Consolidate or refinance loans: eligible for IBR/PAYE?

[deleted716403]

Hi guys,

If I consolidate & refinance my loans with DRB, will I be eligible for income-driven repayment plans such as IBR or PAYE?

I have Perkins loan, Stafford loan, federal direct subsidized and unsubsidized loans (+ grad plus) + small private loan.

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[DrMidlife]

nope. can't mix private loans w/federal, can't use private consolidation for federal repayment plans.

DRB should be making this very clear all over the place - but doing so would be bad for business.

 

[deleted716403]

Thank you.

For PRIVATE loan, can I refinance it with DRB without having any effect on my eligibility for IBR/PAYE ?

 

[DrMidlife]

yes, private loan activity has no bearing on federal repayment.

note that separate federal consolidation is also usually required. see the repayment section on studentloans.gov and use finaid.org and whitecoatinvestor for insights.

 

[RangerBob]

Whitecoatinvestor has a great post on whether it's smart to consolidate with DRB or not. I don't have a link, but if you google "whitecoatinvester DRB resident refinance" it should hopefully pop up.

DRB does allow (require) you to make $100 payments while you're still a resident. I think another company (SoFi?) doesn't require any payments while you're a resident.

For both of the above, you'd lose any hope of loan forgiveness via Federal programs, so if there's any chance you will take advantage of them (assuming they stick around--we should know more in late 2017 when the first batch of eligible PSLF applicants pop up) then I would NOT consolidate any federal loans.

I consolidated my private loans with DRB--I got a lower rate and it was fixed, vs a variable rate with the private loans I consolidated. Usually the variable rate is lower and the way to go if you plan to pay the loans off quickly, but with the offer I got, it only resulted in a $10/month savings in a best case scenario (interest rates staying at all-time low), so I just went with the fixed.

So right now I just pay the $100/month to DRB plus my IBR payment to FedLoan. Totally manageable. If I knew I wasn't going to go into a PSLF-eligible job and/or it had been eliminated by this point, I may have consolidated all my federal loans as well.

I'm still holding out hope that the next president or two will finally definitely do something to help borrowers that doesn't screw everyone else (like PSLF would for high earners/borrowers--it just foots the bill to taxpayers). It'd be nice to consolidate federal loans with a federal consolidation loan at current rates. This is the reason DRB and those other banks are making so much money--professionals with a lot of debt but the ability to pay it off see they can save a lot of money with these banks, which means the gov't loses out on that class of borrowers most likely to repay their loans.

 

[RangerBob]

nope. can't mix private loans w/federal, can't use private consolidation for federal repayment plans.

DRB should be making this very clear all over the place - but doing so would be bad for business.

You can can mix federal and private loans with the private consolidation loans--just not with a federal consolidation loan. But you're 100% accurate that if you consolidate your federal loans into a private loan like with DRB, you lose all federal loan benefits, including IBR/PAYE/PSLF, easy ability to put loans in forgiveness (hardship forbearance, etc.).

 

[deleted716403]

Whitecoatinvestor has a great post on whether it's smart to consolidate with DRB or not. I don't have a link, but if you google "whitecoatinvester DRB resident refinance" it should hopefully pop up.

DRB does allow (require) you to make $100 payments while you're still a resident. I think another company (SoFi?) doesn't require any payments while you're a resident.

For both of the above, you'd lose any hope of loan forgiveness via Federal programs, so if there's any chance you will take advantage of them (assuming they stick around--we should know more in late 2017 when the first batch of eligible PSLF applicants pop up) then I would NOT consolidate any federal loans.

I consolidated my private loans with DRB--I got a lower rate and it was fixed, vs a variable rate with the private loans I consolidated. Usually the variable rate is lower and the way to go if you plan to pay the loans off quickly, but with the offer I got, it only resulted in a $10/month savings in a best case scenario (interest rates staying at all-time low), so I just went with the fixed.

So right now I just pay the $100/month to DRB plus my IBR payment to FedLoan. Totally manageable. If I knew I wasn't going to go into a PSLF-eligible job and/or it had been eliminated by this point, I may have consolidated all my federal loans as well.

I'm still holding out hope that the next president or two will finally definitely do something to help borrowers that doesn't screw everyone else (like PSLF would for high earners/borrowers--it just foots the bill to taxpayers). It'd be nice to consolidate federal loans with a federal consolidation loan at current rates. This is the reason DRB and those other banks are making so much money--professionals with a lot of debt but the ability to pay it off see they can save a lot of money with these banks, which means the gov't loses out on that class of borrowers most likely to repay their loans.

If SoFi doesn't require payment while you're a resident, why do you refinance with DRB instead of SoFi?

I'm just planning to refinance my private loan with either SoFi or DRB, and take advantage of IBR for federal loans.

 

[RangerBob]

If SoFi doesn't require payment while you're a resident, why do you refinance with DRB instead of SoFi?

I'm just planning to refinance my private loan with either SoFi or DRB, and take advantage of IBR for federal loans.

I'm not positive--but I believe SoFi is the lender that doesn't require any monthly payments during residency. Regardless, at the time, DRB was the only lender consolidating loans for residents, and they usually offer the better rate anyway from what I hear.

If you just want to refinance your private loan, I'd get quotes from at least a couple lenders. If you're a resident, look up the whitecoatinvestor article that details which lenders are now refinancing loans for residents and get quotes from all of them.

Just an FYI, these banks are usually fairly small, so it's actually kind of a pain/hassle to consolidate. It's worth it in the end, but it can be frustrating.