refinancing federal student loan

[Julie S]

Hi there,
Recently graduated and looking into student loan repayment options. Has any refinanced federal student loans? I recognize I can't use public service loan forgiveness. Any issues with leaving income-based repayment?

Just looking to save if I can!

Thanks guys

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[jjjDPT]

Assuming you have Federal Direct/Plus loans...

IBR and PAYE plans are the safest way to go, because you are only required to make relatively small payments (helpful during financial hardships).

After 20 or 25 years of payments on these plans the remaining balance is forgiven. Currently, that forgiven balance will be taxed as income the year it was forgiven. So if you have 100k in loans and make minimal payments, never touch the principal for 25 years, and have 200k "forgiven" that is taxed, you will be stuck with a crushing tax that is greater than your gross income.

Legislation may change this so that forgiven balances are tax exempt. We may see something new this year (says my loan servicer). Of course, it can always change...

To play it safe, sign up for IBR or PAYE if you can, and make additional payments as if you are on a shorter term plan.

 

[NewDPT31]

if you work at a non profit(like a lot of hospitals), it qualifies as Public Service Loan Forgiveness. PSLF. It's only 10 years of qualifying payments and you are not taxed on the forgiven amount.
Obama proposed to lower total forgiven to like $59k i think but per the Dept of Education that would only apply to future loans. Find out before you do anything.
Cheers

 

[callmecrazy]

if you work at a non profit(like a lot of hospitals), it qualifies as Public Service Loan Forgiveness. PSLF. It's only 10 years of qualifying payments and you are not taxed on the forgiven amount.
Obama proposed to lower total forgiven to like $59k i think but per the Dept of Education that would only apply to future loans. Find out before you do anything.
Cheers

I somehow missed that bold part in all my research. You just made my day, hah. I was just talking about putting aside savings for the huge tax hit I'd take down the line.

 

[DesertPT]

Keep in mind that even though there are many ways to lower your monthly payment, there is no circumstance where paying off a loan faster will cause you to spend more money in the long run. If there is anyway you can afford to sign up for a standard 10 year plan I would advise it. Signing up for IBR or PAYE and then just making bigger payments as if you were on a 10 year plan is a logical way to do it (so you don't have to pay a lot in a month if you get desperate). However, it is easy to fall prey to the temptation too just make the minimum payment just this one month so that we can buy the sofa we need. And then it happens another month and another month. Paying off a loan in less than 10 years when you aren't on a 10 year plan takes discipline and budgeting skills. Most people with student loans could save themselves thousands and thousands of dollars in the long term of their life if they would sacrifice for a couple more years of living like poor college students and dumping most of their income into loans.

Obviously everyone's situation is different so take this all with a grain of salt. These are just some of my rambling thoughts at the moment. The main point is that there is no circumstance where it is better to be in debt than to not be in debt. So let that seemingly very obvious yet often forgotten principle guide your decision making.

 

[NewDPT31]

Keep in mind that even though there are many ways to lower your monthly payment, there is no circumstance where paying off a loan faster will cause you to spend more money in the long run. If there is anyway you can afford to sign up for a standard 10 year plan I would advise it. Signing up for IBR or PAYE and then just making bigger payments as if you were on a 10 year plan is a logical way to do it (so you don't have to pay a lot in a month if you get desperate). However, it is easy to fall prey to the temptation too just make the minimum payment just this one month so that we can buy the sofa we need. And then it happens another month and another month. Paying off a loan in less than 10 years when you aren't on a 10 year plan takes discipline and budgeting skills. Most people with student loans could save themselves thousands and thousands of dollars in the long term of their life if they would sacrifice for a couple more years of living like poor college students and dumping most of their income into loans.

Obviously everyone's situation is different so take this all with a grain of salt. These are just some of my rambling thoughts at the moment. The main point is that there is no circumstance where it is better to be in debt than to not be in debt. So let that seemingly very obvious yet often forgotten principle guide your decision making.

I disagree. That's the whole point of IBR and PAYE, and if **** hits the fan you call them and they readjust your payment...one of the goals of the programs are to keep your credit in good shape so that you don't get behind, get screwed on credit, and then cant buy a car/house/etc. And deciding on if being in debt is absolutely on a case by case basis.

The main point is that there is no circumstance where it is better to be in debt than to not be in debt. So let that seemingly very obvious yet often forgotten principle guide your decision making.

Nope. No no nope no. not true. This sounds like some Dave Ramsey tomfoolery.

 

[DesertPT]

Dave Ramsey tomfoolery.

I'll give you that one.

And I meant to say that my opinion is that for a PT there is no circumstance where it is better to be in student debt than to not be in student debt. I doubt that changes your opinion of my statement, but thought I'd say what I meant for the record.

 

[MDDM]

I refinanced through SoFi. They do quite a bit of verification and the process can be a bit annoying but their variable rate is the lowest I could find. If you're like me and don't have the option of getting loans excused through government programs, refinancing through them can save you a good amount of cash. If you have a friend who can refer you, they offer you AND your friend $100. Nothing compared to our loans I know, but still something nice..

 

[engmedpt]

I refinanced through LinkCapital. I think they offer the lowest rates for physician refinancing at moment. They also offer a resident program with full deferral through residency!

Thank you for sharing. Did they show their highest interest rate ceiling?