JohannDeMann wrote:If you can pay off within 4 years, I'd save the money for probably about 6-8 months, and if you like it then, try to refinance. But just because you "can" pay something down in 3-4 years doesn't make it smart. If you like the job and are very confident you will be in it for 10 years, pay down the debt aggressively and refinance after about the 8 month mark or 1 year mark (to make sure you like your job). If you are not confident you will be in this job for 10 years and there's a real chance you'll go to PSLF eligible jobs, then don't pay the debt down aggressively or refinance.
consider the situation where you stay in this job for 5 years, and then go PSLF:
Based on $145k salary you are looking at yearly payments of $12k under PAYE. I'd lock in PAYE right now for monthly payments of like $500 for the next year. If salary goes up, you may be looking at $15-20k in payments a year - or $25k a year based on your 25 year repayment if you get kicked off PAYE because of salary exceeding debt. PAYE is based on tax return so you are always paying based on last year's salary (another huge benefit that people overlook). I'd estimate you pay around $80k over the next 5 years.
If you pay down the 171k over the next 5 years, you just blew like 210k. That's 210k spent compared to 80k.
Then if you take a PSLF job the 80k would be like another 10k of payments under PAYE a year (assuming average $100k salary) * 10 years for forgiveness equals $100k. Thats $180k total payments spread out over 15 years instead of $210k over 5 years. Huge difference. If you take a PSLF job earlier into the 5 years, the results are even more drastic.
Go on PAYE right now, stack your money in conservative investments or even just a bank CD, if you love your job and see yourself there for the long haul or at least in the private sector for the long haul, refinance onto 10 year plan and throw a chunk of your savings youve been accumulating at the loan.
I agree with this. Although, I'd just use forbearance for the 5 years, if you're pretty sure that you're going to go into a PSLF job after that. You can also probably snag up a 6 month unemployment deferment when you're between both jobs. I think these loans have 5 years of practically no questions asked forbearance, so you might as well just use that and save that money. Then start utilizing PAYE once you're in the new PSLF qualifying job (which will have a lower salary, and hence, lower payments). You can also toss $18k /year into your 401k/TSP and reduce your PAYE payments even further (since 401k/TSP reduces your AGI).