Finishing fellow looking at the future and going for PSLF

[GonePostalMD]

I was looking at a recent post here and it got me thinking.

I'm currently a finishing fellow and will be working in a higher paying sub-specialty academic practice going forward (appx $400K). At the end of training, I will have 5.5 years towards PSLF already done (which was an adventure to work with Fedloan to even get to this point).

I'm currently in REPAYE, and don't qualify for PAYE given my earliest student loans. My loan size ~$200K (direct and consolidated, 6%) and income would eventually have me paying appx $1200-1300/mo over the standard 10 year repayment. Do I stay in REPAYE to make sure that I can get to my 120 payments (knowing that I will be paying over the 10 year repayment for a few years), do I switch to something else (IBR) before leaving fellowship while I still have the partial financial hardship?

Assuming I do REPAYE, I am looking at 70-80K being forgiven, which is nice but not the end of the world. Do I even go for PSLF at this rate; or just refinance and get rid of it? Otherwise, all available money is going towards at down payment for a house in the next 1.5 to 2 years in a VHCOL area, so anything helps.

Thanks!

[jfoxcpacfp]

Bumping in case it may help you get comments. Personally, I believe there are too many moving parts for you to get more than general advice on this forum. Consider contacting one of the recommended student loan advisors on WCI.

[East coast]

On your first question - My understanding is that IBR has a payment cap at the 10 yr standard repayment (definitely confirm that as I am much more familiar with Repaye/Paye, but know that paye/ibr are similar). Assuming you want to go for PSLF, if you were to switch plans to IBR, you'd be saving yourself the apprx $1200-1300/mo in cash flow with that cap - seems like the way to go given the info provided to me. Capitalizing the interest shouldn't matter too much in this situation since it would be forgiven in the end.

General advice on your second question - If it's a math equation, we don't have all the details (family size, principal/interest balance, in the lower 48 vs. alaska, refinancing rates, potential spouse income etc.), but you seem to be familiar enough with PSLF to be able to run those scenarios. So to answer the non-math portion of that question, that's more up to you. My spouse and I have somewhat similar numbers - $200k-ish initial loans. On our current path we'd have $100k forgiven if things go as planned, but would essentially have paid back 200k in total over the course of the loan. I see it as being given the opportunity to load up investment accounts at an effective 0% loan. For us, the relative (to our income) low amount forgiven is still worth it with the proper backstops in place (side fund, investing the savings not spending etc.)

[GonePostalMD]

On your first question - My understanding is that IBR has a payment cap at the 10 yr standard repayment (definitely confirm that as I am much more familiar with Repaye/Paye, but know that paye/ibr are similar). Assuming you want to go for PSLF, if you were to switch plans to IBR, you'd be saving yourself the apprx $1200-1300/mo in cash flow with that cap - seems like the way to go given the info provided to me. Capitalizing the interest shouldn't matter too much in this situation since it would be forgiven in the end.

General advice on your second question - If it's a math equation, we don't have all the details (family size, principal/interest balance, in the lower 48 vs. alaska, refinancing rates, potential spouse income etc.), but you seem to be familiar enough with PSLF to be able to run those scenarios. So to answer the non-math portion of that question, that's more up to you. My spouse and I have somewhat similar numbers - $200k-ish initial loans. On our current path we'd have $100k forgiven if things go as planned, but would essentially have paid back 200k in total over the course of the loan. I see it as being given the opportunity to load up investment accounts at an effective 0% loan. For us, the relative (to our income) low amount forgiven is still worth it with the proper backstops in place (side fund, investing the savings not spending etc.)

Thanks for the feedback. I will probably switch over to IBR, its such a shame we have to play this game, especially with FedLoan who hasn't seemed to get one step of my yearly certification forms correct yet.