLU, ChFC is a Senior Partner with North Star Resource Group in Minneapolis, Minn., specializing in consulting ...

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