Refinance student loans or wait it out?

[elgaeCB]

Hi guys, so as the loan extension period starts coming to an end again and interest rates are going up, I am seeking some advice as to what to do. I am not interested in pursuing PSLF as I need to be in a specific geographic region after training and the hospitals there do not qualify, in addition my preference is to just aggressively pay off my debt so it's less of a mental stress for me.

Would you guys recommend refinancing now or wait out for another extension/other debt relief things that may be in the future?

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[akwho]

Student loan servicers told to hold off on sending out billing notices, a sign payment pause may be extended

Student loan servicers have been instructed to hold off on the process of restarting borrowers' payments. The bills are scheduled to resume after Aug. 31.

www.cnbc.com

Imagine Biden will extend it until January so midterms are well in the rearview mirror, then payments will resume. Maybe they will give 10k forgiveness at that time along with payments resuming to soften the blow. Or maybe they will have payments resume but interest be 0%.

I would hold off until we find out what else the government is going to do with student loans. They are in limbo right now.

If you are worried about private rates going up, you could always put your application in for private refinance. They will usually lock the rate for you for 60 days, and you don't have to commit to anything. Only downside is it's a hard credit pull which will affect your credit score.

 

[Groove]

Just pay it off. I graduated residency with 400K in loans, half of which was for 2.5% and the other half was around 7%. This is back when SOFI was just getting started, etc.. I didn't even refinance, I just started working lots of hours and put my nose to the grindstone. I paid around 10K each month and paid it all off in about 4.5 years. It was a great feeling. I'm not sure if it was the right decision from a financial savings standpoint (I did not save anything for retirement during those years) but it was the right decision for myself mentally.

Let's get real, the gov is never going to forgive your hundred thousands dollar physician debt, nor is the general public ever going to support forgiving loans for the top 2% income bracket. It's a pipe dream and the longer you smoke that pipe, the more interest is accrued and the longer you delay financial freedom.

 

[charleydogmom]

That feeling is the dream. I have just under $200k before even starting medical school. It will get paid off eventually and then I'll be free! (in about 10 years from now) haha. So grateful for the interest/repayment pause from Biden right now.

 

[mistafab]

I have 300k in debt and am not planning to PSLF. I am not refinancing because the benefits of staying federal have been huge. If I had refinanced early on for the "low number" they offered as an interest rate, I would have missed out on the 40k in savings I have had from the student loan pause from the gov. You just never really know what you are giving up.

I would be very hesitant to refinance privately. Feel free to enter into a repayment program (REPAYE) or whatever with the same goal to pay it off. Maybe consider private refinance once you are an attending and actually start making money.

 

[MattspookFurphy]

I think it will be better to refinance it. "pay off my debt so it's less of a mental stress for me" is the best way. Education is a stressful thing on the base, but the loans make it much more awful. During my studying, I musted to work to pay for my life needs. It's hard to keep a balance between all of them so I've often bought my abstracts here https://ca.edubirdie.com/mba-help and it saved me from exclusion. But maybe my thoughts are a little surface.

 

[twospadz]

Biden to extend student loan pause as court battle drags on | Magnolia Banner News

President Joe Biden announced Tuesday that his administration will extend a pause on federal student loan payments while the White House fights a legal battle to save his plan to cancel portions of the debt.

www.magnoliabannernews.com

 

[Sardonix]

Do not EVER refinance privately. Far too many programs and benefits to staying with federal loans.

And as Twospadz just posted, federal loan deferments was just expanded even further. As a PGY3 FM, I will have graduated residency without a single dime of interest paid since COVID. That effectively saved me like ~$100,000 over the lifetime of my loans. I am still making what payments I can while a resident. But I never considered privately refinancing for a second so far.

 

[VA Hopeful Dr]

Do not EVER refinance privately. Far too many programs and benefits to staying with federal loans.

And as Twospadz just posted, federal loan deferments was just expanded even further. As a PGY3 FM, I will have graduated residency without a single dime of interest paid since COVID. That effectively saved me like ~$100,000 over the lifetime of my loans. I am still making what payments I can while a resident. But I never considered privately refinancing for a second so far.

Utter nonsense. Unless you are a) getting some type of loan repayment/forgiveness or b) benefiting from the current student loan pause then there are absolutely times when its worth it to refinance.

 

[Brigade4Radiant]

You pay for the government benefit with the higher interest rate. Covid was unique but the rates will be higher also it depends on who is elected

 

[Iamnew2]

Just pay it off. I graduated residency with 400K in loans, half of which was for 2.5% and the other half was around 7%. This is back when SOFI was just getting started, etc.. I didn't even refinance, I just started working lots of hours and put my nose to the grindstone. I paid around 10K each month and paid it all off in about 4.5 years. It was a great feeling. I'm not sure if it was the right decision from a financial savings standpoint (I did not save anything for retirement during those years) but it was the right decision for myself mentally.

Let's get real, the gov is never going to forgive your hundred thousands dollar physician debt, nor is the general public ever going to support forgiving loans for the top 2% income bracket. It's a pipe dream and the longer you smoke that pipe, the more interest is accrued and the longer you delay financial freedom.

This. I also paid it off as soon as possible, great feeling to have no debt. It's too uncertain what will happen - as someone said, it's unlikely that loans will be forgiven (how would that be fair to those who already paid, or the millions of Americans who didn't go to college?) It's already on thin water and the debt forgiveness is likely not legal the way it's been done per my understanding. So I wouldn't count on the loan forgiveness fairy. That will likely not be a successful strategy.

