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[Presidential Candidates] vs Re-finance vs PSLF

Home Student Loan Management [Presidential Candidates] vs Re-finance vs PSLF

  • Avatar NY-TX-CA doc 
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    I currently have $305,000 in federal student loan debt at 6.88%, 3 years out of residency. I have been working at a PSLF 401c3 hospital and have put in 66 months qualified payments, meaning I have to put in another 4 years 6 months at that or another qualifying institution in order to have the remaining balance forgiven according to PSLF.

    I have been fortunate to have a second full time job elsewhere which provides me a much higher income than the 401c3 job. However, I’ve had to travel between the 2 jobs since they’re located in different areas. Due to some life circumstances (wife with child on the way), I’ll probably have to cut down on the travel and give up one of the jobs, which will likely have to be the 401c3 PSLF hospital, and pick up more work closer to my other job. I wouldn’t qualify any longer for the PSLF program, so a smart move would to re-finance my student loan to a private lender who would give me ~2% interest rate.

    However, Bernie Sanders is proposing this bill to cancel all student loan debt. I’m afraid if I re-finance to a private lender, and the bill actually gets passed, I may not qualify since my loan would no longer be a federal student loan (I know the article says private loans would also be canceled, but I’m skeptical). This bill would probably only pass with a democratic president+congress, otherwise I can’t see either a republican president or congress allowing this to happen. Predicting politics would be a dangerous game to play. Even if all that happens, he gets into office Jan 2020, maybe another 6-12 months for the bill to take into effect, earliest hopefully would be Jan 2021 that loans will start to get canceled.

    My question is, should I take the gamble and keep with my federal loan provider in the hopes all of the above happens? It would be another 14 months before we’ll know if he and the democrats win the Nov 2020 election. That’s 14 months of 6.88% instead of 2% interest rate, all into a loan balance of $305k. If the bill doesn’t pass, that’s a lot of money I’m losing to interest that I could have changed by re-financing.  If the bill does pass but I already re-financed, I’d lose out on my loans being canceled if the bill doesn’t include private loans.

    #243395 Reply
    Hank Hank 
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    Let’s try to keep this focused on the personal finance side of student loans, not the “coulda, shoulda, woulda” of why a particular candidate or party is good or bad.

    This thread is on a very short leash.  Please provide the poster with helpful advice about the income and loans he has now.

    #243405 Reply
    Avatar Panscan 
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    If you’re making a bunch more at new job you could probably refi to a low rate and pay it off or at least significsntly decrease remaining principal before any potential policy changes go into effect (without going into the probability of it even happening or graduate school debt being forgiven).

    I would refi and crush them. If you could get 2% interest rate it’s a no brainer IMO. That’s crazy low

    #243409 Reply
    Liked by Lordosis
    Avatar DCdoc 
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    Refinance and pay off loans.  Gambling on a particular candidate winning the election over a year away, and then gambling that a bill passes congress which wouldn’t disqualify you based on income is a very unlikely proposition.  Paying a ton more in interest (vs. refinancing) for this slim possibility is unlikely to result in a positive outcome.  If you want to gamble, I would wager you have a higher chance of winning the lottery than what you describe regarding non-PSLF loan forgiveness.

    #243410 Reply
    Avatar Peds 
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    Predicting politics would be a dangerous game to play.

    Click to expand…

    yet here you are on your first post.

    My question is, should I take the gamble and keep with my federal loan provider in the hopes all of the above happens?

    Click to expand…

    no, you play the hand you are dealt.

    the bigger question: is it even worthwhile to continue PSLF at all?

    once you no longer work for a 501c, then refinance.

    if you continue to qualify via a 501c, then you need to play the PSLF game.

    not the no one knows the future about anything game.

    #243411 Reply
    Liked by Nysoz
    MPMD MPMD 
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    I would strongly advise you not to worry about this at the moment, particularly given that BS nomination is not even likely at the moment.

