Continue pslf/repaye payments vs deferment during fellowship year vs refinance? likely going into PP

[apr27]

Pursuing fellowship in another high COL area. Haven't had to pay anything over the past 2 years 2/2 to covid. While I have been accumulating pslf payments, I feel life is probably going to take me to PP after fellowship. Anyway, my calculated payments will be like $300, which I think is a significant chunk of change per month especially in a high COL area. Better to keep doing this IDR plan, defer so I have money, or refinance? Not sure what the cost would be per month if I refinance

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[Mad Jack]

Pursuing fellowship in another high COL area. Haven't had to pay anything over the past 2 years 2/2 to covid. While I have been accumulating pslf payments, I feel life is probably going to take me to PP after fellowship. Anyway, my calculated payments will be like $300, which I think is a significant chunk of change per month especially in a high COL area. Better to keep doing this IDR plan, defer so I have money, or refinance? Not sure what the cost would be per month if I refinance

You should continue REPAYE. If you exit an income-based repayment program your interest will immediately capitalize and begin compounding. Your interest will again capitalize when you re-enter REPAYE. Furthermore, REPAYE will halve the total amount of accrued interest over the amount of your minimum payment. So you'll capitalize your interest twice, adding it to your principle that is compounded upon, while also doubling the amount of interest you are accruing for the next two years.

Moonlight if you can, one moonlighting weekend gets me enough money to cover almost all of my student loan payments for a year in fellowship.

 

[apr27]

You should continue REPAYE. If you exit an income-based repayment program your interest will immediately capitalize and begin compounding. Your interest will again capitalize when you re-enter REPAYE. Furthermore, REPAYE will halve the total amount of accrued interest over the amount of your minimum payment. So you'll capitalize your interest twice, adding it to your principle that is compounded upon, while also doubling the amount of interest you are accruing for the next two years.

Moonlight if you can, one moonlighting weekend gets me enough money to cover almost all of my student loan payments for a year in fellowship.

Thanks!!! Makes sense. As a follow up, would it make more sense to refinance?

 

[Mad Jack]

Thanks!!! Makes sense. As a follow up, would it make more sense to refinance?

Usually no. If you refinance there is no income based repayment- you're paying it back in a fixed fashion like a 20 year mortgage. With you being in fellowship, look into PSLF- if you keep making payments throughout and your total training time is 6 years, then you work for 4 more, your loans are forgiven tax-free so long as you were under IBR, PAYE, or REPAYE. Couple that with the halved interest, no interest capitalization, and income-based payments and you can really win out in your battle against student loan debt

 

[Mad Jack]

Thanks!!! Makes sense. As a follow up, would it make more sense to refinance?

Oh and let me clarify- I'm assuming you meant private refinancing, correct? Because that's what my post above addressed. There's other issues with private refinancing, such as many companies not having death or disability clauses, but generally it isn't a good idea for doctor levels of debt unless you've got a very specific situation