Big Shrimpin wrote:But are they going up by like 3-4% in the next few years to moot the endeavor? Wouldn't that be a huge jump?
I've interrogated everyone I know in the banking industry (IB doods, HF doods, PE doods and VP level corporate banking doods). The unanimous response has been that, given a payoff date in 3-4 years and considering I'm paying about 8% net, I would be a 'tard not to refi at a 4% variable.
Probably not going to be at 8% in the next 3-4 years, but who knows, anything is possible. Obviously, if you're already at 8%, it makes a lot of sense to refinance at 4%, all things being equal.
Big Shrimpin wrote:Obviously, you never know what's going to happen, but on a short term repayment, what is the argument against refi?
If you can actually repay the entire loan (or close to it) in 3-4 years, then there really isn't a great argument against refinancing. But I think it takes some balls to refinance $250k in nondischargable debt with a private lender, if you're a recent grad just about to start in biglaw. There's a huge safety net you lose by refinancing with a private lender, such as loss of long-term forbearance, unemployment deferment, only simple interest while in deferment, long-term PAYE, loan forgiveness, and PSLF. I mean even if you repay $50k /year towards your loans (which is more than what most people in NYC biglaw are going to do), you're still going to have well over $100k left after 3 years at which point you might get canned/forced to leave/rage quit biglaw and your salary is going to be a lot lower at your next job. (I.e. it's not going to be easy to repay that 6 figure debt without biglaw.) Personally, I think the loss of PLSF is significant for anyone who might want to work for fed government a few years out, because that's tax-free loan forgiveness with merely making 10% PAYE payments for 10 years (and those payments would largely be paid be a LRAP program for most people who went to t14s). I also think that there's a certain value to having the money invested, rather than a somewhat lower student loan balance (because you can always use that money to repay your loans if you get 5 years out and biglaw is looking like it's going to be a long-term thing for you). I'm sure zweitbester will jump in here disagreeing with this and advocating sofi (maybe he is a paid promoter?), but that's my 2 cents.