By Dr. Jim Dahle, WCI Founder
The most complicated time period for physician student loan management is during residency. While there can still be some complicated issues as an attending, it generally boils down to a simple “Go for PSLF vs refinance and pay off quickly” decision that is primarily based on whether or not you are working full-time for a 501(c)(3). However, in residency there are all kinds of student-loan related decisions to make like:
- Should you refinance or not?
- Which IDR should you enroll in?
- How should you file your taxes?
- What retirement accounts should you contribute to?
If you struggle with any of these decisions, we recommend you contact Andrew Paulson at StudentLoanAdvice.com for a one-time, flat-fee student loan consultation. Spending an hour and a few hundred bucks now could mean tens of thousands of dollars in savings over the course of your loans.
Today we're going to talk about the first of those questions, and specifically whether an intern or junior resident should enroll in REPAYE and take advantage of its subsidy, or whether that intern should refinance the loans.
Private Loans
If you have private loans, the decision is easy for them. You can't enroll those into an IDR, and they won't be eligible for forgiveness. So you can safely refinance them any time you can get a lower rate. If you go through the WCI Links on this page and elsewhere on the site, you will get all of these benefits:
- A lower interest rate
- Fewer loans to keep track of
- Better customer service
- Easier to understand terms (government programs can be complicated)
- $300-1500 Cash back (if you refinance through the WCI Student Loan Refinancing Links)
- Free enrollment in our Fire Your Financial Advisor online course (a $799 value) if you refinance $100K+ through our links
So refinance those private loans early and often. The lower your rate and the more cash you get, the faster you can get them paid off.
Federal Loans
Naturally, the decision to enroll in REPAYE versus refinance is more complicated when it comes to federal loans. Before we get into any calculations, we should first point out the obvious. Also, note that we're talking about REPAYE today because that is the usual default for graduating medical students these days due to the interest rate subsidy provided by REPAYE. There are some situations (primarily IDR forgiveness) where enrolling in PAYE can be the right move. If you think this might apply to you, we REALLY suggest that consultation with StudentLoanAdvice.com.
Going for PSLF?
If you are planning to be a full-time employee of a 501(c)(3) or a governmental employer, then you DEFINITELY DO NOT want to refinance your federal student loans. If you do so, those loans are no longer eligible for Public Service Loan Forgiveness (PSLF). Even if you're just not sure if you might go for PSLF, you should not refinance until you are positive you will not qualify for that benefit.
Going for IDR Forgiveness?
Some doctors, usually those with high debt to income ratios (usually > 2.5X but perhaps with a ratio as low as 1.5X), choose to go for Income-Driven Repayment (IDR) forgiveness through a program such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), or Revised Pay As You Earn (REPAYE). Now IDR forgiveness is much less attractive than PSLF, not only because, unlike PSLF, IDR forgiveness comes with a tax bomb (the amount forgiven is taxable as ordinary income in the year of forgiveness), but also because you have to make payments for 20 (PAYE) to 25 (IBR, REPAYE) years!
However, if you are one of those considering this strategy, you definitely don't want to refinance those federal student loans. You might want to be in PAYE instead of REPAYE too. Again, seek advice if you're not sure how to run the numbers yourself.
REPAYE vs. Refinance
Now, there are still a whole bunch of you out there who have federal loans and are not planning to have them forgiven. You know you will be paying them off yourself, so the only real question left is what you do with them during residency. The usual choices for you are REPAYE or refinance. There are two considerations. The first is effective interest rate and the second is cash flow.
#1 Interest Rate
It is important to understand how the REPAYE subsidy works. It forgives/waives half of the unpaid interest each month. So long as your payment is less than the accumulating interest, there is some interest rate subsidy going on. Let me give you four examples to demonstrate how to calculate your effective interest rate. In each of these examples, we'll assume you have a $200,000, 6% student loan. That's a conveniently chosen number because it generates precisely a nice, round $1,000 a month in interest. Let's also assume you have applied to each of the four lenders in the chart below who refinances student loans for residents without an attending contract in hand and the best interest rate you could find was 4.5%. The question to answer is whether you get a lower effective interest rate by remaining in REPAYE or refinancing to 4.5%.
