For soon-to-be residents

[abolt18]

Idea to enter REPAYE early

Best way to save money, get the government to pay a significant portion of your interest, and minimize your required payments through residency and potentially throughout the life of the loan if you intend the do PSLF.


To summarize it:
1. Graduate from medical school
2. Consolidate all your federal loans immediately after graduation while applying for RePAYE.
3. Pay $0 per month for the first year or two of residency.



*Pretty-much the only people for whom this isn't ideal is for someone who is married to a high-earning working spouse.

**Make sure you file your taxes for 2017, showing your miniscule to nonexistent income as a medical student.

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[The Physician Philosopher]

Probably true for first year because half of whatever you don't pay (in interest) is paid by government.

That said, after intern year, (IF you decide PSLF isn't a viable option for you)...you should refinance privately through residency refinance programs because you'll start paying under REPAYE anyway once you've had an income for a year.

I write about all of this on my site because I was angry when I found out these things existed and no one told me. Also worked hard to provide some of the best cash back deals available because I felt residents are getting hosed and aren't being informed.

PLSF is great for certain people and not the best option for others. I've written recent posts on these topics, too.

Also, a timely topic given match day today!

Congrats to all those who matched!

TPP



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[abolt18]

Probably true for first year because half of whatever you don't pay (in interest) is paid by government.

That said, after intern year, (IF you decide PSLF isn't a viable option for you)...you should refinance privately through residency refinance programs because you'll start paying under REPAYE anyway once you've had an income for a year.

I write about all of this on my site because I was angry when I found out these things existed and no one told me. Also worked hard to provide some of the best cash back deals available because I felt residents are getting hosed and aren't being informed.

PLSF is great for certain people and not the best option for others. I've written recent posts on these topics, too.

Also, a timely topic given match day today!

Congrats to all those who matched!

TPP



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Now, I have to clarify that refinancing after intern year may very well still not be the right answer. I am married and have 3 kids, with whom my wife stays home. My payments will be $0.00 a month for another year. Also, with the way RePAYE payments are calculated, it's likely going to be ideal for everyone to stick with it through at least 2 years of residency.

I'll use a single person as an example though.

First year is $0.00 per month because your previous year's income was ~$0.

The first half of intern year you make $25K. Meaning your "discretionary income" from which your payments are calculated the following year is your previous year's salary minus 150% of the poverty level for a family of your size. In this example, 150% of the poverty level for a family of 1 is $17,487.

25,000-17,487 = 7,513
(7,513/12)x0.10 = $62 a month, or $751 per year.

The government subsequently pays half your monthly interest, less $62.

If your student loans accumulate as much interest per month as mine do ($1850/month), then it only make sense to continue with RePAYE.

And if you have a lot of loans, like most graduates, it's feasible that it will benefit you to continue with RePAYE through all of residency.

RePAYE becomes even more favorable if you have a family and are the single money earner in the home.

 

[Psai]

Probably true for first year because half of whatever you don't pay (in interest) is paid by government.

That said, after intern year, (IF you decide PSLF isn't a viable option for you)...you should refinance privately through residency refinance programs because you'll start paying under REPAYE anyway once you've had an income for a year.

I write about all of this on my site because I was angry when I found out these things existed and no one told me. Also worked hard to provide some of the best cash back deals available because I felt residents are getting hosed and aren't being informed.

PLSF is great for certain people and not the best option for others. I've written recent posts on these topics, too.

Also, a timely topic given match day today!

Congrats to all those who matched!

TPP



Sent from my XT1710-02 using Tapatalk

I was really interested until I looked. You have the same stuff as white coat investor. They are all bull****.

You know what sofi offered me when I applied? 7% fixed. It was even higher than what I was paying sallie mae and WAY higher than what I'm paying under repaye. **** all those companies. Fixed rate 3.5% my ass. The other companies were the same.

 

[abolt18]

I was really interested until I looked. You have the same stuff as white coat investor. They are all bull****.

You know what sofi offered me when I applied? 7% fixed. It was even higher than what I was paying sallie mae and WAY higher than what I'm paying under repaye. **** all those companies. Fixed rate 3.5% my ass. The other companies were the same.

From what I've seen in the WCI forum is that it is very rare to get good rates from the companies before attendinghood.

 

[The Physician Philosopher]

I was really interested until I looked. You have the same stuff as white coat investor. They are all bull****.

You know what sofi offered me when I applied? 7% fixed. It was even higher than what I was paying sallie mae and WAY higher than what I'm paying under repaye. **** all those companies. Fixed rate 3.5% my ass. The other companies were the same.

Woah, woah. Take it easy, @Psai.

All of the residency refinance programs are the same regardless of who you get them through except in what the cash back bonus is that the website offers you.

And I explicitly say that they are advertised rates and that you should apply to see what they actually are for that exact reason. They are advertised.

That said, some of them will knock your rate down to 5.5 or so. If you are getting less than that through repaye, you should obviously go with that! That's also why I spend all of my time making sure people consider PSLF and repaye FIRST before considering a private refinance.

