Student Loan Debt...Re-fi vs PSLF

[lko223]

Hello everyone,

About to wrap up a fellowship in neuro-critical care (6 total years of training) and have had no idea how to manage my finances, with all my loans in deferment and forbearance with interest accruing.

I will be starting an academic job in a couple months, with plans to remain in academics as a neuro-intensivist and have a base salary of $250k.  Total of principal loans are approximately $450k with $80k interest and varying interest rates between 6-8%.

At the moment I see there being two options for loan repayment, please let me know if I am missing something...

Re-finance and pay off over perhaps 10 years vs PSLF (which would involve having to consolidate my FFEL loans).

Thoughts? Appreciate all advice, wish I had started planning sooner.

[DMFA]

Wait...why have all your loans been deferred/foreborne?  Why have you not been making PSLF-eligible payments over the past six years, meaning you'd only have four years let?

So you'd be on the hook for $530,000 in debt if you refinanced?  Yikes.  A 10-yr standard payment at 4.49% fixed (SoFi's rate at the moment) is $5,490/month.  You'd pay $658,800 over the life of that loan.  If you couldn't start PSLF until now, then your monthly payment would be (AGI - 1.5pov) / 120, aka 10% of discretionary income, capped at 10-yr standard rate of when it would have entered repayment...which, at 6-8%, would probably be close to that over those ten years.

How much of your loan balance actually has had payments on it which could possibly be retroactively certified as PSLF-eligible (i.e. income-driven payments made while a full-time employee of a non-profit)?  That'd be a good start if you could do PSLF for some of them and consol/refi others.  If you've been deferring them ALL, well...you're not screwed, but you're in an unenviable situation, I'm very sorry to say.

 

[lko223]

Thanks DMFA for the response, I had a couple private loans that I paid off while in training but have not made any payments on the federal loans....

 

[The White Coat Investor]

Unfortunate. You either didn't get advice or got bad advice. Here's the reason- what gets forgiven with PSLF is the difference between the little tiny payments you make during residency and fellowship and a "full" 10 year payment. Now that you're an attending, if you make 10 years of full payments, you probably won't have anything left to forgive. So although most docs coming out of training and staying in academics should go for PSLF and not refinance, that's probably not the case for you. Run the numbers to be sure, but I think that's what you'll find.

By "run the numbers" I mean see how much less your payment under PAYE would be than under the 10 year standard repayment. If they're the same or nearly the same, might as well refinance and pay them off.

If you need help, hire one of these guys:

https://www.whitecoatinvestor.com/student-loan-advice/