Payments of $0
Imagine you're a brand new intern who filed taxes in the Spring of your intern year showing an income of $0 for the prior year. Your REPAYE payments are $0. So there is $1,000 of interest on the loan. 1/2 of that, $500, is waived because you are in REPAYE and the other $500 is added to the loan. Thus, your effective interest rate is 6% × $500/1000 = 3%. Since 3% < 4.5%, you should not refinance yet.
Payments of $200
Now, let's say your income is a little higher and you now have REPAYE payments of $200. $1,000 in interest – $200 = $800 in interest. REPAYE waives 1/2 of that interest, or $400, and $400 is added to the loan. In this case, your effective interest rate is 6% × $600/$1,000 = 3.6%. Since 3.6% < 4.5%, you should not refinance yet.
Payments of $800
Maybe your spouse is working too and your REPAYE payments are $800. $1,000 in interest – $800 = $200 in unpaid interest. REPAYE waives 1/2 of that interest, or $100, and $100 is added to the loan. In this case, your effective interest rate is 6% × $900/$1,000 = 5.4%. Since 5.4% > 4.5%, you should refinance.
Payments of $1,500
Let's say you're married to an attending and now your REPAYE payments are $1,500. ALL of your interest and some principal is covered by that payment, so there is no unpaid interest for REPAYE to waive. Your effective interest rate is simply 6%, and since 6% > 4.5%, you should refinance.
What about the student loan interest deduction?
One other consideration is that student loan interest deduction. For tax year 2020, if your Modified Adjusted Gross Income (MAGI) is less than $70,000 ($140,000 Married Filing Jointly) you can deduct up to $2,500 of student loan interest paid during the year from your income. That benefit phases out up to an income of $85,000 ($170,000 MFJ) above which there is no deduction. If you, like most residents, qualify for that deduction, you also need to adjust your effective tax rate for that. Luckily, this is a pretty minor effect. Consider the third example above where the doc has $12,000 in interest but only pays $400 × 12 = $4,800 of that interest. The doc can take the full $2,500 deduction for it. They're probably in the 22% bracket for federal and maybe 5% state, so $2,500 × 27% = a savings of $675. If you split that up by 12 months, it's $56 a month. So in reality, the effective tax rate is not truly 5.4%, it's 6% × $844/$1,000 = 5.1%. 4.5% is still better, of course.
However, don't forget that the refinanced loan is also eligible for that deduction; it isn't limited to federal student loans. If the doc refinances and pays $100 a month toward the loan, that would all go to interest, providing a $1,200 deduction worth $324. So the effective rate there isn't just 4.5%, it's really (4.5% × 200,000 – $324)/$200,000 = 4.3%. Still, 4.34% is better than 5.1%, so refinancing is still in order.
Note that the borrower COULD pay more of that interest if he or she wanted. By paying extra on the loan, the effective interest rate could be reduced from (4.5% to 4.5% × $200,000 – $675)/$200,000 = 4.16%
This effect is generally relatively minor compared to the effect of the REPAYE subsidy on the effective interest rate.
#2 Cash Flow
The second consideration in the REPAYE vs Refinance conundrum is cash flow. Most residents NEED to be enrolled in an IDR program simply because they cannot afford to make full payments on their student loans. They can afford $100 or even $400 a month, but they can't afford the full 10-year payment on a $200,000, 6% loan ($2,264 a month). So they would not refinance to get a lower interest rate just due to cash flow issues.
However, the student loan refinancing companies have (finally, after many years of me urging them to do it) recognized this reality and structured their loans such that the resident can make payments of just $100 a month! For many residents, their required payments are actually LOWER after refinancing than when they are in an IDR. Whether lower or not, a resident certainly cannot complain about a $100 a month payment. In fact, there may even be some residents out there who would refinance into a private loan with a slightly higher effective interest rate than what they would have in REPAYE just to improve their cash flow.
