JohannDeMann wrote:so much cognitive dissonance in this thread so that the people who refi-ed don't feel terrible about their decision. every year since 2007 has just been more and more favorable to govt debt holders. no reason to think that's going to change once hillary gets in and continues obama's policies and democrats do better in the house and senate than they have in while.
most people ITT that regularly post and have refi'd are very open to the possibility that it could have been better to stay on a Gov program in the long run. That doesn't mean it would have been better. You're generally the only poster ITT repeatedly justifying your decision and pushing it as the right decision
I think the cost of being wrong is much much lower if you stay on PAYE. At worst, you are losing the 3% interest spread, and that's really only if you make enough to pay back your debt in a reasonable amount of time. Basically, if you end up being a high earner, you have cost yourself 10k-30k in the long run, which isn't nothing but it's not really life altering for someone who earns that much. It can never be ruinous because as worst its a 10% tax on your income.
But if you are wrong about the refi, you could be stuck with six figures of debt (quickly going into default) and no job or significant assets. Or worse, you could be stuck in Biglaw desperate for the opportunity to take a lower paying or more chill job, but you are shackled to your loans. The economy always works great until it doesn't, and then suddenly everyone is underwater. Refinancing is the same. Most would be better off refinancing until things unexpectedly go sideways and you are stuck trying to come up with 3k each month in a crashing economy.
I agree there is no explicit right or wrong answer to this, and whats best for each person depends on their circumstances. That said I think anyone with significant debt, 150k+, should at least give it a year in biglaw before refinancing. So many people start, immediately hate it and either leave or wish they could. Don't lock yourself into massive monthly payments that you can only afford with a biglaw job if you haven't spent a day in biglaw. None of us can predict how the economy will do or when the next crash will come, so guessing if the insurance of PAYE will pay off in those circumstances is a fools errand. But I can tell you PLENTY of people start in biglaw, hate it, and move to a more relaxed or interesting job that's pays less, go back to school, start a business, etc. It's not for everyone and if it's not for you then refinancing your loans could literally lead to years of misery stuck in biglaw, or financial ruin.
I only say all this because how you choose to deal with your debt will be one of the most significant financial decisions of your life, and could cost you hundreds of thousands of dollars or years working at a job you hate. Chasing the lowest interest rate could end up being a case of penny wise and pound foolish, so I just want an alternate viewpoint out there and to encourage people to think long and hard before making a decision that you cannot turn back from.