Recently a reader reached out to me for custom advice. I am always glad to help whenever I can, and so although our discussion was tailored for his unique situation, I thought I would share it here to potentially benefit others, perhaps it will jumpstart another young doctor in training thinking more comprehensively about their debt management!



He is a COM class of 2016 graduate who will be starting residency (with internship) this July


He is unmarried and owes $228k in federal student loans


His two primary options are to:


do Income Based Repayment (IBR) for the next 6 years (1 intern, 4 radiology, 1 fellowship) and get a job at the non-profit organization for 4 years so the leftover amount will be forgiven after 10 years with PSLF




do IBR for 6 years, switch to standard payment for 2-3 years to aggressively pay off the loan completely


He is leaning towards the latter as he wishes to avoid long term payment


When he reached out to me, his main questions were 1) Do I have to consider the consolidation or refinance or loans? And 2) For people who are not sure whether they will go into private (for profit) practice or non-profit, which loan payment (IBR, PAYE, RePAYE) is the most appropriate during the 6 years of residency training and after?



Initially I referred him to some of my posts that dissect PSLF at greater length. In short I advised him that as there are more opportunities and better pay in private practice, it makes more sense to not count on PSLF. At which point his options are:


  1. Refinance with DRB or LinkCapital, which can be done here:
  2. IBR
  3. PAYE


It is free to apply to DRB and receive a quote. He (and others) could potentially be quoted the best interest rate AND the smallest amount of monthly payments for the amount owed. (DRB only requires $100/month throughout 6 years in pgy radiology training + 6 months after fellowship completion). This option provides the most cash flow out of the four.


Cash flow matters because of the time value of money.


DRB will refinance MS4s with contract in hand. Upon approval, you can start saving interest on your student loan while everyone else is just letting their loans grow… 9 months of 3% interest savings on 200k is $4,500 interest saved. You can funnel your savings into higher return investments or use it pay down your debt further for guaranteed return in further interest savings.


For someone who isn’t interested in the extra cash flow made available by refinancing, and is instead interested in PSLF, the easiest approach is to go to and start plugging in numbers. The website will generate different monthly payment amounts given options 2-4.


My advice is to run a few different incomes that may apply:


Payment is based on prior year tax return:
2015 tax return is small as MS4→this gives your payment as PGY1.
2016 tax return is half pgy1 income→this gives your payment as PGY2.
2017 tax return is half pgy1, half pgy2 income→this gives your payment as PGY3.
2018 tax return is half pgy2, half pgy3 income→this gives your payment as PGY4.
So for most pgy1 their federal payments are ~$0; most single pgy2+ start making a couple hundred dollar payments on IDR.


I find it is best to project the different monthly payment amounts long-term to see how they will affect your overall financial wellbeing (does it limit your ability to contribute to Roth IRA or take advantage of company employer match for retirement etc) before deciding whether to stick with federal payment options or to refinance.


Of the federal repayment options, Repaye makes the most sense because there’s a 50% interest subsidy on the difference between your Repaye payment and your monthly-accrued interest. I would also sign up for PSLF immediately so I can start in on the 120 payments.



The above constitutes our initial exchange that I reformatted so other readers can follow along more easily. Our discussion continued after in pretty standard Q&A format so I will reproduce those unaltered in the upcoming posts.

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