Refinancing During Residency
If you think this situation applies to you, I would encourage you to take the first step in making the comparison. Apply with the four companies below that will refinance resident student loans and see how low of an interest rate you can get. Then compare it to your effective tax rate under REPAYE. If you are not going for forgiveness, you can get a lower effective interest, and you can improve your cash flow, what are you waiting for? Refinance today!
† Bonus includes cash rebates and value of free course. Borrowers who refinance more than $60,000 in student loans using the WCI links will be enrolled in The White Coat Investor’s flagship course, Fire Your Financial Advisor: ATTENDING for free ($799 value). Borrowers will still receive the amazing cash rebates that WCI has negotiated with each lender. Offer valid for loan applications submitted from May 1, 2021 through April 30, 2026. Free course must be claimed within 90 days of loan disbursement. To claim free course enrollment, visit https://www.whitecoatinvestor.com/RefiBonus.
Student Loan Refinancing Disclosures
What do you think? Are you a resident planning to pay off your loans yourself? Are you in REPAYE or did you refinance and why? Comment below!
Agree with this approach completely. As a resident with an unclear career path ahead of you, you want to keep your options as open as possible. My approach: enter PAYE as a resident with the intention having loans forgiven under of PSLF. As you near graduation and you enter the job hunt, take the best job for you based on income/benefits/location, etc. If that job is a 501(c)3, then great, continue to pursue PSLF and have loans forgiven. If not, then immediately refinance and pay off loans ASAP. By the time graduation happens, hopefully the precedent with PSLF has been set and we will see if this approach can actually be successful for soon-to-be high earning doctors, which will allow you to make a more informed decision. With this approach you have left your options open. Otherwise, as soon as you refinance, PSLF no longer becomes an option, even if you end up at a 501(c)3 after residency.
My question for WCI is: do you agree with Jan in that this new policy (REPAYE) supports the idea that PSLF will exist in its current form for current borrowers and that people will be “grandfathered” even if the rules change? Does this new policy (REPAYE) help refute the “too goo to be true” approach which involves exiting PSLF and refinancing ASAP?
I suppose it makes grandfathering somewhat more likely, but that’s difficult to quantify. Personally, I thought grandfathering was very likely BEFORE REPAYE came along. No guarantees of course.
I still think that grandfathering in is more likely than not to become a talking point for politicians that want the “rich doctors” to “pay their fair share”. I would be hesitant to take chances on that sort of a promise I was absolutely sure that I was going to take a qualifying job afterward. In today’s market, that sort of job stability doesn’t come easily.
Ugghhhh are you kidding me….. I just refinanced with Link Capital last week as a PGY1 at 4.42%
Don’t beat yourself up too much. What were your loans at? Even if they were all at just 6.8%, and all were eligible to be moved into REPAYE, that’s only 3.4% effective. You got > 2/3rds of the way there with your refinance, and there’s nothing to say you can’t refinance again later to an even lower rate. And if some of your loans were at >6.8% or weren’t eligible for REPAYE, then you’re certainly doing better on those. I mean, this program doesn’t even start for a couple of more weeks.
I suppose you’re right. That’s for the quick reply. I believe most were 6.8 and one was at 5 something so the average was 200k at 6.4% before I refinanced.
Well, 4.4% sure beats 6.4%. On $200K in loans over 6 years, that’s about $20-24K you’ll save. Better than a kick in the teeth. Plus your residency payments will probably be lower.
Anyone know how the 50% interest subsidy work for those of us stuck in IBR? If we switch to REPAYE, is it only 50% of the accrued interest after switching, or does this include 50% of the total interest accrued while in IBR as well (since interest is not capitalized in IBR)?
That’s a good question. I’m not 100% sure, but I suspect it’s only 50% after switching. Of course, no one has ever switched since this doesn’t take effect for two more weeks.
After switching. Once you switch, all accrued interest automagically capitalizes and becomes part of the principal. There is no way to switch plans without this occuring.
