Tales from the Wallet: Refinancing Student Loans (Guest Post)

refinancing student loansHave you refinanced your student loans, or are you looking into it? We’ve talked about tackling huge school debt, paying down debt vs. saving, getting financially prepared for grad school, creating a money roadmap, and switching from a lawyer’s salary to a student lifestyle, but we haven’t discussed refinancing student loans. Today, Blonde Lawyer (the name she uses to comment on Corporette posts) shares her experience of refinancing with SoFi, one of a growing number of peer-to-peer lending companies (CommonBond is another) that offer student loan refinancing. The author is including a referral link of her own, but Kat / Corporette is not being compensated in any way for this post — it sounded like an interesting topic for readers to discuss, and hopefully this one reader’s experience will be a launchpad for discussion.  Thank you for writing this, Blonde Lawyer!  Here’s a recent WSJ article and a Reuters article for further reading on the topic. Update 2015: Blonde Lawyer has started a blog with more information.

I have noticed that a lot of Corporette readers are interested in potentially refinancing their student loans. I suggested to Kat that this would make a good “Tales from the Wallet” post and offered to write about my experience refinancing with SoFi. Hopefully there are other posters who refinanced with one of the other major players that can write about their experiences too.

So a little bit about me: I graduated law school in 2009. I went to an in-state school with in-state tuition. I paid my tuition 100% with Stafford loans ($59,500) and also took out living expense loans ($34,072) through a private loan company for a grand total of $93,572 in loans. After graduation, I was most worried about my $34,072 in private loans. My husband co-signed them and they were not dischargeable if I died or became disabled. The interest rate was a variable 8.61% with a 19% cap!!! I had one other issue with this company. I had selected a standard 10-year repayment for all my loans, but once the private loans entered repayment, the math wasn’t adding up to me.

It took me over a year to figure this out, but it turns out I somehow was set up on a 15-year repayment plan by accident and they refused to adjust it to a 10-year plan. Instead they told me the amount in payments to make so I would pay it off in 10 rather than 15 years. However, after paying that for awhile, it still didn’t seem right and I called them again. The total they gave me was to pay it off 10 years from my call, which would make it a 12-year loan, not a 10-year loan. Even after they recalculated my repayment amounts once again, it still seemed wrong. Despite their assurances that my extra payments were going to principal, I think they were just paying me ahead. When I refinanced with SoFi 4 1/2 years later, I still owed $31,283.90 on the private loans! I had paid less than $3,000 toward the principal of a loan that was originally supposed to be halfway paid off.

By contrast, I originally had $59,500 in Stafford loans with interest rates of 6.3, 5.8 and 6.8% on a 10-year standard repayment plan. When I refinanced with SoFi after 4 1/2 years I owed $40,938 — I had paid $18,562 in principal on this loan. SoFi offered me a five-year loan with no co-signer and a fixed interest rate of 5.375% (so long as I pay with automatic electronic payments, and 5.625% if I opt out) to refinance $72,222.

My old Stafford payments were $746.48/month, and my old private loan payments (on the wrong 15-year plan) were $386.05/month but I had been paying $444.00 trying to pay that off in closer to 10 years. (With the company’s fuzzy math, it likely would have at least been 13 years.) So, on the old loans I was paying just about $1,200/month combined with 5 1/2 years to go on the Staffords and 8 1/2 to 10 1/2 years left on the private loans with the risk of the interest rates skyrocketing.

I think I first learned about SoFi from people on this site. With SoFi I pay $1,383.70/month, approximately $200/month more than before, and I will have my loans paid off in five years. I’m saving approximately $17,000 over the life of my loans, at a minimum, and a ton more if interest rates on my old loans were to go up. I’ll save an additional $800 on my last payment due to the interest rate reduction for making electronic payments.

I did lose some federal protections on my federal loans, like IBR (income-based repayment plan) and public forgiveness, but those are programs that I wasn’t able to utilize. SoFi offers emergency forbearance and also has an alumni network to help you find a job if you have a career setback. Since they are alumni funded, the investors have an interest in keeping you working!

SoFi has GREAT customer service. They seem to have U.S.-based operations and everyone I spoke with sounded happy, energetic, and helpful. There was no noise in the background so I don’t think they operate out of a call center. I was able to give them the logins to my old loans and they filled out a bunch of the paperwork for me. My school’s registrar was slow in confirming I graduated, so a SoFi rep called me and asked me to just text a picture of my diploma on my office wall.

