RomeoENT

7+ Year Member
Jan 6, 2011
11
0
Status
Medical Student
Hello all - please some help for finding the correct financial solution.

I am trying to figure out what my best financial option is: REPAYE vs refinance vs possibly a mix of both??
I am currently a 3rd year resident of a 5 year program. I recently commissioned Army Reserve and as part of my incentive package I will eligible for $40,000/year loan repayment (taxable of course) during my remaining 3 years of residency, payable at the end of each academic year. I currently stand at $360k for loans + accrued interest w/ average APR of 6.7%.
My total annual income for residency + military is $91K. I am married w/ 2 kids and my wife currently works full time as a stay-at-home mom :)
If my Army $40k (minus taxes) payment goes to federal loans in July/August of next year then am I correct that it will likely pay all my annual interest and thus negate any benefit of the REPAYE plan? Or, does the REPAYE plan forgive any interest on a monthly basis?
Currently I have an offer from Laurel Road Bank (formerly DRB) for 5.15% 7 year fixed student loan refinance with $100/month payment during residency.

I am trying to figure out what my best financial option is: REPAYE vs refinance vs possibly a mix of both??
thanks in advance for any help and other details I may be missing.
 

dpmd

Relaxing
10+ Year Member
Sep 14, 2006
20,916
31,810
Lazytown
Status
Attending Physician
Hello all - please some help for finding the correct financial solution.

I am trying to figure out what my best financial option is: REPAYE vs refinance vs possibly a mix of both??
I am currently a 3rd year resident of a 5 year program. I recently commissioned Army Reserve and as part of my incentive package I will eligible for $40,000/year loan repayment (taxable of course) during my remaining 3 years of residency, payable at the end of each academic year. I currently stand at $360k for loans + accrued interest w/ average APR of 6.7%.
My total annual income for residency + military is $91K. I am married w/ 2 kids and my wife currently works full time as a stay-at-home mom :)
If my Army $40k (minus taxes) payment goes to federal loans in July/August of next year then am I correct that it will likely pay all my annual interest and thus negate any benefit of the REPAYE plan? Or, does the REPAYE plan forgive any interest on a monthly basis?
Currently I have an offer from Laurel Road Bank (formerly DRB) for 5.15% 7 year fixed student loan refinance with $100/month payment during residency.

I am trying to figure out what my best financial option is: REPAYE vs refinance vs possibly a mix of both??
thanks in advance for any help and other details I may be missing.
Would your loan repayment work with the refinanced loan option. Even if it is taxable it is still worth using.
 
OP
R

RomeoENT

7+ Year Member
Jan 6, 2011
11
0
Status
Medical Student
Would your loan repayment work with the refinanced loan option. Even if it is taxable it is still worth using.
Yes, the loan repayment is eligible for refinanced school loans.

I think I’ve decided to go for the refinance and pay $100 per month during residency and have a lower interest rate and therefore more of the annual repayment will go toward principle. If anyone has more thoughts or suggestions let me know.
 

dpmd

Relaxing
10+ Year Member
Sep 14, 2006
20,916
31,810
Lazytown
Status
Attending Physician
Sounds like a decent plan. You could even calculate the interest difference with the new rate and see if the repayment or not of accrued interest under repaye would even make a difference (if it was calculated monthly instead of yearly so you got the benefit of it and the 40k would pay down some prinicipal).
 
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