Comprehensive Guide to LFI EdMed Loan Programs and AAMC Collaboration

Introduction and Organizational History

  • The program discussed is LFI (also referred to as Alfi or Elfi), which is specifically designed for medical and other health care professions.
  • While the LFI program is relatively new, the parent organization has been in the student lending industry for over 3030 years.
  • The organization brings decades of experience in helping students and families navigate the complexities of higher education financing.
  • The speakers expressed a commitment to working collaboratively with the AAMC (Association of American Medical Colleges) and its member schools.

Organizational Structure and Mission

  • The organization is mission-driven and focuses heavily on customer experience throughout the life of the loan, from the initial application through education and final payoff.
  • There are three distinct entities within the group that play different roles:
        - Elfi Inc: A not-for-profit 501(c)(3)501(c)(3) organization with a long history of supporting student loans and higher education.
        - Southeast Bank: A full-service commercial bank headquartered in Tennessee. It acts as the originating bank for all loans. It has a 1414-branch network but supports all 5050 states in The United States via digital solutions.
        - LFI: A division of Southeast Bank headquartered in Knoxville, Tennessee. This division focuses on private student loans. It has offered refinance products since 20172017 and in-school student loans since 20192019.
  • The organization has a customer service rating of 4.94.9 out of 55 stars on Trustpilot.
  • The organization confirmed it has the capital necessary to originate the loans expected for this program.

EdMed Loan Product: General Eligibility and Credit Criteria

  • High-level qualification requirements for the EdMed loan include:
        - The borrower or cosigner must be a US citizen or permanent resident.
        - Borrowers must be of the legal age of majority in the state from which they are borrowing.
        - Students must be enrolled at least half-time.
        - The school must be Title IV eligible and a not-for-profit institution.
  • Credit Criteria:
        - Minimum FICO score requirement of 660660.
        - Review of adverse credit events, such as bankruptcy.
  • Maximum Loan Amounts:
        - There is no stated maximum aggregate or lifetime limit.
        - Loans are available up to the total Cost of Attendance (COA) minus any other financial aid received.
        - Minimum loan amount is $1,000\$1,000.

Core Features of the EdMed Loan Product

  • Multi-Year Eligibility:
        - Designed to give students confidence in funding their entire medical journey.
        - It is not strictly time-capped, recognizing that some students take longer than 44 years to complete their education.
        - Eligibility is maintained as long as the borrower maintains their overall credit profile without adverse impacts.
        - Future funding requests under this program may involve a soft credit pull rather than a hard credit pull.
  • No Income or Cosigner Requirements:
        - Income is not required for approval if the borrower selects the fixed $25\$25 repayment option (provided other credit criteria are met).
        - Cosigners are never mandatory, though adding one may lead to better interest rates or help an applicant meet credit requirements.
  • Auto-Pay Discount:
        - Includes a 0.25%0.25\% interest rate discount for enrolling in automatic payments.
        - This discount is specifically available for the fixed $25\$25 repayment option, which is unique as many lenders do not offer auto-pay discounts when a full payment is not required.
  • AAMC Borrower Benefit Program:
        - A specific interest rate discount of 0.5%0.5\% is available to students in MD programs at AAMC member schools that are LCME (Liaison Committee on Medical Education) accredited.

Residency Deferment and Grace Period Specifics

  • Automated Residency Deferment:
        - Offers a first-of-its-kind automatic deferment for up to 9696 months (88 years).
        - Upon graduation (verified via national databases), students are automatically moved into residency deferment for an initial block of 4848 months.
        - Extension beyond 4848 months can be requested in 1212-month increments up to the 9696-month total.
        - Exceptions for fellowships or residencies extending beyond 88 years can be reviewed on a discretionary basis.
        - Borrowers can opt out of deferment at any time to begin full Principal and Interest (P&I) payments.
  • Nine-Month Grace Period:
        - This period is applied on top of the residency deferment.
        - If a residency ends on June 30, the full P&I payments would typically not begin until April of the following year.
  • Interest Capitalization:
        - Interest does not capitalize for the first time until the end of the nine-month grace period.
        - This means interest may accrue for over 100100 months before it is added to the principal balance to earn additional interest.

Repayment and Rate Options

  • Repayment Types:
        1. Fixed $25\$25 Option: A flat $25\$25 monthly payment during school, residency, and grace period. This is the only option that does not require income for approval.
        2. Interest Only: Paying only the monthly interest accrued while in school.
        3. Fully Deferred: No payments required during school (requires income/cosigner for approval).
        4. Full Principal and Interest: Immediate repayment while in school (no grace period available for this option).
  • Interest Rates:
        - Fixed rates currently start as low as 5.99%5.99\% (with a cosigner).
        - Rates can range up to approximately 12%12\%.
        - Variable rates are available and typically sit between 2020 and 4040 basis points (0.2%0.2\% to 0.4%0.4\%) different from fixed rates, updating monthly based on a published index.
        - LFI offers a prequalification tool on their website using a soft credit pull to show actual rates before a hard credit pull is conducted.

Customer Support and Coordination

  • Student Loan Advisors:
        - Every applicant is paired with a dedicated advisor who provides predictable communication and explains complex requirements.
        - The advisor follows the borrower throughout their journey, even post-education.
        - Advisors assist with coordination between the student and the school financial aid office.
  • Billing and Servicing:
        - LFI uses Moheila (Missouri State entity) and AES (Pennsylvania entity) for standard payment processing.
        - Specialty servicing for delinquent accounts is handled in-house by LFI to ensure borrowers receive direct support to get back on track.

Questions & Discussion

  • Question: Who is eligible for the broader EdMed product versus the AAMC benefit program?
        - Response: The broader EdMed loan is available to students in MD, DO, DDS, DMD, DPM, Nursing, Veterinary, Optometry (OD), and Pharmacy programs. However, the 0.5%0.5\% interest rate discount is strictly limited to MD students at AAMC member schools.
  • Question: Why did the AAMC choose to work with only one lender?
        - Response: The process was complex, and working with one lender was the initial agreement to launch the program quickly. The AAMC found LFI to be the right fit for this collaborative effort.
  • Question: Does LFI lend to for-profit schools?
        - Response: Currently, the EdMed loan is only available for not-for-profit institutions. There are ongoing discussions regarding potential future expansion to other school types.
  • Question: How does LFI handle a student who already has high debt ($200,300k\$200,300k range)?
        - Response: LFI does not have a limit on the total amount of student loans (private or federal) a borrower has in determining eligibility. The focus is on credit profile rather than aggregate debt.
  • Question: Is there a cosigner release policy?
        - Response: Yes. After the grace period ends and the borrower has made 1212 consecutive, on-time full P&I payments, they can request to remove the cosigner. This is subject to the student meeting credit requirements at that time.
  • Question: How are multiple loans handled regarding the $25\$25 payment?
        - Response: Every individual loan has its own $25\$25 payment. If a student takes four separate loans over four years, they would eventually make four payments totaling $100\$100 per month.
  • Question: Are loans discharged in the event of death or disability?
        - Response: Discharge upon the death of the borrower is built into the promissory note. Permanent disability discharge is not a broad policy but is reviewed on a case-by-case basis upon request.
  • Question: Can past-due balances be certified?
        - Response: Yes, LFI allows for past-due balances up to a certain period of time.
  • Question: Can international students apply?
        - Response: No, applicants must be US citizens or permanent residents.
  • Question: Does the school need to have LFI on a preferred lender list for the student to get the discount?
        - Response: No. Students can access the discount as long as they go through the designated landing page (elfi.com/aamc\text{elfi.com/aamc}) and attend an eligible AAMC member MD program.