Just out of fellowship: Keep loans in IBR vs Refinance?

[cbtk18]

I am just out of fellowship with a $400k/year job in private practice (no chance of PSLF). Have about $280k in loans currently in IBR. About to have to re-certify at my new income level, so payments will go up.

Should I keep my loans in IBR at the 6-7% interest rate or refinance in the private sector at a lower rate? Is there any reason to keep in IBR (despite the higher rate) such as not-compounding or subsidized loans? What do most people do at this point?

And to those who do refinance, who are you using?

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[mark-ER]

If you are going to stick with a private practice (rather than a non-profit), you should refinance. Check out white coat investor.

 

[dpmd]

The main benefit to not refinancing is in case you later can't pay (either temporarily or by by becoming permanently totally disabled or dead) or if your loan burden is so high that the non-pslf forgiveness might apply to you. Otherwise a lower rate will lead to a quicker payoff.

 

[pgy0246]

Same circumstance here; working for hospitalist in a for profit group.
already have 4 years of qualified payment in residency, but the fedloan stating I only have 4-6 months

Waiting another 2 years and see if PSLF being given and after the 2020 election before refinance
once you refiance or switch payment plan, the 10 years (120 payments) clock will reset

 

[RangerBob]

Same circumstance here; working for hospitalist in a for profit group.
already have 4 years of qualified payment in residency, but the fedloan stating I only have 4-6 months

Waiting another 2 years and see if PSLF being given and after the 2020 election before refinance
once you refiance or switch payment plan, the 10 years (120 payments) clock will reset

I just want to clarify two things:
1) PSLF is already being awarded. Only a small percent of those who applied qualified because most didn’t meet the criteria in some form (job not PSLf-eligible, loans not direct loans, didn’t make enough qualifying payments, and actually quite a large percentage didn’t fill out the application correctly...)

Granted, it wouldn’t surprise me to see any changes made to the program. However, to date no proposed changes have been implemented, and anything proposed would not have been retroactive.

2) The 10-year PSLF clock does not restart when you change payment plans, but the 20-25 year income-driven forgiveness plan does. Few people are aiming for that form of forgiveness. I certainly wouldn’t recommend it (currently it’s taxable, and 25 years gives the govt a long time to change the program, so it’s make me nervous to have a ballooning balance for that long)

I switched from IBR to REPAYE. My interest capitalized and I lost the two years of income driven payments from IBR, but I still have credit for those two years towards PSLF.

Refinancing would eliminate everything. Consolidating with a federal loan results in interest being effectively capitalized) and all forgiveness plans reset (it’s effectively a new loan. The only reason to do a federal consolidation is typically to make non-direct loans eligible for REPAYE and PSLF.

OP: I would recommend holding off on refinancing until you’re sure you’re going to keep this job. However, if most jobs in your field (whether PSLF-eligible or not) pay around $400k, then PSLF isn’t really a great plan for you anyway (unless you only need a few more years of eligible payments) and I’d just pay those off ASAP. With that kind of income you should be able to pay off everything in 2 or 3 years.

Whitecoatinvestor has a few articles on companies to refinance with. By far the best rates are with First Republic (rates as low as 1.95% fixed for a 5-year loan), but you have to work/live within their geographical footprint.

 

[BorntobeDO?]

Same circumstance here; working for hospitalist in a for profit group.
already have 4 years of qualified payment in residency, but the fedloan stating I only have 4-6 months

Waiting another 2 years and see if PSLF being given and after the 2020 election before refinance
once you refiance or switch payment plan, the 10 years (120 payments) clock will reset

That qualified payment thing is why the majority are getting denied right now. Only 24% are the other stuff ranger bob mentioned.

https://www.gao.gov/assets/700/694506.pdf

Its fun to think that we are smarter than everyone else but its not the truth. Most of these people were in the right kind of job and made payments for 10 years or more. The Temp emergery PSLF isn't any better either too, tho that one people just appear to be screwing up: https://www.gao.gov/assets/710/7011...252&esid=49f1b138-66d5-e911-8119-005056866fb1

Anyway, just wanted to throw these thoughts in. I am very interested in you smart people ahead of me succeeding cause I want this to work for me someday too.

 

[mvenus929]

That qualified payment thing is why the majority are getting denied right now. Only 24% are the other stuff ranger bob mentioned.
View attachment 285845
View attachment 285846

https://www.gao.gov/assets/700/694506.pdf

Its fun to think that we are smarter than everyone else but its not the truth. Most of these people were in the right kind of job and made payments for 10 years or more. The Temp emergery PSLF isn't any better either too, tho that one people just appear to be screwing up: https://www.gao.gov/assets/710/7011...252&esid=49f1b138-66d5-e911-8119-005056866fb1

Anyway, just wanted to throw these thoughts in. I am very interested in you smart people ahead of me succeeding cause I want this to work for me someday too.

