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  • Refinance vs. PSLF

    Hey all,

    I am a fourth year medical student applying to urology residency this year (5 year residency). I am trying to be proactive and plan out my student loan management strategy - whether to pursue PSLF or to just refinance and pay off my loans myself. My final loan distribution will be in January, at which point in time I will have ~$230,000 total in loans ($185,000 Direct unsubsidized, $45,000 Direct grad PLUS). Interest is currently frozen, but will begin accruing again in February 2022 (my average interest rate will be ~5.5%). I will be moving in with my girlfriend at the start of residency (planning to rent), and she works as a PA making ~$100k per year (she is "the one," but I will need to set aside money for a ring in residency). Besides my student loans, we will not have any other debt whatsoever. We will also already have a 20-30k emergency fund set aside at the start of residency.

    Given that the average urology attending salary runs around 400k (from my understanding) and that my significant other will have a solid income to contribute towards loans, I am currently leaning towards refinancing my loans and paying them off myself. However, I realize that one can save a significant amount of money over the life of the loan with PSLF and so I am wondering whether it would be worth pursuing this option instead?

    Any advice would be greatly appreciated!

  • #2
    Welcome. You didn't mention if you are interested in a private practice career, or a career in academics or at another 501(c)(3) organization.

    If private, it's a moot point. If not, I'd at least keep your options open through training (assuming that's at a PSLF-eligible organization) by not refinancing too early. Once you're making attending money you'll be able to pay them off no problem, but if you refinance you can't unring that bell.

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    • #3
      Originally posted by Bombers51 View Post
      Hey all,

      I am a fourth year medical student applying to urology residency this year (5 year residency). I am trying to be proactive and plan out my student loan management strategy - whether to pursue PSLF or to just refinance and pay off my loans myself. My final loan distribution will be in January, at which point in time I will have ~$230,000 total in loans ($185,000 Direct unsubsidized, $45,000 Direct grad PLUS). Interest is currently frozen, but will begin accruing again in February 2022 (my average interest rate will be ~5.5%). I will be moving in with my girlfriend at the start of residency (planning to rent), and she works as a PA making ~$100k per year (she is "the one," but I will need to set aside money for a ring in residency). Besides my student loans, we will not have any other debt whatsoever. We will also already have a 20-30k emergency fund set aside at the start of residency.

      Given that the average urology attending salary runs around 400k (from my understanding) and that my significant other will have a solid income to contribute towards loans, I am currently leaning towards refinancing my loans and paying them off myself. However, I realize that one can save a significant amount of money over the life of the loan with PSLF and so I am wondering whether it would be worth pursuing this option instead?

      Any advice would be greatly appreciated!
      Urology where I work makes 800-1,000,000. And it’s a 501(c)3. But in all seriousness just pay it back. I rarely ever recommend this.

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      • #4
        Your debt to income would set you up well to private refinance.

        However, look at the effective interest rate you'd be paying in REPAYE vs. if you private refinanced in your intern year. The interest subsidy in REPAYE is significant and would probably drop the effective interest rate lower than the interest rate you could receive by private refinancing in your intern yr.

        Here's a great post for your review - https://www.whitecoatinvestor.com/re...as-a-resident/
        Helping student loan borrowers manage their student loans. StudentLoanAdvice.com. [email protected]

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