Putting a Band-Aid on Borrowing
The average medical student is $200,000 in debt, a dilemma Shady Henien can relate to all too well.
As a resident at Bridgeport Hospital in Connecticut, Shady talks every day with peers who are trying to manage or refinance their loans. He calls the debt situation a major threat for the medical profession.
A few years back, Shady started to model a solution for student doctors trying to repay their debt. His company, Student Promise, plans to bundle debt for investors and offer rates to borrowers that beat the current federal rate for medical students which he says is about 6.8%.
Shady started pitching his idea in 2013 to a group of politicians in Iowa, which is where he graduated from medical school. “Iowa is a big physician exporter state,” he says. “Students from Iowa match to other states during their residency and don’t necessarily come back.”
Shady plans to grow support for Student Promise by negotiating a tax credit for investors who purchase student debt from those schools. “In exchange students come back to the state and practice there for a minimum of two years,” he says.
Two Sides of the Coin
Student Promise is still finalizing the structure of the debt vehicles they will offer to borrowers. In the meantime, Shady has been busy gathering interest both among his peers and the investors who will back the loans.
“For the investor, their number one is the ROI,” Shady says. “But they also have a heart.” His target audience is a philanthropic investor. “He already sees the necessity of giving back and securing the position of the future generation of physicians. That’s our customer base.”
Shady’s team is also working on an algorithm that will help diversify the risk and limit the amount of risk the investor is exposed to. Even so, he points to very low default rates amongst the doctor borrower population.
In terms of the students, Shady says they just want to borrow from a company they can trust. Shady believes being physician-owned and physician-led company will help him maintain that kind of reputation.