[Update 5/18: Since this post was originally published in 2015, there are now four companies doing student loan refinancing for residents. These include:

Using these links gets you hundreds of dollars in cash back you don't get if you go directly to the companies.

As far as the REPAYE vs Refinancing decision, I think I can simplify it more now than I could in 2015.

  1. If you have private loans, refinance them now as long as the rate you can refinance to is lower than what you now have.
  2. If you are going for PSLF and are single or part of a single-earner family, use REPAYE until you finish training then switch to PAYE.
  3. If you are going for PSLF and part of a dual-earner family, get some professional advice about your student loans
  4. If you anticipate refinancing your public loans after residency, weigh your effective rate under REPAYE against the rate you can refinance to and take the lower one.

I hope that update on this post is helpful.]

Earlier this week, blog advertiser and student loan expert Jan Miller explained the newest loan management program from the federal government, REPAYE, which is basically a combination of IBR and PAYE, with a few interesting additions. This post is about one of these additions, and how it should affect your decision about refinancing your student loans as a resident.

I've been pressuring student loan refinancing companies into refinancing student loans as early as possible for several years now. Two of them, DRB and Link Capital, are currently doing so. At least one other company is hesitant to do so because of the issue I'm addressing in this post. This is all a bit of a moving target, of course, but after student loan refinancing as a resident became possible, and prior to REPAYE, as soon as you decided you were not going for PSLF (and if you didn't have an outlandish student loan burden AND a relatively small income making IBR/PAYE forgiveness attractive) you should refinance. DRB and Link Capital offer tiny payments, better than IBR/PAYE in most cases, during residency PLUS, most importantly, the interest rate is much better, decreasing the total loan burden. Obviously, you don't want to pay off loans that would otherwise be forgiven, so until you decided you weren't going for PSLF (by working at a 501(c)3 for a total of 10 years including residency and fellowships) you didn't necessarily want to refinance, since the now private loans aren't eligible for PSLF.

But with REPAYE coming into the picture, things become more complicated (and business increases for people like Jan since many more people are going to need his expertise to make the optimal choice.)  The main reason is the 50% interest subsidy available under REPAYE that WAS NOT available under IBR and PAYE. Normally, under IBR/PAYE you're paying much less than the interest due on the loan each month and all the interest you don't pay gets tacked on to your total debt. With subsidized loans, that interest was forgiven, but those haven't been available since 2012 for graduate students. Now with REPAYE, 50% of that interest is just forgiven, effectively lowering your loan interest rate during residency.

So it is possible for someone NOT going for PSLF, depending on the rates offered by DRB, Link Capital, and anyone else who gets into the game, that you would accumulate less total debt staying in REPAYE during residency and refinancing as you finish rather than refinancing at the earliest possible moment. If you thought the math was complicated before, wait until you add in this factor!

For example, let's say you have a bunch of 7% federal loans and, just for convenience sake, can have REPAYE payments of $0. You contact Link Capital, and they offer you a 4% fixed loan or a 2.5% variable loan and $0 payments in residency. Your effective REPAYE interest rate is now 3.5%, better than the Link Capital fixed rate, but not as good as the 2.5% variable rate, assuming interest rates don't rise. The other concern, of course, is that if rates rise dramatically during residency, you might not be able to get that 4% fixed rate with Link Capital in 3-5 years when you graduate. Talk about a tough decision! Thank you very much, President Obama, for making optimal student loan management even tougher than it already was and creating an entire industry of student loan advisors.

Let me try to simplify this a bit for you residents out there.

  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.
  2. If you are not sure yet about PSLF, then stick with PAYE if possible, and otherwise run the numbers with reasonable assumptions and take your best guess between IBR and REPAYE. REPAYE is probably the better way to decrease interest accumulation if you're leaning toward paying the loans off.
  3. If you are sure you're not going for PSLF, then get refinancing quotes ASAP from DRB and Link Capital and compare them to the effective interest rate under REPAYE. Go with the lower rate, realizing that the variable rate may be the best deal, even with the additional risk.

If you do decide to refinance your student loans, please use the links below. Not only do you get the special WCI deal (usually $200-550 back in your pocket) but I get paid, the refinancing company gets a profit, and the taxpayer gets his money back. Win-win-win-win. I've had great feedback from every one of these companies but would love to hear more about your experience.


Cash Back
Variable 1.89%-6.66%
Fixed 2.63%-6.63%
*Low Rate Guarantee
Variable 1.89%-5.90%
Fixed 2.80%-6.00%
Variable 1.99%-5.74%
Fixed 2.98%-5.89%
Variable 1.93%-8.24%
Fixed 2.70%-8.49%
Variable 1.89%-5.74%
Fixed 2.80%-5.85%
Fixed 2.55%-6.17%
Variable 2.39%-6.01%
Fixed 2.79%-5.99%
Variable 2.25%-6.43%
Fixed 2.99%-6.88%
*Variable 1.97%-6.82%
Fixed 2.83%-6.74%
Variable 1.93%-4.85%
Fixed 2.7%-4.49%
Variable 1.99%-5.25%
Fixed 2.95%-8.28%
New Bonus Disclosure
Earnest Welcome Bonus Offer Disclosure: Terms and conditions apply. To qualify for this Earnest Welcome Bonus offer: 1) you must not currently be an Earnest client, or have received the bonus in the past, 2) you must submit a completed student loan refinancing application through WCI link; 3) you must provide a valid email address and a valid checking account number during the application process; and 4) your loan must be fully disbursed. The bonus will be automatically transmitted to your checking account after the final disbursement. There is a limit of one bonus per borrower. This offer is not valid for current Earnest clients who refinance their existing Earnest loans, clients who have previously received a bonus, or with any other bonus offers received from Earnest. Bonus cannot be issued to residents in KY, MA, or MI.
“*Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. If you choose to complete an application, we will conduct a hard credit pull, which may affect your credit score. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Oct 10, 2020 and may increase after consummation.”
The Crack of Lake Powell

The Crack of Lake Powel

What do you think? Am I looking at this right? Is there anything else to consider in this decision? What will do with your loans? Are you a little more hesitant to refinance as a resident knowing about REPAYE? Why or why not? Have you already refinanced? Which company did you use and what has your experience been like? Comment below!