Hey there, CWA,
Welcome to the NerdWallet Community! Thanks for stopping by, and for providing so many details about your situation.
First of all, wow. What you’ve acheived — good credit, retirement savings, six-month emergency fund, house down payment, etc. — is impressive and pretty much a textbook definition of what we typically recommend.
This is a complicated question with lots of tradeoffs to weigh. But you’re in a good place financially, and it sounds like you’re on track to meet your goals regardless of whether you stick with PAYE or refinance.
That being said, assuming you don’t stand to get forgiveness under PAYE, you can afford a slightly higher payment and you qualify for a lower interest rate, refinancing might be the better option.
To answer your questions specifically:
1.)The PAYE plan could still make sense for you if it helps you maintain the lower monthly payment you want — especially if you’re on track to receive a good chunk of forgiveness in 15 years and you’re prepared to pay the tax bill.
I strongly recommend using the government’s repayment estimator to estimate your projected forgiveness and your payments based on filing separately vs jointly.
I plugged in the information you provided and it shows that your current monthly payment would be $586 under PAYE if you’re married filing separately and $689/month if you file jointly. (I used $95k as both you and your husband’s adjusted gross incomes, but your actual AGIs may be different, which would change those results). Please use the tool for yourself to get the most accurate results.
Jumping to your third question, because it’s related: You can stick with PAYE either way, but how you choose to file will impact your payment under PAYE starting the next time you recertify your income for the plan:
If you file separately, your payments under PAYE will continue to be based on your income alone.
If you file jointly, your payments will be based on you and your husband’s combined incomes. Since your husband also has federal student loans, your payment will be proportional to your share of the combined debt.
However, there are other, non-student-loan-related benefits to filing jointly that you’ll want to consider. I’d recommend consulting a tax professional to help you weigh the pros and cons of each tax filing method.
Circling back to your first question, the repayment estimator also showed that you’re not on track to get forgiveness under PAYE regardless of whether you file separately or jointly. (Again, please do the calculation for yourself, being as precise as possible when entering loan balances, interest rates and adjusted gross incomes for both you and your husband).
If it’s the case that you will pay off your balance under PAYE before you qualify for forgiveness, there’s less of an incentive to remain on the plan — especially since your payments on the PAYE will continue increasing as your income increases.
2.)There’s a benefit to refinancing if you can qualify for a meaningful lower interest rate. With your excellent credit score, there’s a good chance you can. If you’re curious, I’d recommend using our prequalification tool to get personalized rate estimates from six different lenders, including the two you mentioned. (This won’t ding your credit). Once you have a rate estimate, our student loan refinance calculator can help you estimate your potential interest savings.
The tradeoff with refinancing is that once you refinance, you’ll no longer be eligible for PAYE.
I know it’s a lot, but I hope this is helpful - please let me know if you have more questions, and keep us posted on what you decide!