Can the RePAYE is kept by you Interest Subsidy if You Prepay Your Loan?

Can the RePAYE is kept by you Interest Subsidy if You Prepay Your Loan?

Editor’s Note: This visitor post ended up being submitted by first-year resident and regular audience Wynton Overcast. A lot of you’ve got had the question that is same now due to the perseverance of Wynton, no further have actually to imagine during the upshot of prepaying your loan under RePAYE. As it happens the clear answer just isn’t exactly just exactly what We anticipated or hoped. Wynton and I also do not have economic relationship.

An question that is unanswered May I Keep Consitently The RePAYE Interest Subsidy if I Prepay My Loan?

After hunting all over internet, WCI forum, Reddit and previous WCI articles, we finally reached off to Dr. Dahle together with WCI Team with an unanswered concern: may i pre-pay my figuratively speaking while nevertheless wanting to make use of the RePAYE 50% Interest Subsidy? Always the instructor, Dr. Dahle provided me with the solution to the most readily useful of their knowledge then again suggested us to test that out myself and “send me personally a visitor post about any of it! ”

Establishing the phase

Let’s set the phase a bit that is little. I’m a very first 12 months resident with

$150k of student loans at mortgage loan of 5.5% and my loan company is FedLoan Servicing. We joined the RePAYE plan this summer time and because of my pupil status and my wife’s relatively lower earnings this past year, our expected payments for the following year under this plan are $0…. Which ensures that i’ll be obtaining the complete 50% interest subsidy through the federal federal government and an interest that is effective of 2.75per cent.

( crucial Note: we will never be opting for PSLF later on, so we will need to eradicate this financial obligation at some time on our personal. If you’re choosing PSLF it’s a good idea to create as numerous tiny repayments as you are able to for the 120 required payments and you ought ton’t even think of prepayments. )

More →