Newbie: Looking for Loan Repayment Advice

[shabear]

Good morning,

I graduated from med school this past May and will be starting my internship July 1.  I am outright confused about how to proceed with the next steps for loan repayment.  I read these articles, talk with classmates, see other's posts but still feel overwhelmed--I'm looking for constructive advice about what to do next.  I am in grace. I am single, but will be married in in 1.5yrs to a classmate/intern (our salaries are $51,000 each, she has her own loans).  I will complete intern year then be an ophtho resident who will likely do a 1-2yr fellowship (5-6yrs total training).

All are Direct Unsubsidized loans

1. 7/2013: $32,722 @ 5.41%


2. 7/2014: $40,5000 @ 6.21%


3. 7/2015: $47,167 @ 5.84%


4. 5/2016: $ 34,418 @ 5.84%


5. === $154,807.00=== ($174,871 balance as of now)

I think I should enter RePAYE because that will allow me to pay off my loans quickest/cheapest. But then I read these posts about refinancing with SoFi or Laurel Branch, and then the FAFSA repayment calculator implies PAYE might be better and I'm at a lost. Does anyone have constructive advice?

Additionally, in residency, I plan to fully contribute to my programs 401(a) retirement plan and contribute to a Roth I had one set up from previous field/employment.

 

THANKS!

[FutureDoc]

First of all, congratulations on graduating from medical school!  The fact that you are looking at this stuff now puts you ahead of the game, so don't worry if it feels overwhelming.

 

Now, to address you information specifically.  Given that you had no income last year, and your AGI next year before you get married will be around 26k, REPAYE is definitely the best option for you for now.  Given that you are an incoming resident, and your average loan interest rate is already 5.8%, you should be able to get that effectively down to around 2.9-3% with REPAYE, which is far better than anyone is offering residents who refinance currently.  Then, in a year or two from now when you get married, you can switch to PAYE to avoid double income based payments.

 

Saving that 3% annually on your loan interest with REPAY will save you around $10,000 in interest over the next two years, so I think it definitely comes out ahead!

Have you read the article on enrolling early in REPAYE?  Given that you have already graduated, the process is fairly simple, just filed to consolidate all of your loans, select REPAYE as the repayment program, and have your tax returns.  Sadly you have to turn in the paperwork now since the automatic IRS tool was disabled due to security concerns.

Slight conflict of interest:  I'm the author of that article.  Let me know what other questions you have!

[shabear]

Thank you for your response!  I am looking into the process of doing this now, and verifying everything before I take additional steps!  Also, your article was clear, articulate and very helpful--thanks for writing that up!

I do not think I will be going for PSFL but do you recommend applying for PSFL anyways? It sounds like I'll have the option to opt out of it after training if I wanted to, but it is still there if plans change.

[DMFA]

You're not "applying for" it, you're just certifying your payments as eligible to count toward the 120 payments need to apply for PSLF. If there is a non-zero chance you might do PSLF, and your payments would be eligible anyway, might as well certify your employer.