Help! Can't refinance my loans!

[ICUDoc2020]

Hello all,

This is my first WCI post so if I forget a few details bear with me. I am quite embarrassed about my position, which I unfortunately got to after an exorbitantly priced medical school. I am currently a first year pulmonary/critical care fellow in Chicago. I have $511,000 of student loans currently in the federal program at a horrible 7.25% interest.

I am currently in PSLF with 25 months in (I had to defer the loans for 11 months when I bought my home). Based on some of the posts here I attempted to see what kinds of refi options I had, but EVERY BANK I contacted said their maximum refi amount is $450,000 and that they couldn't help me at all. I have my paperwork in process to move into the REPAYE plan but I'm not sure what my best option is. Should I refinance, if so, how? Should I hold the course with the Feds at this horrible interest rate? Any help is appreciated!!

Dan

[hightower]

Will they let you refinance SOME of your loans?  I mean, getting 450k at a lower interest rate is better than keeping it all at 7.25%.

[ICUDoc2020]

I'm not sure...i didn't ask. Has anybody ever tried refinancing part with one bank at a lower rate, and then waiting a few months and trying to refinance the remaining part with another bank at a lower rate?

[Donnie]

Agreed, try to refi a portion of your loans at least.  If you can do so, I would pay the remaining 7.25% loan down as fast as possible, except for possibly funding a retirement plan up to the match if there is a match with your employer.

While this isn't helpful now, it probably would have been a good idea to refi prior to taking on a mortgage because your debt to income and other credit metrics probably look pretty rough now, which may harm your ability to get better refi deals.  Generally, with that much student debt it would have been a good idea to just wait to buy a house.

 

[ICUDoc2020]

Donnie,

Yeah...that might have been a mistake from the credit metrics idea but hindsight is 20/20...sigh.

I do wonder though if it would be better to have these refi banks only take on say half of the fed loan debt so I can get a better rate (4-5%). As it stands if I maxed out their ability to refinance (the whole 450k)...they offered 6.25% which doesn't sound that great.

This might be a silly question at this point, but with myself eventually moving out of primary care and not likely being able to be hospital employed or at an academic institution I assume PSLF is a silly thing to stay in federal repayment for since my numbers are already so high and the interest is murderig me

[Doctor Money Matters]

You would likely be in PSLF for 3 more years due to your fellowship at which point you are halfway done. Unless you work for a private group, you may still be eligible for forgiveness as long as you are employed by a non-profit (not necessarily academic) institution. For those who believe loan forgiveness is going away, I tell them to set aside the extra payments in a separate account. Once you refinance, I believe forgiveness is over. Unless you can get significantly lower rates by refinancing, maybe you should continue down the loan forgiveness path.

[TotallyBroke]

I also bought a house straight out of fellowship before seeing the WCI light.  If it helps, this is what I did with my $450K in student loans (current salary ~$220K).  The problem I had was that even if I did refinance everything into a 5 yr loan, monthly payments would have been too high.  Over the past year, I've been able to refinance while making payments and paying off certain loans.  Here is what I have now:

$184K in a 15 yr fixed (I got a rate of 4.75%)

$207K in a 10 yr variable (currently 4.02%) - maybe should have gone with fixed.... we'll see...

$33K in a 5 yr variable (currently at 2.92%)

My minimum monthly payment now is $4300.  That fits comfortably in our budget and leaves me space to make extra payments, and still allows me to cash flow unanticipated costs/replenish, E-fund, etc.

Although less than ideal, you may need to consider something like this where you refinance part into a very low interest rate at a 5 or 7 yr term and leave some at slightly high interest rates (though less than 7.25%) until your debt to income ratio is better.

[DMFA]

ICUDoc2020 wrote:

Hello all,

This is my first WCI post so if I forget a few details bear with me. I am quite embarrassed about my position, which I unfortunately got to after an exorbitantly priced medical school. I am currently a first year pulmonary/critical care fellow in Chicago. I have $511,000 of student loans currently in the federal program at a horrible 7.25% interest.

I am currently in PSLF with 25 months in (I had to defer the loans for 11 months when I bought my home). Based on some of the posts here I attempted to see what kinds of refi options I had, but EVERY BANK I contacted said their maximum refi amount is $450,000 and that they couldn’t help me at all. I have my paperwork in process to move into the REPAYE plan but I’m not sure what my best option is. Should I refinance, if so, how? Should I hold the course with the Feds at this horrible interest rate? Any help is appreciated!!

Dan

Click to expand...

Does the interest rate *really* matter if you're not going to pay it anyway, i.e. RePAYE/PSLF or MFS/PAYE/PSLF?

Even if you get paid less as a non-profit W-2 employee, with *that* level of debt, I'd be RePAYE all the way, fingers crossed.

That's $101.50 every *day* of accruing interest.  Yikes.

[Faithful Steward]

If you are going for PSLF, why in the world would you refinance? Refinancing would eliminate the possibility of PSLF and ensure you pay back the entire amount. Do you know what repayment program you're on? IBR, PAYE, or REPAYE?

I would recommend you speak to my good friends over at Doctors Without Quarters (http://www.dwoq.com/). They specialize in helping physicians navigate the student loan repayment minefield. I'd encourage you to visit their website and have them help you analyze refinancing versus going the PSLF route.

[jhwkr542]

Loan forgiveness all the way.

[Peds]

This is a horror story. I wish you the best.

 

- The Lowely Pediatrician

[MochaDoc]

ICUDoc2020 are you willing to sell the house?

[Craigy]

At some point, the loan burden chooses your career path for you...

[adventure]

Doctor Money Matters wrote:

You would likely be in PSLF for 3 more years due to your fellowship at which point you are halfway done.

Click to expand...

So if you worked for PSLF/Repaye/etc for 3 years, you'd get paid a physician salary, and get nearly 600k (tax free, if I'm not mistaken!)? That sounds like an amazing deal.

To say it another way, I'd put up with a lot of (but not endless) hassle at work for another 200k/year.

The program is there now, and hasn't changed yet. I'd leave the loans alone and go for it. Afterwards, you'd have amazing freedom. Put another way, WCI advocates to pay off loans quickly. 3 years is wayyy faster than what he recommends (pouring cash into loans). Make a 10 year plan, in a spreadsheet, and compare loan repayment, refinance at 4%, and see the difference!

[adventure]

Craigy wrote:

At some point, the loan burden chooses your career path for you…

Click to expand...

Respectfully, slightly disagree.

At some point yes... but not entirely. Maybe points you in a new direction, but not totally even at this level of debt.