Questions about REPAYE

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  • Avatar rfarias48 
    Status: Student
    Posts: 1
    Joined: 04/11/2019

    Some background info:

    Currently an M4 going into OBGYN with 164k total debt for undergrad/med school.

    About 10k of this is private loans at a 10% interest rate (plan on refinancing these immediately)

    The rest is almost entirely direct unsubsidized federal loans.

    1st year stipend around 58k and I am currently single.

    My plan currently is to enroll in REPAYE to take advantage of the government subsidies while paying off the private loans as quickly as possible. My end goal is to either A) pursue a fellowship and take advantage of the PSLF program or B) Take a job right out of residency, refinance, and pay off aggressively. My question is, on the REPAYE plan, am I better off paying the minimum every month until I can refinance, or is there a benefit to paying extra per month into the higher interest loans with the caveat of losing out on the interest subsidies. Thanks in advance for the help.

    #205688 Reply
    Faithful Steward Faithful Steward 
    Status: Financial Advisor, Small Business Owner
    Posts: 438
    Joined: 06/12/2017

    If you think you may go the PSLF route, you do not want to pay anything extra. Paying extra makes your payment a non-qualifying payment. You need 120 qualifying payments to qualify for PSLF. So, don’t pay extra now.

    Instead, establish a side-fund specifically earmarked for your loans and put your extra payments in this account. That way, your payments will count toward PSLF. If you don’t go for PSLF, you’ll have the money in the side-fund that you can put toward the loans to knock down the balance or pay them off entirely. If it turns out that you do go the PSLF route and your loans end up being forgiven, your side-find can be repurposed for other financial priorities.

    Michael Peterson, CFP® | Faithful Steward Wealth Advisors | (717) 496-0900

    #205766 Reply
    Liked by jhenry
    Avatar Peds 
    Status: Physician
    Posts: 3988
    Joined: 01/08/2016
    My question is, on the REPAYE plan, am I better off paying the minimum every month until I can refinance

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    #205961 Reply

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