They made it as seamless as possible:

  • I received an email on March 6, 2014, that my school was added to the approved list, and I applied that day.
  • I was conditionally pre-approved on March 9, 2014.
  • I e-signed the final paperwork April 4, 2014.
  • My loan was funded April 12, 2014.

Once everything was said and done, they sent me a great t-shirt (one of those super-soft, organic cotton ones) and a bottle/wine opener. They also offer all customers a referral link so you can earn $100 for each person you refer that signs up/gets approved, and the new borrower also gets $100! (If you are going to apply, please use this link so we each get $100.) I’m happy to answer any questions if I can.*

Readers: have you refinanced your student loans? What were your experiences like? 

Update March 2015: Blonde Lawyer has started a blog herself with more information.

* Ed. note — Blonde Lawyer asked me to note that she’ll be busy today until 5 PM ET but will be on after that to try to answer questions. 

(Pictured: Checkbook-ageddon, originally uploaded to Flickr by Adam Burke.)

—————

* As always, this guest poster has been invited by Kat to post on a subject of interest to the community. We value having different and diverse voices here, and indeed part of the benefit of guest bloggers is broadening the dialog beyond Kat’s own views. To that end, please note that opinions expressed by guest bloggers, like opinions expressed in comments, do not necessarily reflect the opinions of Kat, Katfry LLC, or any of our sponsors or other contributors.

N.B. PLEASE KEEP YOUR COMMENTS ON TOPIC; threadjacks will be deleted at our sole discretion and convenience. These substantive posts are intended to be a source of community comment on a particular topic, which readers can browse through without having to sift out a lot of unrelated comments. And so, although of course I highly value all comments by my readers, I’m going ask you to please respect some boundaries on substantive posts like this one. Thank you for your understanding!
refinancing-student-loans

Comments

  1. I need to bookmark this to read later.

  2. TECH ISSUE –

    Kat – I keep getting redirected to some advertisement by vindicosuite when I click on a post to see the comments… not sure if its just me or if its a site issue

    Thanks!

    • I had the same issue last night, although it seems to have gone away today (for now).

  3. Oohhhhh great post! I’m going to do it. I’ve wanted to for over a year but didn’t see the value in it.

  4. does anyone know any of the ins and outs of loan forgiveness for public service?? Hubs has student loan debt, but he volunteers in public service. I feel like I have heard about some sort of amnesty for this? Or am I just crazy?

    • Anonymous :

      There’s deb forgiveness for people who work certain public service jobs. I’ve never heard of it for volunteers.

    • I believe if you have federal loans and make 10 years of on-time payments (through IBR payment program. . . otherwise your loans will be already paid off in 10 years under the more traditional programs) while working for a qualifying governmental/public service agency, then the balance is forgiven. The program is too new for anyone to have taken advantage of it yet, and the last time I checked there were unknown tax consequences from the forgiveness (I read once this had been dealt with, then later read it would depend on the tax regulations in place when this actually happens, so I don’t know).

      • Wildkitten :

        I think it’s any government or non-profit. (Maybe only 50c3?) And I think the tax consequences are if you do a 25 year repayment (not in public service) not in the 10 year repayment (public service).

        • Also applies ( or used to a few years back) to tribal governments if you happen to be able to get a job through one and have one in your area!

    • Anonymous :

      Last time I looked into it for my ex hubby (a cop) it was for teachers and cops in high risk areas only…none were even close to where we lived, think cities with known large population & poverty/violence like St. Louis and Detroit.

    • I’m counting on this loan forgiveness, so I have a pretty good grasp of the basic details. PSLF requires 120 monthly payments (not necessarily consecutive) on qualifying loans while employed in a qualifying job. Qualifying jobs are: government (local, state, federal, or tribal), a 501(c)(3), AmeriCorps/Peace Corps, or a private not-for-profit. There are some exclusions, though: I know labor union employees aren’t eligible even though they would otherwise qualify. Only payments since 2007 count. You can certify your eligible employment now so that the Dept. of Ed starts tracking your progress toward forgiveness.

      https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

      I’m halfway there and can’t wait until this gigantic debt-monkey is off my back!

      • Aelcee, thank you so much for your comment. I have been “counting” on this for years, but was frustrated at the slow rate of guidance being rolled out. I’ve gotten bad about researching this regularly in the past couple of years, and missed the fact that they will now do an annual certification for you. Thanks for the link, and I hope this helps out a lot more people that might have been interested in PSLF when it was first introduced, but frustrated by the lack of guidance. It really looks like things are beginning to turn around in the clarity department.

