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IBR w/ heavy debt, switch to REPAYE?? Help!!

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  • gonc
    replied
    I too am considering switching from IBR to REPAYE and just spent 20 minutes on the phone with FedLoan. Initially the CSR was unaware of the unsubsidized loan subsidy. She spoke to a supervisor and was then able to confirm that there is a 50% subsidy on interest not covered by the monthly payment on unsubsidized (and subsidized after the 3-year period where you get 100%) loans for an indefinite period while on REPAYE.

    In my situation as a fellow with almost three years of training remaining, this translates into a very nice $400+/month benefit. It does seem like switching from IBR to REPAYE is a no-brainer for those of us with high debt burdens that are still in training.

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  • Sergio Estavillo
    replied




     


    PMed yspower with MyFedLoan contact.

     

     

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  • DMFA
    replied




    I talked to the myfedloan manager-level person who said that under REPAYE for unsub, after 3 yrs, there is no interest subsidy benefit. That is why I was confused. We will see after 3 yrs, I guess…
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    I want you to find out who this person/people is/are and ask them if they've read page 24 of this document: https://studentaid.ed.gov/sa/sites/default/files/income-driven-repayment-q-and-a.pdf

    And see if their opinion changes because it's really quite plainly stated. If that isn't the case, then a lot of experts which talk online about this subject, which include WCI and many of the advising professionals who post here, and amateurs who think they know a couple things like me, are making ill-advised decisions.

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  • yspower
    replied
    I talked to the myfedloan manager-level person who said that under REPAYE for unsub, after 3 yrs, there is no interest subsidy benefit. That is why I was confused. We will see after 3 yrs, I guess...

    Leave a comment:


  • DMFA
    replied




    I too am surprised that many borrowers, eligible for both IBR and PAYE, chose IBR over PAYE. Recently I saw an early federal fact sheet on PSLF stating that for most borrowers IBR would be the best plan. I guess people followed that out-dated advice Thankfully the new materials are updated to reflect better advice.

     
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    Same here.  I think it has to do with the window that occurred from before PAYE was on the table (2006-7 or so, I think?) and the "new" IBR which came into play for new borrowers after, um, 2014 I think.  AFAIK the "new" IBR is basically PAYE with the monthly payment being 10% of the disposable income instead of the prior 15%.  Maybe this was done to prevent confusion with RePAYE?




    Myfedloan counselor told me that REPAYE is only effective for the first three years for the unsubsidized fed loans with 50% interest subsidy benefit. After 3 yrs, they were adamant that there is no interest benefit…counselor was pretty positive about it. I thought this plan will stay until Gov removes this plan.
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    You are not the only one who has reported that their loan counselors have told them this.  This is directly in contrast to what the federal regulations state.  I know that we're not on the "inside" and they are, but given the clear official statements to the contrary by the Dept of Ed, I (and the pros on the site) really think those individual counselors are incorrect in their assessments.

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  • Joy Sorensen Navarre Navigate
    replied
    DMFA,

    I too am surprised that many borrowers, eligible for both IBR and PAYE, chose IBR over PAYE. Recently I saw an early federal fact sheet on PSLF stating that for most borrowers IBR would be the best plan. I guess people followed that out-dated advice Thankfully the new materials are updated to reflect better advice.

    Regarding advice. PMR_Res, I strongly recommend you (and all borrowers with significant med ed debt) consult an expert. The fee is minimal compared to the risk of missing a detail. When I review physicians' plans, most of the time we encounter gaps or room for improvement. About one in ten borrowers have maximized their savings with the federal repayment plans.

    I track the additional savings. So far we've saved borrowers an additional $40k to $400k on their student loans. w

    I'm happy to announce that my new agreement with WCI includes a 25% discount for his readers. Check out the WCI Recommendations page.

    All the best,

    --Joy

     

    Leave a comment:


  • PMR_Res
    replied
    Yspower, according to Studentloans.gov that is not true, this is directly copy & pasted from the website:

    "

    • On subsidized loans, you do not have to pay the difference between your monthly payment amount and the remaining interest that accrues for your first 3 consecutive years of repayment under the plan.

    • On subsidized loans after the first consecutive 3 years and on unsubsidized loans during all periods, you are only responsible for paying half of the difference between your monthly payment amount and the remaining interest that accrues."

    Leave a comment:


  • yspower
    replied
    Myfedloan counselor told me that REPAYE is only effective for the first three years for the unsubsidized fed loans with 50% interest subsidy benefit. After 3 yrs, they were adamant that there is no interest benefit...counselor was pretty positive about it. I thought this plan will stay until Gov removes this plan.

    Leave a comment:


  • PMR_Res
    replied
    Well I did it, I just submitted my application to switch to REPAYE. DMFA thanks again for everything

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  • PMR_Res
    replied
    Looks like I will file for the switch from IBR to REPAYE, I really appreciate your time and help

    Leave a comment:


  • DMFA
    replied
    Did you include your spouse's income in your RePAYE calculations?  RePAYE always includes spouse, even if you're MFS.

