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PSLF and Refinancing Combined

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  • Avatar Benji 
    Participant
    Status: Physician
    Posts: 14
    Joined: 01/20/2019

    Hi Everyone-

    Really appreciate the effort everyone puts into responses on this forum. I tried searching for a similar situation to mine but couldn’t find it—if someone knows of a previous thread I’d appreciate being directed to it if that makes everyone’s lives easier.

    I’m an anesthesiologist working at an academic program. I’ve totaled about 320,000 in student loan debt, but just earlier this year realized that in spite of borrowing it all from what I thought was the federal government—not all of my loans are directly serviced by the federal government and thus, some are ineligible. I’ll make somewhere in the ballpark of 320-350k salary as an attending.

    My loan breakdown is:

    -Approx 172k between 6.55% and 7.65% is directly serviced by the federal government and eligible for PSLF in early 2024 (I’ve been paying since intern year and I always plan on remaining in academic medicine)

    -Approx 100k at 6.55% is serviced by my fed loan but not “direct.” This is mind-boggling to me as both are owned by the US dept of education and the guarantor is the Federal Government.

    -Another 50k at 5.8% also originally taken out from the Federal government (Stafford subsid/unsubsid) serviced by Navient and also apparently ineligible for PSLF.

    I have two questions and I recognize they may be hard to answer:

    1- Has anyone ever experienced this situation where loans you believed were taken from the Federal government and thus eligible for PSLF then turned out not to be even though they’ve remained with the government the whole time? And is there any recourse on making these part of a PSLF “package” other than consolidating them and resetting the PSLF clock?

    2- Presuming that the “indirect” loans are ineligible for PSLF and I refinance them (rates at about 4% from Laurel Road on the table currently), I’m wondering how PSLF would work for the 172k that is eligible for PSLF? As my salary is fortunately pretty good, I worry that by refinancing the rest of my loans, my calculated 10-year payoff based on my income would pay off the 172k prior to PSLF eligibility in 2024, and that I might as well just refinance all of those too and save on the interest.

    Thanks for your time and thoughts on this.

     

    #204718 Reply
    Avatar FutureDoc 
    Participant
    Status: Resident, Physician
    Posts: 112
    Joined: 04/24/2016

    Hi there!  Definitely a tricky situation.  First of all, stafford loans are a type of Direct loan.  For more info on this, review this:

    https://studentloanhero.com/featured/what-is-a-federal-stafford-loan/

    Navient doesn’t process PSLF, which may have been why you were told it wasn’t PSLF eligible.  Basically never believe what the phone reps tell you, the federal loan process is ridiculously complex and most of them don’t know one kind of loan from another.

    What exact type of loan is the 100k that is with myfedloans? Perkins? Stafford? Grad Plus?

    You definitely qualify with the stafford loans, but you will need to eventually get them transferred to myfedloans since navient doesn’t process PSLF.  THIS IS NOT THE SAME AS CONSOLIDATING.  DO NOT CONSOLIDATE EVERYTHING AT THIS POINT.

     

    Now to actually answer your question:

    1. I’ve had loans I thought were federal loans that actually turned out to be Perkins (school funded), or private (thanks navient), but otherwise no.

    2. Your Payment on the 172k would most likely cap at the 10 year amoritization rate, which assuming you paid several years of payments under an income driven repayment plan during residency, will be years away from paying them off, so you should still have funds to receive PSLF on.

    This is a complicated scenario, you are definitely in the right place to ask this, but if we can’t get this straightened out then I would consider talking to Travis or Joy who actually plan for complicated loan repayment scenarios as a day job.

    #204722 Reply
    Liked by jhenry
    Avatar Benji 
    Participant
    Status: Physician
    Posts: 14
    Joined: 01/20/2019

    Thanks for the quick responses:

    The loans that aren’t “direct” are Federal Subsidized and unsubsidized Stafford loans. There are 4 total of those, and they’re all serviced by My Fed Loan currently.

    I have two other loans with Navient that are also Federal subsidized and unsubsidized. How they ended up in Navient’s hands seems to be a complicated web of buying and selling loans while I was a med student, but it’s frustrating to me that a federal loan isn’t automatically a “directly serviced” loan.

    Good point on the IBR payments capping out at the 10 year amoritization rate. That may very well be a saving grace.

    #204726 Reply
    Avatar Benji 
    Participant
    Status: Physician
    Posts: 14
    Joined: 01/20/2019

    It looks like you are saying that ALL of the Federal loans (subsidized/not) should be eligible for PSLF? I would agree, that would be what I thought, but apparently there is a further distinction as to whether they are “directly” serviced by the Federal government. It seems like a sneaky trick to me, as my payment on this would be the same regardless of who was servicing them, particularly over my last few years making IBR payments as a resident.

    #204727 Reply
    Avatar Benji 
    Participant
    Status: Physician
    Posts: 14
    Joined: 01/20/2019

    Just hoping to get another input on this question. I’d imagine I’m not the first person this has happened to so hoping someone might have an experience with this before.

    #205957 Reply
    Avatar Benji 
    Participant
    Status: Physician
    Posts: 14
    Joined: 01/20/2019

    In case someone comes back to this—I’ll answer my own question here having done a bit of digging. The issue here was that these loans were made before “direct” loans from the government were an option. Because of this, they didn’t originally qualify under the plan, and now would have to be consolidated to a new direct loan, and would start the 120 monthly payment timer at 0. While I could do that, the standard repayment plan would pay them off by that point. It also would likely be more financially advantageous based on my current income simply to refinance them and pay them off faster.

    Thanks to anyone who looked and didn’t have an answer.

    #209724 Reply

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