  5. Question: what was your lowest interest rates and did they end up higher? I have a loan at 1.9%, several at 3.9%, and several at 6.8%. One may even be 8%. I hate to have the 8% drag the interest rate on the lower ones up.

    • Gail the Goldfish :

      SoFi will do individual loans. I refinanced only my two highest-interest loans.

    • Blonde Lawyer :

      None of my interest rates ended up higher. I still have a small undergrad loan with a lower interest rate and I just didn’t include it in my refi.

  6. I’ll second the recommendation for SoFi. I thought their customer service was excellent, and really appreciated them walking me through calculations so that I could increase my monthly payment to add some extra to interest each month so that my loans will be paid off earlier. I only wish they had been available for my school sooner! I structured my refi so that my annual payment was the same as before, but now much more money is going to principal each month, which will result in paying off my loans much sooner.

  7. I am saving to buy a house (which I plan to purchase this summer) but also want to refinance my student loans. Should I refinance my loans before or after buying the house? Will refinancing my loans affect my ability to get a mortgage for the house? Thanks in advance for the help! All thoughts appreciated!

    • Blonde Lawyer :

      Generally the advice is to keep the status quo when buying a house. Your old lines of credit will be closed when you refinance and sometimes that can cause a ding. However, if you are refinancing to more advantageous terms, then maybe that would help your credit. I would ask your mortgage adviser. I refinanced a house right before I refinanced my loans. I didn’t ask which way I should do it. You could also try asking someone at SoFi if the house mortgage would impact what interest rate you get to help you decide.

    • Must be Tuesday :

      Don’t know if you’re still checking this thread, but watch out for income to debt ratio. Even if you are refinancing student loans for better terms over a shorter period, if your monthly debt payment rises, that can diminish your purchasing power for a house. Talk to your mortgage broker to confirm this and whether or not it will be a factor for you personally, but be aware that it can be an issue in some circumstances.

  8. Gail the Goldfish :

    Both BF and I refinanced part of our loans through SoFi back at the beginning of the year. That was easy with no problems. However, BF tried to refinance another loan recently and had a really hard time with it–they were slow getting back to him after he sent stuff in and kept changing the interest rates they were offering. Ultimately he gave up because they interest rate they finally settled on wasn’t that much better than what the loan was already at and higher than what his other loans with SoFi were at. I’d still recommend, but it seems like they may have declined a bit in the customer service department as they expanded.

  9. Very informative!

    I have been getting a ton of SoFi mailers and have been considering it. One of the reasons I am actually leaning to do it is the customer service so I am happy to hear that people are happy with them. My loans are now serviced through ACS and it is the worst. They basically make it near impossible to make an extra payment to principal each month. I never thought I’d say this, but I miss Access Group.

    I’d love to read people’s experiences with other refinancing services.

    • Wildkitten :

      I also miss Access Group.

    • Anonymous :

      ACS is the actual worst. With all of the money they’re making off of us, you would think they could update their website functionality so it doesn’t look like 1998.

  10. Does anyone know if there are financial advisors who specifically deal with student loans repayment options? I’d love to sit down with someone unaffiliated with any company that does this and go through the math on my options – regular repayment, public loan forgiveness, refinance, etc.

    • anon op from above :

      amen

    • We ran the numbers with our normal financial planner. I don’t think you need someone who specializes in that area, just someone with a fair amount of JDs, MBAs, and MDs as clients who is used to their clients having loans.

    • newbattny :

      this!!

    • Anonymous :

      I know a lawyer (former classmate) who does this in Boston.I sat down with him and reviewed all my loans, my plans and preferences, etc. He wrote me a decent-length memo explaining all the various options and benefits/consequences of each, then recommended a particular option based on our discussion. His name is Adam Minsky and I highly recommend. Another well-known student loan lawyer is Joshua Cohen, not sure if he offers a similar service. I found it comforting to have a lawyer do this, as they typically handle conflicts between borrowers and servicers, so they know what the real pitfalls are.

  11. Katharina :

    I also refinanced my loans recently using SoFi and love it! Their customer service is very professional and efficient. Getting approved and set up took less than a month. For me, I wanted the lower monthly bill and was able to do so and add minimal time to my repayment. I highly recommend SoFi to anyone looking to refinance their student loans.

  12. Ouch. I started the process earlier this year just to see what options were available, but didn’t finish it because I couldn’t get specific enough information. So they essentially denied the app and now say I’m ineligible. Oh well, their loss of business. Has anyone used a different company? I want a 5 year term.

    • Anonymous :

      Call them?