I have $250,000 in 9 loans that qualify for PSLF, and $150,000 in 6 loans that do not. I am currently on ICR. I am a PGY3 getting ready to consolidate the 6 loans that do not quality for PSLF. How will the REPAYE option or refinancing affect my options ?
First person I’ve seen in ICR for a while. Sure it’s not IBR?
You should definitely refinance the $150K in loans as soon as possible.
As far as the $250K in loans, you need to figure out ASAP if you’re going to work for a 501(c)3 when you finish training. If so, stay in a federal program (and consider switching to REPAYE). If not, then apply to refinance. If the refinanced rate is less than the REPAYE adjusted rate, then refinance.
Thank you for your response. I am on IBR and will be working for 501c3 next year.
So your real choice is IBR vs REPAYE. Unfortunately, your situation is pretty complicated. You might want to hire someone like Jan for advice on your situation about which way to go. I think you’re actually going to have to make some assumptions and run the numbers carefully.
Hi, thanks for the post. I didn’t realized the REPAYE has been in the making until I first read your REPAYE articles. Once idea I had (I’m currently on PAYE since the start of residency and 1/2 way through a 5 year residency and anticipated 1 yr fellowship and 50/50 on deciding to work at a 501c3 until I job search at the end of training) is to switch to REPAYE to obtain the 50% interest subsidy of the interest not paid during residency while paying my small $202/mon for a $215684 loan with $18553 already accrued in interest. Once I become an attending and plan to work for 501c3 to qualify for the PSLF in 5 years, I plan to switch back to PAYE to have my payments capped by the 10 yr payment plan to pay less per month (than if they were not capped) before my loan is forgiven for the 10 yr PSLF . This way if I choose to not go 501c3 and pay off the loans aggressively as WCI advises, I’ll have saved my self tens of thousands of dollars in interest accrued for the remaining 2.5yrs during residency/fellowship at 6.8% interest rate. Only downside I see for someone like myself is by switching to REPAYE, the $18,553 interest is capitalized. Anyone’s thoughts
I don’t think you can switch back can you?
According to my loan service provider, FedLoan, I can, even after discussing what I discussed above in my original post. I’ve read another forum, “Askheatherjarvis.com” who states it switching back as well is permissable. The only downside is capitalized interest in my scenario. I’ve read https://www.gpo.gov/fdsys/pkg/FR-2015-07-09/pdf/2015-16623.pdf that was posted on the other REPAYE article and couldn’t find language restricting it. The challenge is finding information stating if switching back is an option or not in writing. No rush I guess with WCI hesitation. As always, if anyone has links for update REPAYE regulations, they’d be appreciated.
That’s cool if you can. Seems odd, since it just allows borrowers to play the system though.
Might have missed it, however I didn’t see anything addressing the married component of the REPAYE plan. I’m assuming, if you are married and spouse is making income, that this plan would be an absolute no-go considering the mandatory FILE JOINTLY clause?
Yes, that would make it much less attractive.
Depends on how much your spouse makes and if they have loans
I guess it would make sense if my wife is a resident and having 250k in loans as well?
“1. If you are going for PSLF, then stick with PAYE if at all possible. If not possible, then choose carefully between IBR and REPAYE based on your expected salary and how much more you’ll have to pay as an attending under REPAYE, while also considering the resident cash flow issue you’ll have staying in IBR.”
I would encourage those with high student loan balances to run the numbers before taking this statement as truth. My wife has 315k in student loans and therefore a high standard payment of approx $3630. By my calculations she would need to made at least $460k/yr before she would exceed the standard payment if we switch her from PAYE to REPAYE. I don’t see that happening so then there is really no penalty to leave PAYE for REPAYE (except that the ultimate forgiveness date goes from 25 to 20 years if you don’t do PSLF and still have outstanding balance). This way if PSLF doesn’t work out you still have the interest benefits of REPAYE. Even with lower loan balances in the $250,000 range you are looking at salaries of $350,000+ needed to exceed your standard payment if you are in REPAYE. And this would be in the first few years out of residency before you hit 10 years for PSLF, a time when your attending salary will likely be as low as it ever is.