Also, there are multiple companies that will refinance you to an attending rate once you have your contract in hand while still in your last year of residency. So, for many who cannot get a better rate during the beginning of residency, they should do REPAYE until then. If at that point they figure out that they don't want to do PSLF, then a private refinance will save them more money.

In all seriousness, Psai... I'd be curious to know what the other three offered you (laurel road, splash financial, and link capital). SoFi is not known to have the lowest actual rates, but are known to advertise the lowest rates that you won't get.

Some of those other offers from companies not named SoFi offer the same rate to everyone during residency. And it is in the 5-6% range.

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[kidthor]

I just refinanced with PenFed and got 3.5% fixed for a 5 year loan. FWIW I'm an attending...

 

[The Physician Philosopher]

I just refinanced with PenFed and got 3.5% fixed for a 5 year loan. FWIW I'm an attending...

Yeah I refinanced through common bond on a 7 year variable and have a rate right around the same. But I refinanced like 18 months ago or so.

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[The Physician Philosopher]

Yeah I refinanced through common bond on a 7 year variable and have a rate right around the same. But I refinanced like 18 months ago or so.

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P.s. I got that rate in my last year of training.

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[abolt18]

So.... Back to RePAYE. Do it. Follow the link in the first post for examples and more details than I care to write out on my phone.

 

[GaseousClay]

refinanced with first republic for 2.95% fixed for 10 years

 

[deleted162650]

refinanced with first republic for 2.95% fixed for 10 years

Nice, I'll check with them. They are who I use for my personal banking, and they are excellent to deal with.

My loans are currently consolidated with Laurel Road.

 

[GaseousClay]

Nice, I'll check with them. They are who I use for my personal banking, and they are excellent to deal with.

My loans are currently consolidated with Laurel Road.

if you are really ambitious they have 1.95% for 5 years.

 

[deleted162650]

if you are really ambitious they have 1.95% for 5 years.

I wish I could be that ambitious.

 

[ButterButter]

After looking into REPAYE, I have a few questions. My spouse earns about 70k/yr and this is factored into AGI for REPAYE, but not for PAYE. I don't graduate until early June and with driving a UHaul across the country and starting residency 1 week later, it's not possible for me to consolidate before starting work. If I go with REPAYE, my monthly payment will be about $750, which is way too much considering I'll be in a high cost of living city, paying childcare, car payments, etc. The benefit of REPAYE is obviously the interest subsidy. Under PAYE, my payments would be about 250 which is much more manageable, but I would be adding an extra ~15000/yr in interest since I would be missing out on the subsidy.

I know ya'll will all say go with REPAYE, but I honestly, don't think that monthly payment is feasible. Is it possible to start in PAYE and switch to REPAYE during PGY-2?

 

[abolt18]

After looking into REPAYE, I have a few questions. My spouse earns about 70k/yr and this is factored into AGI for REPAYE, but not for PAYE. I don't graduate until early June and with driving a UHaul across the country and starting residency 1 week later, it's not possible for me to consolidate before starting work. If I go with REPAYE, my monthly payment will be about $750, which is way too much considering I'll be in a high cost of living city, paying childcare, car payments, etc. The benefit of REPAYE is obviously the interest subsidy. Under PAYE, my payments would be about 250 which is much more manageable, but I would be adding an extra ~15000/yr in interest since I would be missing out on the subsidy.

I know ya'll will all say go with REPAYE, but I honestly, don't think that monthly payment is feasible. Is it possible to start in PAYE and switch to REPAYE during PGY-2?

I feel like we're missing details here. I don't see how your payments would be as high as you're stating. Presumably, you made no money last year and your spouse made $70,000? And you have children? All of these things can change the numbers a lot. Did you file taxes for last year as married filing jointly or separately?

RePAYE is always the right answer when there's one low earner in the home, but as soon as you're married to a working spouse who earns significant income, you have to plug all the numbers more carefully because RePAYE may possibly not be the right option.

More details would allow people to better help you answer those questions.

 

[ButterButter]

I feel like we're missing details here. I don't see how your payments would be as high as you're stating. Presumably, you made no money last year and your spouse made $70,000? And you have children? All of these things can change the numbers a lot. Did you file taxes for last year as married filing jointly or separately?

RePAYE is always the right answer when there's one low earner in the home, but as soon as you're married to a working spouse who earns significant income, you have to plug all the numbers more carefully because RePAYE may possibly not be the right option.

More details would allow people to better help you answer those questions.

Those numbers came from the studentloans.gov calculator based on 120k of income between me and my spouse. Last year we filed separately (70k for her, 0 for me) as we weren't married at that time. We have one child.

Edit: is it possible to switch from PAYE to REPAYE when I renew during PGY-2? If so, is it easy or are there lots of hoops to jump through? Testing the waters with a lower payment during intern year seems to make more sense rather than jumping into a higher monthly payment. Sure, I'll miss out on the interest subsidy for that year, but it may be worth it for piece of mind.

 

[Psai]

Those numbers came from the studentloans.gov calculator based on 120k of income between me and my spouse. Last year we filed separately (70k for her, 0 for me) as we weren't married at that time. We have one child.