I mean, you have to stay on top of it. For new grads, my recommendation would be to submit an ECF after working for a month to get your loans with FedLoan from the start of repayment. Half my issue right now is that FedLoan isn’t counting the 43 payments I made before I transferred my loans to them. The counting of the payments seems to be a struggle.
Also, when you look for an attending job, make sure you know who pays you and if they qualify. Just because you work at a non-profit hospital doesn’t mean that your employment counts.

 

[dpmd]

I mean, you have to stay on top of it. For new grads, my recommendation would be to submit an ECF after working for a month to get your loans with FedLoan from the start of repayment. Half my issue right now is that FedLoan isn’t counting the 43 payments I made before I transferred my loans to them. The counting of the payments seems to be a struggle.
Also, when you look for an attending job, make sure you know who pays you and if they qualify. Just because you work at a non-profit hospital doesn’t mean that your employment counts.

Why would they count payments before you transferred the loan to them?

 

[RangerBob]

Why would they count payments before you transferred the loan to them?

The loans are the same loans-just transferred, not consolidated. All eligible payments made prior to bringing the loans to FedLoan (who takes over all loans once PSLF certifying form is filled out) should still be counted.

 

[dpmd]

The loans are the same loans-just transferred, not consolidated. All eligible payments made prior to bringing the loans to FedLoan (who takes over all loans once PSLF certifying form is filled out) should still be counted.

Was it a direct loan prior to the transfer?

 

[RangerBob]

Was it a direct loan prior to the transfer?

It was another poster that had the issue-I’ve (unfortunately) always been with fedloan.

The loans stay the same when transferred, so they’d only be eligible if they were direct loans. If not, they would need to be consolidated into the direct loan program-I had to do that for a few loans to get them into REPAYE and eligible for PSLF

 

[dpmd]

It was another poster that had the issue-I’ve (unfortunately) always been with fedloan.

The loans stay the same when transferred, so they’d only be eligible if they were direct loans. If not, they would need to be consolidated into the direct loan program-I had to do that for a few loans to get them into REPAYE and eligible for PSLF

I see, I guess my question should have been to that person. A surprising number of pslf applicants did not in fact have a direct loan when they applied for forgiveness (or only have a direct loan for part of the time they were paying) which is why I asked the question. I paid off my direct loans a long time ago before all the pslf stuff and when there was only the direct loan servicer so the terminology confused me (still have Stafford loans with nelnet after consolidating them at 2% or so just before that became no longer possible)

 

[mvenus929]

Why would they count payments before you transferred the loan to them?

Because I was making payments at an eligible employer on an eligible repayment plan--why would they not count? It's not MY fault that my loans originated with Navient instead of FedLoan.

The loans are the same loans-just transferred, not consolidated. All eligible payments made prior to bringing the loans to FedLoan (who takes over all loans once PSLF certifying form is filled out) should still be counted.

Was it a direct loan prior to the transfer?

Of course it was a direct loan prior to the transfer. I didn't consolidate my loans, I literally filled out an ECF, turned it into my previous servicer, who then transferred my loans to FedLoan, since they are the only ones doing the admin work for PSLF. The year I started taking out loans (2010) is when Direct Loans became the default loan given out. Thus, 2021 and beyond is when the majority of the people qualified from the start to take out loans are going to start asking for forgiveness.

 

[dpmd]

Because I was making payments at an eligible employer on an eligible repayment plan--why would they not count? It's not MY fault that my loans originated with Navient instead of FedLoan.




Of course it was a direct loan prior to the transfer. I didn't consolidate my loans, I literally filled out an ECF, turned it into my previous servicer, who then transferred my loans to FedLoan, since they are the only ones doing the admin work for PSLF. The year I started taking out loans (2010) is when Direct Loans became the default loan given out. Thus, 2021 and beyond is when the majority of the people qualified from the start to take out loans are going to start asking for forgiveness.

Didn't mean to offend you. As I said a large number of people applying for forgiveness didn't actually have direct loans so it is a reasonable concern. Apparently navient is known for applying payments incorrectly so perhaps that is the problem (your payments don't count because they are considered late or otherwise not qualifying due to their error). However getting that fixed by a different servicer will likely be really difficult.