just started looking into this...does this plan make sense?

[Borrow]

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i wish i had followed advice and paid more attention to this earlier...

anyways, im a single 4th year going into a 5 year residency
303k in debt at 6.3% interest rate (mostly unsubsidized)
salary during residency ~55k

did some rough math and was wondering if I should do REPAYE for the 3 years they offer the 50% interest help
for 3 years I pay about $300/mo, so with the interest help I would be adding roughly $7000 a year to my loans

after 3 years I then refinance the loan through one of the private lenders

does this plan make sense at all?

 

[pageantry]

Hey, I'm at the beginning and looking at a potential for about your level of debt, depending on how I handle things. I don't have advice for you but I wanted to know what you meant by "wish I'd followed advice." What would you have done differently?

 

[SigmaFS]

In a word, yes.

i wish i had followed advice and paid more attention to this earlier...

anyways, im a single 4th year going into a 5 year residency
303k in debt at 6.3% interest rate (mostly unsubsidized)
salary during residency ~55k

did some rough math and was wondering if I should do REPAYE for the 3 years they offer the 50% interest help
for 3 years I pay about $300/mo, so with the interest help I would be adding roughly $7000 a year to my loans

after 3 years I then refinance the loan through one of the private lenders

does this plan make sense at all?

In a word, yes. Read through the IBR vs PAYE vs REPAYE thread.

 

[mvenus929]

If you're planning to consolidate, why not consolidate right away to a direct federal loan and then do one of the income based options, so you don't accrue so much debt in the first place?

I fail to see what doing REPAYE for 3 years would do vs just consolidating early and doing REPAYE or IBR then...

 

[doc05]

consolidate early. doubtful that interest rates will be lower in 3 years, prob much higher.

 

[RangerBob]

If I'm not mistaken, REPAYE offers the 50% interest subsidy forever. The 100% subsidy on unpaid interest of subsidized loans only lasts 3 years, but those loans went the way of the dinosaurs. With a large loan balance and very small payments while in residency, that almost adds up to halving your interest rate.

An additional benefit of REPAYE is your loans won't capitalize as long as you're on the plan and reapply on-time. That will save you quite a bit--interest capitalizing on $300k in loans over 5 years isn't chump change.

I would hesitate to consolidate (I assume you mean private consolidation--there are hardly any benefits to federal consolidation), given the benefits of REPAYE and federal loans in general. Plus there's still a chance PSLF will stick around, and if it does, you'll be halfway there at the end of your residency.

Generally, the people better off consolidating at the start of residency are those that know they won't take advantage of PSLF and will be able to pay off their loans pretty quickly after starting practice. The lowest fixed rates you can get are generally around 3.5% for a 5-year loan, closer to 4.5-5% for a 10-year loan. There are only a few lenders that will consolidate loans for current residents (see WhiteCoatInvestor's website for more details). Given that your effective interest rate while on REPAYE and in residency will be around 3.5-4%, I would stick with REPAYE.

If you're debating getting a federal consolidation loan, the time to do that is ASAP after graduation. There are not too many benefits of federal consolidation (the only reason I consolidated a few loans was to bring them into the direct loan program so they'd be eligible for PSLF, and now, REPAYE). But, your interest will effectively capitalize when you consolidate and any prior PSLF-eligible payments will be lost as you now have a new loan. If you're a current 4th year, I think all your loans should be direct loans, in which case I wouldn't recommend a federal consolidation loan.