    • i would also be interested in another company… it doesnt look like sofi covers the university that i went to…. anyone know of any other companies that do this?

      • Officedronette :

        Darien Rowayton Bank also refinances student loans for certain degrees. I have my loan re-fi through them; my husband’s is through SoFi. His was a lot easier to complete; mine had a lower interest rate and lacks some of the protections offered by SoFi (discharge upon debt, emergency forebearance). All in all, I’ve been satisfied once I got the refi completed, but the process took a lot longer than SoFis.

      • Blonde Lawyer :

        I just read an article about Citizens Bank offering Refi w/ lower interest rates than SoFi.

  13. What would you do? :

    I hope that this won’t be seen as off-topic, but I’ve been wondering about it for a while. I have a bit over $50,000 in student loans, all from law school, in mine and my husband’s names. (We got married several years prior to my going.) We’re paying, but slowly, slowly, slowly, and it’s obviously a cramp to our lifestyle, particularly with one kid and another on the way. Husband is a SAHD and we’re fully financially joined.

    My in-laws have offered to essentially refinance the loans for us – that is, lend us the money to pay them off and let us pay them, interest free and basically on our own schedule (though we’d pay them the amount that we pay monthly now). Part of me is hugely resistant to this idea – “NEVER borrow money from family!!!” my mind screams. But the other part of me is really, really tempted – with no interest, we could pay them so much faster, and boy, do I ever want them gone!

    As background, we have a fine relationship with my in-laws. They are fairly well off, and, as far as I can tell, this would not harm them financially. They are more “busybody” types than I would like, ask personal questions and the like, but they’ve never tried to interfere in our business or question the way that we do things. We’ve been married for over 13 years, so it’s a pretty solid relationship. They live out of state, so we don’t see them a ton, though my husband speaks to his mom (to allow the kid to Facetime with her) several times a week.

    Thoughts?

    • Anonymous :

      I wouldn’t borrow the money from them. It’s too much for me to be comfortable with. I’d hate myself if I defaulted.

      I’d also have husband get a job. How you decide you can afford for him not to work when you’re struggling to pay off 50k of debt is beyond me.

      • What would you do? :

        We’re not struggling; it’s a limitation, but it’s not that we’re destitute. He has a job; he’s an excellent father and his devotion to that role allows me to make much more in mine than I could if I were having to leave for day care pickups and take off for kiddie-illnesses all the time.

        • Anonymous :

          If you’re not struggling, great! Then you don’t need to involve your in laws in your finances.

          • Hildegarde :

            I think there’s a big gap between “struggling” and “so wealthy an interest-free loan couldn’t help us.” I also would really hesitate to take a loan from a family member, but if the OP thinks it wouldn’t harm their relationship, I don’t think there’s a problem with it. Parents do things like this for their kids all the time.

          • What would you do? :

            Hildegarde, yes, you hit the nail on the head. It would be a huge help, but at the same time, it’s not necessary. That’s why I’m struggling with it.

            Oh, I should have added, this was totally their idea (we definitely have never asked for it or hinted that we would want it), and they have made this offer multiple times over the course of the last 2-3 years.

          • Meg Murry :

            But have you done the math on how much you would actually save? For instance, if your interest rate is currently 8% and you’re paying on a 10 year term, that’s around $600 a month, while a 0% loan on a 10 year term would be $400 a month. Or if you continue to pay the $600 a month, it goes from 10 years to 7. So is that $200 a month or 3 less years worth it for the potential in-law involvement? I think it completely depends on you and your relationship with your in-laws.

      • I was in a similar debt situation and we chose for DH to stay home as well. The cost of childcare for 2 kids was just about equal to his salary. Plus, he runs all the errands and handles house stuff during the week, so I have more time both to see my kids and to work in the evenings and over the weekends than other biglaw moms I know. Hard to put a price tag on that, but I think it has allowed me to be firmly on partnership track doing deal work and still getting to see my kids, and has been a big problem for lots of friends once they have kids. This has also translated into better bonuses for me, so we’re about to be able to finish paying off those loans, which likely would not have happened if DH had been working.

        • What would you do? :

          Word. If he kept working with the one, we would probably be ahead a little financially, but with two in daycare, we would not at all, and would be enormously more stressed out and far less able to enjoy parenting. (I see a lot of advice for demanding-career moms of young kids that basically boils down to “just grit your teeth and bear it, it (the time where they’re little and needy) will be over in a few years and then it will be better” – which makes me sad, when it’s so good right now, with the mamas and lap sitting and being thrilled and amazed with the simplest things).