Please correct me if you see any flaws in this thinking.
Sounds right to me. They’ve made this so complicated there are all kinds of exceptions aren’t there? I always agree you should run the numbers for yourself.
Thanks for your blog, very helpful as always. Regarding REPAYE, do you know if the interest subsidy automatic? I was originally trying to refinance into DRB or Link Capital but have had issues with both because it sounds like they are having trouble handling the current demand. REPAYE sounds like a good alternative and then refinancing into one of the other companies after residency (PGY2 in a 5 year program), but I haven’t been able to find much information regarding the interest subsidy itself. If it really could cut my effective interest rate in half, it’s almost a no-brainer for my current situation.
I think it is automatic, but this thing hasn’t even been in existence 4 weeks yet. I don’t know what it will really look like and how it will really work. Nobody really does.
I am looking for some clarification regarding married couples where both persons are residents with federal loans, and how monthly payments would be calculated in this situation for REPAYE plan. I understand you cannot file separately for REPAYE, and your income when determining monthly payments is based off your combined income (approximately ~$105k per year combined lets say). Compared to an income of $52.5k, this would substantially increase the discretionary income and subsequent 10% payment. Since both my wife and my own payment calculation would be based on our joint income, would this mean that we each would have to pay 10% of our joint discretionary income, for a total of 20% of our discretionary income as minimum payments (10% towards my payments, 10% towards hers)?
I don’t think so. I think it’s 10% total. But that’s still a significant sum.
I just finished refinancing through DRB using your links. I got a 3.9 variable on a 10yr loan for $300k. I will start an attending job in 6 months that is not a 503b. I didn’t plan on doing PSLF from the beginning and so I didn’t do PAYE during residency. I just deferred.
A lot of my resident friends continue to defer or some are doing PAYE and hoping for loan forgiveness in 10-20 years (depending on job or repayment program). My thought is that I would much rather have a lower interest rate now, through as much cash as I can at the loans in the shortest amount of time as possible and pay off the loans quickly. Then they are gone and no matter how government programs change, they can’t take away the fact that mine would be already paid off. Call me cynical, but I just don’t trust the government to “forgive” my loans (or any other “rich doctor’s” loans) 20 years down the road.
I think the REPAYE program is good while you are in residency so that the interest is subsidized and makes the effective interest rate low. If you qualify for PSLF, then do that. If you don’t, then I still advocate to my co-residents to refinance at the end of residency. Even with REPAYE or PSLF, the total amount paid towards my loans is actually less when I refinance and just pay it off myself in 3-4 years.
I worked hard to become a doctor. I will also work hard for my money. I don’t trust the government to pay off my loans 10-20yrs down the road. It might work out for some, I just would rather do it myself and so refinancing was the best way to do that.
Better to refinance (if you need the low payment) or REPAYE (if you want less interest to accumulate) than defer during residency, even if you plan to pay off eventually.
I have just started a pediatric residency and have $85,000 in federal loans which qualify for PSLF. I am currently on the PAYE plan making minimal payments, but I am wondering if I should refinance and be more aggressive with my loan payments? I will likely sub specialize so I will be working for a nonprofit for a minimum of 6 years, after which my starting salary will be approximately $150,000. Any advice on whether to continue with PSLF or just pay them off given my relatively small loan burden? Thank you!
This isn’t an either/or decision. You can do REPAYE and pay them off. You can refinance and pay them off. You can do PAYE and go for PSLF. You can do REPAYE and go for PSLF. Lots of choices there, even if you did a good job keeping your loans down.
Hi WCI, wanted your advice on this. I am finishing residency this year, and will do an additional one-year fellowship. I’m currently on IBR, about 150000 or so in loans (all fed) at 6.8%. I just completed reapplication for IBR this past week. Do you think it’s better to switch to REPAYE, refinance to Link Capital, or stick with what I have? I haven’t had a chance to look at Link Capital yet, but do they allow you to pay more than what is due to speed up paying off? Thanks.
