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PSLF vs Private Refinancing

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  • PSLF vs Private Refinancing

    Embarrassed to say my wife and I combined have $825,000 of debt coming out of training having been in forbearance/deferment due to other financial requirements which have since ceased and now can focus more on our debt.
    We are both still with Federal loans and are deciding to start Repaye and follow the PSLF program as we both will work for a 501c vs trying to pay off our loans as quickly as possible by refinancing at roughly 4% each. We have two children and will have a combined AGI of $750,000 starting next year. Currently our AGI is approximately $236,000.
    Can anyone please provide their advice in which route to take? Nervous about starting 10 years of "what-ifs" by taking the PSLF route.

    Thanks in advance!

  • #2
    I think your current plan is prudent. But, as you said, the future of PSLF is uncertain, especially whether you would be grandfathered into the program is you start before it is amended or abolished. That being the case, I would suggest opening a brokerage account and saving as much as possible/comfortable each month into this side fund. I would invest it fairly conservatively and rely upon this fund to pay down your loan balances if - at some future point - the PSLF track goes out the window.

    The other thing to keep in mind that it's not 10 years for PSLF, it's 120 qualifying payments. So, you will want to make sure your payments and PSLF verification are recorded accurately.


    • #3

      That sounds like a good plan. Seems we will go along with the REPAYE and file for the PSLF plan. After doing the numbers, it appears that we would save roughly $200K combined through this method as opposed to refinancing.


      • #4
        It all depends on what happens with PSLF. If it all works out you save about $200k vs. refinancing but if nothing gets forgiven you wind up paying roughly an extra $400k due to accruing interest. Are you sure that there won't be any life changes that put one of you in a position where you are no longer eligible for PSLF?