Edit: is it possible to switch from PAYE to REPAYE when I renew during PGY-2? If so, is it easy or are there lots of hoops to jump through? Testing the waters with a lower payment during intern year seems to make more sense rather than jumping into a higher monthly payment. Sure, I'll miss out on the interest subsidy for that year, but it may be worth it for piece of mind.

If you made zero last year and you weren't married, you will pay 0 monthly this year for repaye. No need for switching acrobatics. Also, in pgy2 year only half your salary will count because you start in July.

 

[Postictal Raiden]

Soon-to-be resident with tons of debt here.

I thought a lot about the different repayment options. My conclusion is the following:

1) RePAYE during residency is the way to go. Gov't covers 50% of unpaid interests.
2) Unless you can refinance at a much lower rate (below 4%), staying with RePAYE in attendinghood is the way to go. You don't pay interests on interests accumulated during residency. Debt is canceled if you die or become disabled. You may choose to pursue the forgiveness option if it's still available. Also, our payments are based on how much you make, so if you decide to be lazy and work part-time, you can do that.

Things that would make RePAYE a bad option during attendinghood are:

1) If your spouse is high earner with little or no debt
2) If your debt to income ratio is low enough
3) If you can refinance your loans at a fixed rate of 4% or below, AND if you are committed to work hard and payoff your loans ASAP.

 

[ButterButter]

If you made zero last year and you weren't married, you will pay 0 monthly this year for repaye. No need for switching acrobatics. Also, in pgy2 year only half your salary will count because you start in July.

Unfortunately the application just asks if you’re married or not. It doesn’t qualify when you were married (so my spouse’s income will count). I was told by my loan servicer to apply a few months before my grace period ends, but not too early or else they would reject the app. By the time I apply, I will be making money and will have to include my pay stub as my current pay won’t accurately reflect my previous year’s tax return. So I don’t think it’s as easy for me to get zero or low payments right off the bat. And I have two weeks between graduation and start of residency so not enough time to consolidate.

 

[abolt18]

Unfortunately the application just asks if you’re married or not. It doesn’t qualify when you were married (so my spouse’s income will count). I was told by my loan servicer to apply a few months before my grace period ends, but not too early or else they would reject the app. By the time I apply, I will be making money and will have to include my pay stub as my current pay won’t accurately reflect my previous year’s tax return. So I don’t think it’s as easy for me to get zero or low payments right off the bat. And I have two weeks between graduation and start of residency so not enough time to consolidate.

I don't think you'll have a problem with that time window. You submit your IDR application at the same time as the consolidation application. If you consolidate your loans immediately after graduation, the grace period is waived and you are able to enter an income driven repayment plan like RePAYE or PAYE immediately.

That is to say, if you're doing PAYE it will look at last year's income of $0 and your payments will be $0 for a year. If you do RePAYE then they will take your spouse's income into consideration and your payment will be ~$230 a month for the first year (based on income of $70K and your current family size of 3), but you'll get the subsidy on your loans equal to half the monthly interest, less your $230 payment.

And to answer your question, yes you can switch between plans every year when you renew your IDR application.

 

[Robotic Wis-Hipple]

refinanced with first republic for 2.95% fixed for 10 years

That’s incredible. I didn’t see anything under 3.75% (including the 0.25% reduction for direct debit), and every company I got quotes from those low rates were for 5 years, I didn’t even look at 10yrs as I didn’t feel the rates would’ve been that much different from my fed loans. Not sure if my total loan amount hurt me or what, but I’d have been ecstatic to get sub 3%.

 

[TazzasaurusREX]

Thank you all for contributing to this important topic. I've been reading it extensively and have a few questions...
I just graduated and have $165,000 in federal loans with an average interest rate of 6%. As I'm looking to consolidate these and then to enter IDR, I'm wondering if I can shop around different lenders or if I have to do this through Nelnet? Basically, you have written "consolidate your loans" but that is the step that I'm looking for a little more direction on.
Nelnet offered me 6% but I see posters talking about 3% interest rates above.

EDIT: I realized I was mixing up Consolidation and Refinancing of loans.
For my situation of recent grad, I am going to go the consolidation route and enter REPAYE, making my effective rate 2.87% with government subsidy. Refinancing can occur later through one of these private lenders to try for a lower rate.

 

[abolt18]

Thank you all for contributing to this important topic. I've been reading it extensively and have a few questions...
I just graduated and have $165,000 in federal loans with an average interest rate of 6%. As I'm looking to consolidate these and then to enter IDR, I'm wondering if I can shop around different lenders or if I have to do this through Nelnet? Basically, you have written "consolidate your loans" but that is the step that I'm looking for a little more direction on.
Nelnet offered me 6% but I see posters talking about 3% interest rates above.

EDIT: I realized I was mixing up Consolidation and Refinancing of loans.
For my situation of recent grad, I am going to go the consolidation route and enter REPAYE, making my effective rate 2.87% with government subsidy. Refinancing can occur later through one of these private lenders to try for a lower rate.

Your "edit" is correct. But you can select your lender when you consolidate. I chose to move my loans from MyFedLoans to great lakes when I consolidated.