Not enough info. Are you going for PSLF? How big of a deal is payment size during training? What are your current payments? Why aren’t you looking at DRB? Also, I’m having another reader tell me Link Capital isn’t taking applications. I’ve got an email out to them but no response to it yet.
Thanks for your reply. I’m unlikely to do PSLF, I don’t think private practice qualifies, maybe community hospitals. I looked at DRB but they had high payment plans (1200-2000 a month), but I was hoping for something similar to IBR but with the opportunity to pay over. I’ll check Link Capital myself later today.
DRB’s in training plan has $100 a month payments. Link Capital’s are $0. You can “overpay” with either.
Question for you, WCI. I am graduating from medical school in a couple of months with around $165,000 in federal loans. I am going for PSLF and debating between PAYE and REPAYE. I am looking at either 6 or 7 years of residency/fellowship (depending on where I match). I am married (wife’s salary is around 45K, and it will stay there if she continues to work during my training) and have one dependent, and am trying to decide whether to file my taxes jointly (as I did this last year) or separately, which will depend on whether I plan to go for PAYE or REPAYE. I am applying for a surgical subspecialty that is one of the higher paying ones, which makes me think about the potentially high payments I’ll have once I finish if I go the REPAYE route. So there’s that consideration, as well as my attempt to minimize payments during residency. Should I go with PAYE and file taxes separately to minimize payments in residency and after I finish, and hope for a larger loan forgiveness 10 years down the road? I appreciate any advice you can offer.
Has anyone inquired about mortgage rates through any of these loan refinancing companies? I’ve noticed that a number of them advertise this. My wife is finishing contract negotiations for a position that will start this summer after residency, and we are looking to refinance once the contract is finalized. We will also be considering the options for buying a (small, affordable) home in the next 3-4 months. Wondering if we might get a better rate on both the student debt and the mortgage if we can get one company to finance both?
Does anyone know if spousal income is factored in REPAYE if we file taxes separately? My husband has about $250K PSFL-qualifying loans and we are in the process of switching from IBR to REPAYE. Next year I become an attending and if we file taxes jointly would no longer qualify for an income-based repayment program. Therefore I wanted to file our taxes separately so that he can still qualify. But if we stick with the REPAYE program would they still factor in my new salary to our monthly payments? By the way this website is incredibly helpful – thank you for all of the great guidance!!
You can’t do the MFS trick with RePAYE. If you want to do that, you’ll need to go with IBR or PAYE.
Thanks!
Hey WCI, thank you so much for your informative post! I was wondering if you, or anyone else, has the answer to this question. I noticed that DRB allows me to consolidate my loans + spouse’s loans into one. However, if I wanted to keep my loans on IBR/REPAYE/PAYE (probably refinance mid-residency), but wanted hers to get refinanced through DRB with myself as the main holder of the loans, is this possible? Or, would I need to refinance a portion of my student loans and then add hers onto that application? I don’t think she would qualify for refinancing on her own. Thanks again!
Not sure I’d recommend combining your loans. If one of you dies, the other one is then stuck with your loans. Does DRB really allow you to switch her loans to you? I think this is a question for them.
Thanks for this great post!
I’ll be starting residency with the following loans:
Federal student loans: ~$340,000 @ 6.24%
Private student loans: ~$68,000 @ 7.49%
At the start of residency, would I be able to enter the Federal loans into REPAYE and refinance the Private loans (eg, with DRB or a similar company), with the intention to consolidate/refinance the Federal loans (with my private DRB loans) at the completion of residency?
Sounds like a great plan for you.
Is it possible to go to the standard repayment program from REPAYE? People seem worried about the potentially high payment after residency, but it seems like if you don’t renew your REPAYE after residency you will default into the standard repayment like you to with PAYE and IBR. Am I missing something? Thanks
Right now you can go into standard repayment. I don’t know if it happens automatically or not.
