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Continue PSLF or Refinance?

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  • Continue PSLF or Refinance?

    Curious what others would do in our situation - one spouse in medicine (~222k in federal student loan debt, 5 years of certified PSLF payments) and one spouse outside of medicine (no student loan debt). Two young children and spouse in medicine is considering switching from a full time PSLF eligible employer to a part time gig in order to stay home with kids during preschool years (not for financial reasons but for a personal childcare choice). Combined income with this job change is projected to be about $300k but curveball is that medicine spouse is unsure if they will go back to full time PSLF employer after kids start school so wondering if essentially pausing PSLF and continuing to make IDR payments throughout to maximize PSLF payoff is the right approach or if refinancing right away and attacking the loans is what others would do? Have crunched the numbers and even with a “pause” of 4 years, there is still a 53k positive payoff from what would be forgiven and the total payments even after going another 9 years so math is clear but physiologically getting the loans gone in what could be just over 3 years if refinanced and the freedom of not having to go back full time and for 501(c)3 is worth forgoing that forgiveness amount? If refinancing, any merit to hedging the decision a bit and doing a “side fund” until medicine spouse fully settles into part time gig? Estimating that the interest savings would be about $7k/yr if refinancing.

  • #2
    I would hate to have that pressure for the spouse to return to a PSLF job, let alone any full time job. A contingency reserve fund is the standard recommendation anyway.
    This is one of those "family decisions" that does not necessarily tilt to the money spreadsheet.

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    • #3
      Refinance and pay off.

      Going part time is a luxury which is fine as long as there is a plan for student loans.

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      • #4
        Another vote to refi.

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        • #5
          Completely agree with everyone and we are leaning towards the refinance option and tackling loans within 2-3 years - any thoughts on when to pull the trigger on the refi? It feels like we have been on the PSLF plan forever (5 years of actual payments + planning years during medical school) - any thoughts on a timeline to “wait and see” on medical spouse settling into part time job? 6 months, 1 year, 2 years? Opportunity cost is obviously the ~7k/yr in interest so want to pull the trigger asap but don’t want to kick ourselves if we give it a shot and then end up switching back. I realize it’s a personal decision but just wondering how much time others might give it?

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          • #6
            Tough decision but probably would decide to private refinance.

            You could have her work 6 months or so to feel out the job and then decide to private refinance or find a PSLF eligible job again and do PSLF.
            Helping student loan borrowers manage their student loans. StudentLoanAdvice.com. [email protected]

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