Student loan refinancing + Extended payments

[gobruins]

Hello,

I've tried searching but haven't found much information regarding using the extended payment plan in combination with refinancing higher rate student loans.

Background:
My medical school loans are 200k at 4.5% (two 2%, 1x 4.5% and 1x 6.5%)
My wife's school loans are 190k at 6.8%

She is currently staying at home with our two young kids, age 1 and 3 so her income is zero. My current income is 250k.

Based on my AGI and my student loans, I do not qualify for IBR. However, adding her loans allows us to use IBR. We're saving extra each month and applying to her loan principle.

I thought it might make more sense to go ahead and refinance her entire loans and my 6.5% via Sofi or other refinance company because they're offering as low as 5.1%.

I believe we may lose our IBR ability because I'm not sure if the student loan.gov calculator takes into account refinanced student loans. Because of this, I believe we would need to use the extended repayment option to keep our minimum required payment lower than the standard 10 year repayment plan.

All this said, has anybody pursued this strategy to lower their interest rates, therefore saving in overall payments so you can make a higher contribution to the principle?

Any downsides to this besides losing the IBR option? I know I would also lose the possibility of loan forgiveness but when I run my loans along with my wife's through student loan.gov, it says I will not end up with any loan forgiveness anyways.

Thanks for any thoughts.

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[lyn2006]

I am also in the process of deciding whether to refinance with SoFi. I have ~230k in federal loans at 6.8%. My husband (a cardiology fellow through 6/17) has 250k in federal loans at 6.8%. I started a job this year making 260k (plus I take some partners' calls so my total will be a bit more) and my husband has his 55k fellow salary plus moonlighting (last year was ~75k extra but this year with all the call he has to take I think it will be more like <20k).

I just put in an application to SoFi for my loans and got some rates for my loans with the lowest being a variable interest rate of a little less than 3% with a 5 year repayment plan. Haven't put in my husband's yet since his income isn't as good and it said in the application not to include your spouse's income.

From what I've read, it seems like when you refinance through them you lose all the federal benefits, including IBR as you mention, but I think also the loan no longer dies with you if you're dead or disabled (someone correct me if I'm wrong). Our solution will just be to take out a little more life insurance, although we need to do that soon anyway since we now have a third child on the way...

Has your wife applied yet? Curious how it works when her income is actually 0? And are you really still qualifying for IBR? I assumed we wouldn't qualify anymore given our combined income and didn't even bother renewing it; we've been paying as a standard 10 year repayment plan. (Though our goal is to get rid of loans ASAP anyhow so we have been overpaying when possible ever since my husband started moonlighting.)

 

[gobruins]

What was the 20 year fixed rate that Sofi offered, if you don't mind?

My wife hasn't applied yet. I am not sure if we would be putting her income down as zero since we're filing a joint tax return. I believe they would view my income as well.

Yes, we still qualify for IBR at this time. When I used studentloans.gov to calculate, it stated so. I then had to correct Sallie Mae (and now Navient) because they repeatedly incorrectly stated both our loans did not qualify for IBR and put us on standard repayment. This took about 3 weeks to correct.

You can try logging into studentloans.gov, enter your information, then there's a section to "add your spouse's loan." It's a rough estimate but should be valid.

We're also trying to get rid of our loans ASAP (mainly because studentloans.gov projects we will not qualify for any loan forgiveness) but we've had to scale back additional payments because we purchased a house.

 

[lyn2006]

Looking at the email they sent, the 20 year fixed is 5.99 (5.74 with autopay). Was yours 5.1? That's not bad!

 

[gobruins]

Looking at the email they sent, the 20 year fixed is 5.99 (5.74 with autopay). Was yours 5.1? That's not bad!

Sorry, I had a brainfart, I listed 5.1 which is the 15 year fixed advertised (not a personal quote to us), it's 5.3 advertised for the 20 year.

5.74 is pretty good, over a point less compared to my wife's current rate.

I'm going to submit an application this weekend and see what actual rate they offer us. Cross fingers.