Also pro tip - if you get ahead of a payment (say your payment is due in August (I'm just making up months as an example) and make a payment in July, make sure you call the loan dept (at least for gov/federal loans) and ask for your payment to be applied to the principal - otherwise they will continue to put it towards the interest. I did this, and saved myself countless of thousands of dollars this way.

 

[Sardonix]

Utter nonsense. Unless you are a) getting some type of loan repayment/forgiveness or b) benefiting from the current student loan pause then there are absolutely times when its worth it to refinance.

Okay, so allow me to clarify--do not ever privately refinance DURING residency.

Privately refinancing with SoFi, whatever service afterwards when you have a job and steady income can be good. But I feel the risk > > > > benefit of privately refinancing as a resident. May not know where you're going, what job you'll have, how your loan burden may change, until you start getting regular attending checks in hand.

 

[mvenus929]

This. I also paid it off as soon as possible, great feeling to have no debt. It's too uncertain what will happen - as someone said, it's unlikely that loans will be forgiven (how would that be fair to those who already paid, or the millions of Americans who didn't go to college?) It's already on thin water and the debt forgiveness is likely not legal the way it's been done per my understanding. So I wouldn't count on the loan forgiveness fairy. That will likely not be a successful strategy.

Also pro tip - if you get ahead of a payment (say your payment is due in August (I'm just making up months as an example) and make a payment in July, make sure you call the loan dept (at least for gov/federal loans) and ask for your payment to be applied to the principal - otherwise they will continue to put it towards the interest. I did this, and saved myself countless of thousands of dollars this way.

Most servicers will require that outstanding interest be paid off first before they will apply a payment to principal. So if you're graduating from med school (or residency) and have already accumulated $1000s in interest, you have to pay that off before they will attribute payments to your principal.

However, you can target specific loans. I have a couple of subsidized loans remaining, so targeted them to pay down principal since I could easily pay off the interest. Therefore, I didn't accumulate as much interest on those loans overall. I still have plenty of outstanding interest on my other loans, so those I get less benefit from 'extra' payments.

You can also request that the money be paid toward principal instead of 'paying ahead' on the loan, which is probably what your request did. This means that the principal is paid down instead of the next month's payment (which would theoretically include both interest and principal, assuming you've paid down your interest), and you pay less overall.

 

[Low Flow]

I’m planning to hang onto my govt loans for now. Graduating residency in June ‘23. Checked with SoFi the other day out of curiosity and the rates were ~5% depending on the length of the loan. My consolidated govt loans are at 5.8% currently. Definitely hanging onto them until the freeze ends (August 31st) and then I’ll reassess.

 

[Spikebd]

I’m planning to hang onto my govt loans for now. Graduating residency in June ‘23. Checked with SoFi the other day out of curiosity and the rates were ~5% depending on the length of the loan. My consolidated govt loans are at 5.8% currently. Definitely hanging onto them until the freeze ends (August 31st) and then I’ll reassess.

Some people have no patience and jump to re-finance way too soon. Kind of a no brainer to just be patient, wait in federal loans until we find out what happens after the pause ends (IF it ends, it’s kinda getting entrenched that these loans are unsustainable and not fair for young people). Keep living under your means, save what you can, and read and react to whatever news comes out.

 

[ThoracicGuy]

Some people have no patience and jump to re-finance way too soon. Kind of a no brainer to just be patient, wait in federal loans until we find out what happens after the pause ends (IF it ends, it’s kinda getting entrenched that these loans are unsustainable and not fair for young people). Keep living under your means, save what you can, and read and react to whatever news comes out.

What's not fair about student loans?

 

[Spikebd]

What's not fair about student loans?

Usury

 

[ThoracicGuy]

Usury

Blame inflation for increasing rates. The 1970s and early 80s were worse. Still, it doesn't make them unfair. Now if you wanted to talk about the increasing tuition rates which are secondary to all the loans being given out, you could have a point there. If loans weren't so easy to get, tuition rates wouldn't have skyrocketed.

 

[Starbuxian]

As an incoming intern, should I consolidate my student loans (all federal loans) and go on REPAYE? Not sure what the monthly payments would be on a meagre resident salary. Also, when should I consolidate loans (i.e. after graduation, before starting residency on July 1st, after the 6 months grace period, etc..)

I gather that I should probably not refinance at this point (and certainly not private, in case of any federal benefits).

 

[mvenus929]

As an incoming intern, should I consolidate my student loans (all federal loans) and go on REPAYE? Not sure what the monthly payments would be on a meagre resident salary. Also, when should I consolidate loans (i.e. after graduation, before starting residency on July 1st, after the 6 months grace period, etc..)

I gather that I should probably not refinance at this point (and certainly not private, in case of any federal benefits).

If you're motivated, you can consolidate as soon as your school verifies your graduation (usually within a week or so of graduation). You'll then begin repayment once the consolidation is complete. If you filed taxes (or file before April 15) on your MS3-MS4 income (likely $0), your payments on REPAYE will be $0 for the first year, then based on half your intern income (Jul - Dec paychecks).

Or you could just file taxes for 2022 and start repayment in December after your grace period expires, and still only pay $0 for 1 year. That year just starts later.

If you're going for PSLF, the former option allows you to shave off a couple months' worth of payments (assuming continuous employment, you'd be eligible for forgiveness in like Aug/Sept 2033 instead of Dec 2033).