HOW TO KNOW IF OR WHEN YOU SHOULD REFI YOUR FEDERAL STUDENT LOANS
Private refinance repayment Options @ 3%
Federal IDR programs
|Student loan balance||7-year cost per month||10-year cost per month||15-year cost per month||PAYE/REPAYE/IBR 2014 per month|
|$100,000||$ 1,321||$ 966||$ 691||$ 624|
|$200,000||$ 2,643||$ 1,931||$ 1,381||$ 624*|
|$300,000||$ 3,964||$ 2,897||$ 2,071||$ 624*|
|$400,000||$ 5,285||$ 3,862||$ 2,762||$ 624*|
CUTTING YOUR INTEREST RATE MIGHT BE ATTRACTIVE IF YOUR GOAL IS TO BE DEBT-FREE AS SOON AS POSSIBLE, BUT CONSIDER THE FOLLOWING:
- The more cash flow you have at your disposal, the more opportunities you have to boost other areas of your financial and personal wellness, like building an emergency fund, saving for retirement, buying a home, buying or starting a practice, starting a family, taking a vacation, etc.
- If your credit history is not stellar or robust, you may have to bring a co-signer to your refinance. This situation can put your co-signer at risk should something terrible happen to you during repayment or if you stop making payments on your student loans for any reason.
- If your income decreases or is interrupted for a time may be due to a move or maternity leave, your IDR payment decreases; most private loans expect you to continue to pay the same amount per month regardless of changes to your income.
WHEN A PRIVATE REFINANCE OF STUDENT LOANS CAN MAKE SENSE:
- You are refinancing less beneficial private student loan(s) with a more beneficial private student loan. Some of you may have private student loans from before veterinary school with double-digit interest rates. This is a great time to refinance those student loans!
- Your DIR is less than one and you are reasonably certain it will remain there for the duration of your student loan repayment.
Tony Bartels, DVM, MBA
Dr. Tony Bartels graduated in 2012 from the Colorado State University combined MBA/DVM program and is an employee of the Veterinary Information Network (VIN) and a VIN Foundation Board member. He and his wife have more than $400,000 in veterinary-school debt that they manage using federal income-driven repayment plans. By necessity (and now obsession), his professional activities include researching and speaking on veterinary-student debt, providing guidance to colleagues on loan-repayment strategies and contributing to VIN Foundation initiatives.