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Student Loan Management (PSLF vs REPAYE vs paying off)

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  • Avatar BlackBeard 
    Participant
    Status: Resident
    Posts: 3
    Joined: 06/08/2019

    Good morning,

    Bottom line up front: Should I do PSLF or pay off loans asap? I am getting confused with the flowcharts, REPAYE calculators, FAFSA exit interview numbers etc.

    Just graduated medical school last week, starting a military residency (FM) Monday.  I was a three year scholarship, took out loans for my first year. Married, no kids.

    I have 77k in loans at two rates, 5.8 and 6.8%.  My income intern year will be roughly 105k.

     

    Should I go ahead and refinance and pay off my loans aggressively, I figure I can knock them out fairly quickly.  Or would it be better to make the minimum payments and do PSLF?  I have every intention of staying in the military long term.

    The FAFSA calculator I’m using says I’m not qualified for income base repayment, but doesn’t say why it’s just grayed out.  Does it matter if roughly 36k of my 105k income is considered non taxable (housing allowance)?

     

    Thanks for the help.

    #220139 Reply
    Liked by BlackBeard
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 4198
    Joined: 01/08/2016
    I have every intention of staying in the military long term.

    Click to expand…

    wait, you dont get loan repayment through the military?

    #220146 Reply
    Liked by BlackBeard
    Avatar BlackBeard 
    Participant
    Status: Resident
    Posts: 3
    Joined: 06/08/2019

    I have every intention of staying in the military long term.

    Click to expand…

    wait, you dont get loan repayment through the military?

    Click to expand…

    There’s certain programs that helps with loan repayment, such as enlistment or FAP program. But as far as I know, I don’t qualify for any of them.

    #220153 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 4198
    Joined: 01/08/2016
    Married, no kids. I have 77k in loans at two rates, 5.8 and 6.8%.  My income intern year will be roughly 105k.

    Click to expand…

    thats a ton for an intern.

    is that household income? or does your spouse also work?

    for 77K, theres no point for PSLF after 10 years.

    the question really is can you afford the payments during residency (which when you are making 50-60K and have 100-200K in loans usually doesnt work….)

    #220157 Reply
    Avatar BlackBeard 
    Participant
    Status: Resident
    Posts: 3
    Joined: 06/08/2019

    Married, no kids. I have 77k in loans at two rates, 5.8 and 6.8%.  My income intern year will be roughly 105k.

    Click to expand…

    thats a ton for an intern.

    is that household income? or does your spouse also work?

    for 77K, theres no point for PSLF after 10 years.

    the question really is can you afford the payments during residency (which when you are making 50-60K and have 100-200K in loans usually doesnt work….)

    Click to expand…

    thats a ton for an intern.  Residency pay is very good in the military.  36k of that is housing allowance, I’ll be in a high cost of living area.

    is that household income? or does your spouse also work?   My wife will be taking classes and getting a stipend, will likely amount to 12k a year. So total income would be closer to 115-120k.

    for 77K, theres no point for PSLF after 10 years. What do you mean by this? Isn’t PSLF only for 10 years (120 payments)?

    the question really is can you afford the payments during residency (which when you are making 50-60K and have 100-200K in loans usually doesnt work….).  I fully expect I can afford the payments during residency.

    When I put all my info in studentloans.gov calculator my payments it says are:

    Normal standard payments – 870 a month, repayment period 10 years. (total paid 104k)

    PAYE or REPAYE – 664 a month, repayment period 20 years. (total paid 109k).

    So shouldn’t I take the smaller payments in PAYE/REPAYE and after 10 years as long as I stay in the military the remainder should be forgiven?

    Thanks for all the help, this is all relatively new stuff to me.

     

    #220162 Reply
    SerrateAndDominate SerrateAndDominate 
    Participant
    Status: Physician
    Posts: 463
    Joined: 02/01/2018

    Keep in mind if you do MFJ on income tax, that increases your payment on PAYE. Maybe not by much based on wife’s income but still more. REPAYE doesn’t care how you file. They include it all.

    as Peds said, people do REPAYE in training because it lowers their effective interest rate while keeping payments down. I’m on mobile so can’t post links, but some folks register their payment ASAP so their prior year income (usually $0) is calculated for the first year of PSLF payments. That’s great because the PSLF clock starts with a $0 “payment,” but your interest is still growing.

    With a relatively low amount of loans, why not just refinance it and start paying chunks at it? The private lenders compete against each other, you can get autopay and AMA discounts, and as a trainee, you can do a minimum $100/mo payment. You may end up paying less than you calculated with PSLF forgiveness

    Earn everything.

    #220164 Reply

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