    Running your numbers, if you've made 24 PSLF payments prior to this year, then you should have 8 more years of payments.  If your wife's income stays at about $70,000, and assuming then you would make $200,000 out of residency and have an average 4% annual income increase, here's what you'd make.

    At that high rate of interest, you'd benefit most from RePAYE+PSLF, paying only $184,346 more over the life of the loan and having $287,849 forgiven after the 10-year mark.

    If you continue in IBR (my calculator is set up for PAYE, so I just multiplied by 1.5), you'd pay $279,332 over the life of the loan at 10 years.

    If you do RePAYE now and refi to 3.5% and 5 years when you're an attending, you'd pay $380,922.

    So yes, RePAYE + PSLF seems like, for you, the best way to go.  An additional year of fellowship further makes it seem like you'd benefit even more from PSLF.  And, if for some reason, PSLF is taken away from us, then that would minimize the amount of interest that accrues to keep your principal lower.

     

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  • PMR_Res
    replied
    DMFA, how do you calculate that even if I do pursue PSLF that I would still pay less with a private refinance? If I put my end of residency without fellowship calculated balance with REPAYE of $336k and i use an amortization calculator to calculate 6 years (since my 4 years of residency were qualified PSLF payments) of a fixed 3-4% interest rates I get monthly payments for ~$5k to $5300 which is way more than if I continue REPAYE or IBR with a AGI of $270-320k. I don't know if I am missing something, I am new to making these calculations so I was just wondering. I really appreciate your posts !

    Leave a comment:


  • PMR_Res
    replied
    These calculations are based on the loan balance of































    Fedloans Unpaid Interest Total Total Balance
    Unsub $247,780.31 $29,788.04 $277,568.35 $321,567.92
    Sub $43,625.00 $374.57 $43,999.57
    Int 6.75%

    My interest goes up in my PGY4 year since the 3 year subsidy of the Subsidized loans finishes.

    How would I run the numbers to see if a private refinance would be better than PSLF?

    I was considering doing a one time consult with a "student loan expert," he was recommended by my medical school (for a fee of $300), do you think that's worth it? I just want to make sure I'm not missing anything here with my calculations

    Leave a comment:


  • PMR_Res
    replied





































































































































































































































































      PGY3
    IBR REPAYE IBR MFS
    Annual interest $16,725.17 $10,957.93 $16,725.17
    Monthly payment $397.48 $264.98 $397.48
    Annual payment $4,769.70 $3,179.80 $4,769.70
    Loan balance $333,523.39 $329,346.05 $333,523.39
    PGY4
    IBR REPAYE IBR MFS
    Annual interest $18,735.86 $15,652.92 $18,735.86
    Monthly payment $1,199.63 $799.75 $320.00
    Annual payment $14,395.50 $9,597.00 $3,840.00
    Loan balance $337,863.75 $335,401.97 $348,419.25 No Fellowship
    REPAYE v IBR MFJ REPAYE v MFS
    TOTAL PAYM $19,165.20 $12,776.80 $8,609.70 Payment diff $6,388.40 -$4,167.10
    Balance diff $2,461.79 $13,017.29
    ATT1/PGY5 Net $8,850.19 $8,850.19
    IBR REPAYE IBR MFS
    Annual interest $18,735.86 $15,652.92 $18,735.86
    Monthly payment $1,199.63 $799.75 $320.00
    Annual payment $14,395.50 $9,597.00 $3,840.00
    Loan balance $342,204.12 $341,457.89 $363,315.12
    Yes Fellowship
    TOTAL PAYM $33,560.70 $22,373.80 $12,449.70 Payment diff $11,186.90 -$9,924.10
    Balance diff $746.23 $21,857.23
    Net $11,933.13 $11,933.13

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  • PMR_Res
    replied
    So I have been trying to run all the numbers in Excel for REPAYE vs. IBR MFJ vs. IBR MFS and here is what I have... if my numbers are right then REPAYE seems to be in favor of IBR whether it is MFS or MFJ.

    If I do not do fellowship, REPAYE vs IBR MFJ: I would make $6k less in payments, and my total balance would be $2k lower, for a "net" benefit of almost ~$9k.

    Now with REPAYE vs IBR MFS, although I would make $4k more in payments, but my balance would be ~$13k lower, for a "net" benefit of almost $9k.

    Does this make sense? It seems even though I have this nasty amount capitalizing if I switch from IBR to REPAYE I would still benefit quite a bit. Then following graduation I like the idea of refinance.

    I did these numbers based on the following

    PGY3 AGI ~$50k; PGY4/5/Attending year 1 AGI $120k (my 50k + my wifes 70k)

    Yes all my payments have counted for PSLF so far, I submit the form every year. And the $20k that I was considering making a bulk payment with now is in addition to having an emergency fund I have.

    I have a screen shot of the spreadsheet how can I post it here?

     

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