Short answer
Rarely, right now. Refinancing government loans with a private lender permanently gives up PSLF and benefits like RAP's interest subsidy, and private rates may not be much lower today. The main exception: private loans you already have at a high rate, like 8% to 12%.
A short clip from his webinar for residents and fellows, with captions.
Watch the full webinar from 9:05Three common paths
For those of you with loans, there's likely a fork in the road at some point:
- Stay with the government and pay the loans back yourself.
- Stay with the government and go for public service loan forgiveness.
- Do a private refinance: ask a private lender to pay off your government loans and relend you that money at a lower rate.
Before you refinance
If you want to keep PSLF on the table, don't do a private refinance. Once you take the loans away from the government, you can't put them back.
We're also in a somewhat high interest rate environment, so the rate from a private lender may not be very different from what you have now. And you'd give up government benefits, like the interest subsidy you may get on RAP. I'm not saying don't do it, but the juice needs to be worth the squeeze. There are very few situations nowadays where we're seeing private refinances.
The exception
If you already have private loans at a relatively high rate, maybe 8%, 10% or 12%, look at a private refinance sooner rather than later. Some lenders have special programs for residents with lower payments during training.
Where Jay covers this
Jump to each moment in his webinars.