    #243421 Reply
    Avatar jhwkr542 
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    I see a 0% chance a bill like that would get passed anytime in the next 5 years. For all financial planning, I always consider the laws that are currently in place and not on any potential legislation, especially bills that are just a twinkle in one politician’s eye.

    #243439 Reply
    Lordosis Lordosis 
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    Both sides say outrageous things at this point of the political game.  They want to fire up their die hards.  When the time comes to make policy things like this cannot get passed.  They all run to the middle if they want to get re elected.

    So do not bank on canceling of loans.

    If you will not be working for a 501c then refinance and pay those loans down.

    Now if your high income job is 50 k a year with 300k loans that might be a different story but if you are close to 1:1 just pay it down.

    “Never let your sense of morals prevent you from doing what is right.”

    #243449 Reply
    Avatar tex 
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    Predicting politics would be a dangerous game

    Click to expand…

    To take this into “lounge” territory briefly, I heard – somewhere? maybe in the one last thing bit on Marketplace? – some horrifying percentage of student loan borrowers have actually stopped making payments and are betting on student loan forgiveness being passed

    #243456 Reply
    Avatar Nysoz 
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    Even if a candidate was promising eliminating all student debt, the likelihood of it happening in your time frame of loans is slim. Even if it passes, there will probably be exclusions or caps.

     

    As others have said, if you get a non 501c job, refinance and pay down.

     

    If you keep the 501c then keep trying PSLF with a side fund to pay off in case it doesn’t work. As a side note, have we heard of many/any physicians getting their loans forgiven yet? it’s been almost 2 years since we should’ve started to hear something haven’t we?

    #243621 Reply
    Lordosis Lordosis 
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    As a side note, have we heard of many/any physicians getting their loans forgiven yet? it’s been almost 2 years since we should’ve started to hear something haven’t we?

    Click to expand…

    Shh. Hope is all some people have.

    “Never let your sense of morals prevent you from doing what is right.”

    #243623 Reply
    Craigy Craigy 
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    For what it’s worth…

    I don’t regret paying off our student loans recently.

    LEVEL 1 WCI FORUM MEMBER.

    #243643 Reply
    Liked by Lordosis
    The White Coat Investor The White Coat Investor 
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    Joined: 05/13/2011

    Even if a candidate was promising eliminating all student debt, the likelihood of it happening in your time frame of loans is slim. Even if it passes, there will probably be exclusions or caps.

     

    As others have said, if you get a non 501c job, refinance and pay down.

     

    If you keep the 501c then keep trying PSLF with a side fund to pay off in case it doesn’t work. As a side note, have we heard of many/any physicians getting their loans forgiven yet? it’s been almost 2 years since we should’ve started to hear something haven’t we?

    Click to expand…

    How many people do you know who knew about PSLF in 2009? Keep in mind WCI was launched in 2011 (and nobody was reading it for years after that) and most doctors who know about PSLF learned about it here. There is a PSLF doctor FB group which was polled and there was almost nobody in there who would be eligible before 2021-2022 or so.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #243996 Reply
    Liked by MPMD
    Avatar NY-TX-CA doc 
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    Great thank you so much everyone for replying.  Majority seem to favor re-fi and pay off once I’m no longer working at a 501c3, as opposed to the very slim possibility of everything matching up in order for a bill to pass and have the loans canceled.  I feel more comfortable with that direction now reading your thoughts.  Much appreciated

    #244192 Reply
    Avatar Jack_Sparrow 
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    Status: Physician
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    I’m unclear entirely how PSLF works, but is there a way to hedge your bets. Ie refinance part of your student loan. If you have 500k in student loan, refinance say 250k in private loan, then keep the other 250k in PSLF assuming you might be able to get that forgiven someday. Just curious of the possibilities. Only under the most unique scenario would it make sense since it would drastically increase monthly payment and you’d probably pay off your student loan before it got forgiven.

    Also as a side note. I would definitely refinance the whole thing and give up on PSLF. A bird in hand is worth 2 in a bush. Id take the savings now over any type of bet that puts faith in student loan reform assisting the 200k earning doctors.

    #244201 Reply
    Liked by StarTrekDoc

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