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Repaye Questions

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  • Repaye Questions

    I am a PGY 1 EM resident principal 354,000 and interest 4,000. I am in the REPAYE option.I chose this due to the 50% interest subsidy. I figured I would stay ahead of the interest by paying a large amount above my monthly payment each month. What I am finding is that it decreases the amount the government subsidizes. I do not plan to do PSLF with most EM groups being private any way.

    My question is if I refinance after I am finished with residency will the interest that has been subsidized each month with the 50% subsidy through Repaye be capitalized on to the principle? Essentially this money the government is paying as interest, will I eventually owe it if I refinance after residency?

    Also if my monthly payment is more than the interest each month, will the government continue to subsidize the interest? Would it be beneficial for me to stay in Repaye if I plan to pay it off as soon as possible or refinance?

    I essentially would like to know if I should refinance now if all this "subsidized interest" will be capitalized eventually anyway.

    Thank you in advance. I have been trying to find this answer.

  • #2
    I'm in a very similar circumstance though not EM. Call your lender. Mine said that me making payments wouldn't decrease the federal subsidy. I'm interested in the answers to the second paragraph.


    • #3

      Im a bit confused by the wording of the question, but trying to interpret - I believe you are asking if the subsidized (and thus not added to your account) portion of interest comes back from the dead after if you leave the program...that answer is no. Is that the question or is the question whether or not you are receiving the full subsidy? Our loan statements show the actual interest subsidy - does yours and is it what you expected?


      • #4
        Yes. I am wondering if when I refinance with a private lender will the interest that was subsidized be capitalized back on to the principal for leaving Repaye? You answered no which is a relief. I don’t trust anything from Fedloans.

        If I make payments each month it decreases the average monthly interest subsidy by the government from what I can see. Without paying payments I am getting a total 3.5% interest rate after the subsidy but if I make payments it increase my total interest that I pay.


        • #5
          I don't understand. You don't choose or not choose to make payments. You submit an income and they calculate a payment. For some people it's 0 depending on what your income is.

          Making extra payments does not affect your subsidy bc it's completely based on whatever your calculated payment is.