A7X

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I'm graduating med school this coming May and will have about 250k in debt. I'm going into anesthesia. My current plan is to refinance with SoFi or Laurel Road using their resident payment plan of $100/month during residency. If that doesnt cover the accruing interest (which I dont think it will?), I will likely increase payments enough to keep my total debt from rising above 250k. Then once I finish residency I will aggressively pay off the total over the next 2-3 years (assuming a salary of 350k). I will also be married by then, and am considering using my wife's income for all daily expenses/COL and using my entire income to pay off loans asap. I've looked into REPAYE and PSLF, but i'm wary of PSLF and want to go into PP anyway and i'm not a fan of making payments over such a long period of time for REPAYE. Especially since as
I become an attending my debt to income ratio will change significantly and I'd rather invest my extra salary. Also I'll be married within the next year or so, so I believe my payments would increase with REPAYE.

Is this plan feasible? Or should I be paying off loans more aggressively in residency itself to lower the principle? Or should I reconsider REPAYE/PSLF/IBR etc?
 

A7X

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Depends what your rates would be during residency if you refinance. The REPAYE interest subsidy is a nice benefit if you stick to federal to start with.


What kind of interest rate should I be going for if I refinance?
 
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TMP-SMX

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Depends on your credit score and if you have a cosigner. The effective interest rate of REPAYE is around 4%. If you are certain you will not go for PSLF and especially if someone cosigns for you the rate will be lower. You can always refinance after graduation when your financial situation is improved. Keep in mind that the terms for some private loans vary (not all are discharged upon death).
 
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Keep in mind that Biden will forgive about $10K for every year of residency plus the 10K for everyone as COVID relief. Wouldn’t refinance until after graduation at this point.
 

PipetteDreams

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Keep in mind that Biden will forgive about $10K for every year of residency plus the 10K for everyone as COVID relief. Wouldn’t refinance until after graduation at this point.
I haven't seen this specifically applying to residents - do you happen to have any information?
 
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ethilo

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Hey there
I graduated with 249k federal loans at 6.75% and went into anesthesia for residency. I did IBR and this made I think $700/mo payments in residency without private refi. Unfortunately for me I was in probably the worst strategic position in that I wasn't sure about PP vs fellowship vs academic, so I held that loan through residency until I figured out my path at the end. At the end of 4 years I peaked at $390k of debt and then planned PP without fellowship and I abandoned PSLF option. I refi'd with Sofi down to 4.1% 5-year fixed. Payments were minimum $6800/mo. I'm 2 years in now and just refi'd again on $250k to a new 5 year variable 2.99% with Earnest and continue to plan to pay 6800/mo even though the minimum is more like $4400 now. It should be all the way paid off in just over 4 years from graduating residency.

Despite this monstrous-appearing minimum payment, I live way more comfortably than I did in residency and certainly have an adequate lifestyle. If it werent for family/kids/compromise I would have probably paid the whole thing off in 2 years. It's such a change in your pay that it's inconceivable what it'll be like when you're in it deep in residency. Before you know it, it'll be gone!
 
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ethilo

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If I knew out the gate I was committed to PP without fellowship, the strategy would have been to refi as early as possible to get that interest rate low, then max 401/403b/IRA, then hit that loan debt hard as possible with what's left behind.

In the words of MrMoneyMustache: "hair on fire" approach!
 
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PipetteDreams

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Hey there
I graduated with 249k federal loans at 6.75% and went into anesthesia for residency. I did IBR and this made I think $700/mo payments in residency without private refi. Unfortunately for me I was in probably the worst strategic position in that I wasn't sure about PP vs fellowship vs academic, so I held that loan through residency until I figured out my path at the end. At the end of 4 years I peaked at $390k of debt and then planned PP without fellowship and I abandoned PSLF option. I refi'd with Sofi down to 4.1% 5-year fixed. Payments were minimum $6800/mo. I'm 2 years in now and just refi'd again on $250k to a new 5 year variable 2.99% with Earnest and continue to plan to pay 6800/mo even though the minimum is more like $4400 now. It should be all the way paid off in just over 4 years from graduating residency.

Despite this monstrous-appearing minimum payment, I live way more comfortably than I did in residency and certainly have an adequate lifestyle. If it werent for family/kids/compromise I would have probably paid the whole thing off in 2 years. It's such a change in your pay that it's inconceivable what it'll be like when you're in it deep in residency. Before you know it, it'll be gone!
How did you choose Earnest vs like Laurel Road? I'm thinking of refinancing in the future and there seems to be so many to choose from
 

ethilo

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How did you choose Earnest vs like Laurel Road? I'm thinking of refinancing in the future and there seems to be so many to choose from
I just looked at one of those sites where it gives you a prequal to a bunch of lenders and I picked the lowest one, happened to be Earnest at the time.
 
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MedDoc305

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Dec 29, 2018
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Hey there
I graduated with 249k federal loans at 6.75% and went into anesthesia for residency. I did IBR and this made I think $700/mo payments in residency without private refi. Unfortunately for me I was in probably the worst strategic position in that I wasn't sure about PP vs fellowship vs academic, so I held that loan through residency until I figured out my path at the end. At the end of 4 years I peaked at $390k of debt and then planned PP without fellowship and I abandoned PSLF option. I refi'd with Sofi down to 4.1% 5-year fixed. Payments were minimum $6800/mo. I'm 2 years in now and just refi'd again on $250k to a new 5 year variable 2.99% with Earnest and continue to plan to pay 6800/mo even though the minimum is more like $4400 now. It should be all the way paid off in just over 4 years from graduating residency.

Despite this monstrous-appearing minimum payment, I live way more comfortably than I did in residency and certainly have an adequate lifestyle. If it werent for family/kids/compromise I would have probably paid the whole thing off in 2 years. It's such a change in your pay that it's inconceivable what it'll be like when you're in it deep in residency. Before you know it, it'll be gone!
Would REPAYE have been better than IBR?
 

Mad Jack

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Depends on your credit score and if you have a cosigner. The effective interest rate of REPAYE is around 4%. If you are certain you will not go for PSLF and especially if someone cosigns for you the rate will be lower. You can always refinance after graduation when your financial situation is improved. Keep in mind that the terms for some private loans vary (not all are discharged upon death).
My effective interest rate is around 3.4%, and has been even less with the 0% interest during the pandemic. The interest subsidy is great.
 

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