Hey WCI,
Any updates on whether the interest subsidy from REPAYE occurs automatically with each monthly payment vs at the end of the year or at the time of forgiveness? I’m primarily asking because I’ve seen several articles about REPAYE that say stuff like this: “The good news is that REPAYE provides a new interest subsidy, and only half of your unpaid interest will be counted as forgiven at the end of the loan,” which makes it sound like it’s at the very end of the loan…which would definitely affect my plan to pay them off early while still maximizing REPAYE during residency (ie making the lower monthly payments and then paying extra whenever possible, preferably towards principal).
Thanks!
My understanding was always that the subsidy occurred with each payment. If there is a reliable source saying that isn’t true, I haven’t seen it.
Okay great, thanks. I just wanted to make sure because I saw several articles mentioning interest being “counted as forgiven” when the rest of the loan is forgiven after 10-25 years and I wasn’t sure if that meant it was actually not forgiven until that point. I really appreciate your response and all your great articles!
I guess I’d look at it like this. It’s never “forgiven.” It’s “subsidized” meaning it is paid, but by the government. So if the interest due in a given month is $900, and your payment is $300, then you pay $300, the government pays $300, and $300 gets added to the value of the loan. That’s my understanding of how it works. If that is wrong, I’d love to hear about it.
LinkCapital is out of money and not offering loans
Yes, it’s been that way for 2-3 months. They’ve promised to let me know when they have funding again. Hopefully they do.
I am a resident and trying to refinance. I am a PGY 2 out of a 5 year program. I put in an application to DRB in January, and it is still with the underwriters. Link Capital is not accepting refinance applications from residents due to excessive volume for requests. I applied to Earnest and they rejected my loan. At this point time is ticking by waiting for DRB to get back to me and Link Capital to possibly re-open its doors. Should I just go ahead and sign up for RePaye?
Just cause you sign-up for RePAYE doesn’t mean you can’t refinance with DRB. Are you expecting a lower effective rate with DRB or RePAYE?
My loan is $180,000 at 6.8%, so REPAYE should lower it to 3.4%. I do not know what rate to expect from DRB.
It doesn’t usually cut it quite in half since only half of the interest your RePAYE payments don’t cover is subsidized. Expect a fixed rate near 5% in residency from DRB.
I ran the numbers with REPAYE and if using the current principle the rate would be lowered to 4.36 and if using the total balance the rate would be 4.54. If I get out of deferment, would my accumulated interest capitalize?
And to complicate matters in 1 year I will be married to my finance who is an EM resident, at which time he will be out of residency with his $150,000 federal loan which is still in deferment. If I do go with REPAYE, I would have to get out of it as my monthly payment would have to take into account his salary and my effective interest would go back to 6.8. Would it be feasible to have both of our loans consolidated with another company and have a lower total interest at a attending doctor salary rate of 2-3%? Or would they balk at the debt to income ratio as it would be near 1:1?
Sounds like he’s going to want to refinance his given that he’s been in deferment and I assume is thus not going for PSLF. If you’re not going for PSLF then it’s worth exploring refinancing yours with him as a co-signer.
Studentloans.gov has a great table at https://studentloans.gov/myDirectLoan/eligibilityRequirementsHtml.action
Under “leaving the plan” it states for both PAYE and REPAYE “At any time, you may change to any other repayment plan for which you are eligible.” and for IBR “If you want to leave the plan, you will be placed on the standard repayment plan. You may not change to a different plan until you have made at least one payment under the standard repayment plan or a payment under a reduced-payment forbearance.”
I believe this means that you can switch from REPAYE to another plan as long as you qualify for the alternative plan. Am I understanding the table correctly?
Hi there!
Soon to be resident this July. Is refinancing my only option with 90,000 in 4 personal loans? I do not know anything about government loans since I have never had them: REPAYE, PSLF, none of this or anything else after residency will ever be available to me correct?
Correct. Those programs are only for federal loans.