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HELP - High DTIR, PSLF vs. Refinance

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  • HELP - High DTIR, PSLF vs. Refinance

    I was wondering if anyone had any thoughts on my situation. I'm about to finish residency, and have a job that will pay $280k. My student loan debt is $390k with $95k of outstanding interest. Like a fool, I used forbearance, and have missed 5 years of PSLF while in residency (plus the accrued interest). The position I am taking is a 501c3, but I could see myself moving into PP in 3 years (and earning more like $400-500k). My average loan rate is 7.2% fixed for 10 years (not refinanced). My question is what to do now.

    Do I go for PSLF and save the rest on the side, in case I stay within the 501c3, or do I refinance as an attending and try to crush the loans ASAP? I should be able to allocate $8-10k/mo to the loans, if needed.

    Also, in relation, how much should I be putting into retirement vs. loans? I get 10% of my salary straight into a 403b by the employer. I was thinking I would just max out my $18k 401k and apply the rest to loans.

    Any thoughts would be greatly appreciated!

  • #2
    In my opinion you will make too much as an attending to really take good advantage of the PSLF. The real benefit is doing that during residency so as to garner all those income based payments. With your current income, the income-based payments will probably not work for you anyway, and the 10 year IBR would be similar to just the 10yr fixed plan.

     

    In my opinion, I would refinance and try to eliminate that debt as quick as you can. With that income, and living as a resident for the first few years you should be able to eliminate that debt earlier than the 10 years it would take for PSLF.

     

    For retirement, make sure to max out the tax-deferred, tax-free options (403b, 457b, Backdoor Roth IRA, HSAs) and then see how much you have left after taking care of the debt. Next step would be taxable accounts.

     

    I don't have all the specific numbers that other members will be able to give ya, but hope this helps!

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