Help with Student Loan Refinancing

[pjm215]

Hi Eveyone,

New to the forum and WCI in general. I could really use some advice on my current student loan situation.

I'm an attending physician 2 years out of residency with a 300k annual income. I currently have 283k in federal loans serviced through Mohela. Interest rate is 7.125%. I stayed in the govt loan for the last two years because i didn't want to lose the federal loan forgiveness option (although the last 2 years I was working for a for profit company) Recently I qualified for student loan reimbursement through the State of Texas Physician Loan Repayment Forgiveness program. This will pay 160k of my loans over 4 years (in 25k, 35k, 45k and 55k intervals) Leaving me with approx 120k in loan remaining. My plan is to save and pay off the remaining balance by the time of the last payment by the State of Texas (4 years from now).

Would it be worth my time to refinance even though (most likely) I'll have my loans payed off in 4 years? Also would a variable interest rate be a better option then a fixed in this situation? I'm getting quotes of variable interest rates of 3.165% (10 year) and 3.5% (15 year) and fixed rates of 4.49% (10 year)  and 5.0% (15 year) through SoFi.

Any advice would be greatly appreciated as I'm honestly feeling quite overwhelmed with this stuff. Thank you all in advance for taking the time to read and help. Regards!

[DMFA]

pjm215 wrote:

Hi Eveyone,

New to the forum and WCI in general. I could really use some advice on my current student loan situation.

I’m an attending physician 2 years out of residency with a 300k annual income. I currently have 283k in federal loans serviced through Mohela. Interest rate is 7.125%. I stayed in the govt loan for the last two years because i didn’t want to lose the federal loan forgiveness option (although the last 2 years I was working for a for profit company) Recently I qualified for student loan reimbursement through the State of Texas Physician Loan Repayment Forgiveness program. This will pay 160k of my loans over 4 years (in 25k, 35k, 45k and 55k intervals) Leaving me with approx 120k in loan remaining. My plan is to save and pay off the remaining balance by the time of the last payment by the State of Texas (4 years from now).

Would it be worth my time to refinance even though (most likely) I’ll have my loans payed off in 4 years? Also would a variable interest rate be a better option then a fixed in this situation? I’m getting quotes of variable interest rates of 3.165% (10 year) and 3.5% (15 year) and fixed rates of 4.49% (10 year)  and 5.0% (15 year) through SoFi.

Any advice would be greatly appreciated as I’m honestly feeling quite overwhelmed with this stuff. Thank you all in advance for taking the time to read and help. Regards!

Click to expand...

PELRP is great, but if you're not specifically underserved, you're later in line for the money.  A few of my wife's colleagues were in it in earlier years and get hardly anything this past year.

The best way it seems to me is to balance maximizing the state's money and minimizing your own (lower interest).  Problem, is, lower interest means shorter term and higher payments.

You're on the hook for it after the $160,000 anyway.  Might as well pay whatever you can afford.  In either case, even if they didn't pay either, the most you'd pay on the principal on 48 periods at either of those variable rates (assuming the rate stays the same, which it wont) is $132,205 on the 10-yr 3.17% (monthly payment $2,754.28) and $97,109.64 on the 15-yr 3.50% (monthly payment ($2,023.12).  Once they're done paying, you can re-refinance to the lowest rate/term and knock it out.

Based on that, I'd say *prob* go 15-yr and re-refi later, but I'd have to crunch some numbers for it.