    • I did this (but 2.5% interest) with my in-laws. I was really nervous about it because they think it’s totally normal to ask lots of intrusive questions and judge their kids’ life choices, but my average interest rate before was well over 6% and I figured they’d be bossy and judgy either way. I was pretty much right about that – we are almost 2 years into repayment and have heard very little about it. If anything, they’d prefer that we reduce our monthly payments because my FIL is retired and likes having the “free” income stream come in every month. My MIL is super financially conservative so it was just money that was sitting in low-rate CDs to begin with, so I think everyone is coming out ahead, assuming we keep up the smooth sailing for the next 3.5 years…

    • If your plan is to continue to make the same monthly payment to your inlaws, I think it comes down to weighing (1) how much $ you save by taking advantage of their offer of 0% interest plus (2) any added mental benefit you attain by simply knowing that if something comes up and you need to miss a payment, you don’t risk default on your loans, against (3) whatever relationship changes you anticipate if you take the loan. I’m not sure where I would come out on this – I am generally wary of mixing loans and family, but it seems like you would really benefit from the peace of mind this offers, even if your immediate financial picture does not change all that much.

    • We did this, but it was to buy a house and it was from my parents. I only did it because my parents are comfortable financially, I knew they could lose the money, and I knew it wouldn’t impact our relationship. If all these are true, I don’t see why you wouldn’t do it.

    • Meg Murry :

      I wouldn’t do it a 0% interest, because that could put you in a tricky spot legally – is it a gift, or is it a loan? I would suggest one of 2 things happen:
      -either it becomes a gift (which at under $50,000 should fall under the annual gift tax – 13,000 gift from MIL to you, 13,000 from FIL to you, 13,000 from MIL to H, 13,000 from FIL to H) and then you agree to put a certain amount each month into an account of their choosing (like a 529 for your kids?)
      OR
      -you do some very minimal paperwork to make it an “official” loan at at least the Applicable Federal Rate.

      We have done both of these options in my family – my parents gifted my husband and I with money for the down payment of our house, in return for our (verbal, not written on paper anywhere) promise to put a certain amount in 529s for our kids instead of them putting in the 529s, and my BIL took a private loan from his parents to pay off credit card and high interest student loans (which was in their best interest anyway since they were co-signers on the loans). In BILs case, they wrote up a simple contract between them with the amounts and amortization, made sure it was within the AFR, had the family lawyer and accountant give it a quick look over, then had a copy notarized for each of them. At the time, I believe the AFR was 3%-ish and they went with 4% for simple math – and was still way better than the 8%+ on his student loans and 20%+ on his credit card.

      We looked into doing a family based mortgage when we bought our house, and that’s how we learned about AFR and such, with details here: https://www.nationalfamilymortgage.com/afr-rates/

  14. Anonymous :

    Would love to have a post on student loan repayment options OTHER THAN SoFi. SoFi isn’t available in a lot of places, so unless you’re in one of the lucky states, you’re SOL.

    It seems like all the successful loan repayment stories are (1) spouse pays all living expenses, (2) parents/in-laws give an interest-free loan, (3) BigLaw shop pays ginormous bonuses, or (4) some refi program I’m not eligible for. It’s really discouraging to feel like there are all these great things that other people can take advantage of, but you’re stuck with crippling payments that you can’t do anything about.

    • Wanderlust :

      +1000

    • I am at a firm that pays BigLaw salaries, but doesn’t give out bonuses unless you bill crazy-high hours (thus, I’ve never received a bonus). I paid off my loans ($200k) in 6 years on my own–without help of spouse or parents–through the “snowball method.” It works as follows: 1. put all loans on repayment plan (I chose 10 years), and pay that amount each month (say, 5 loans each at $300 per month, so $1800/month). 2. set up your autopay to include a bit of extra principal payment on your highest-interest rate loan each month, and pay this extra amount until that loan is gone (I chose $500 extra/month). In this example, your total monthly payment would now be $2300. 3. When that highest-interest loan is gone, take the total amount you were paying for that loan (i.e., regular 10-year-repayment-plan amount of$300 per month, plus the extra $500/month), and add that total amount as an additional payment to your next highest loan each month. Thus, you will still be paying $2300/month, of which $800 will be an additional principal payment. 4. When that loan is paid off, add $1200 extra each month to your next loan. 5. Repeat.

      I was shocked at how quickly this plan actually did “snowball” and had me paying down principal significantly faster than I would have otherwise, without feeling like I was putting more than an additional $500/month at loans (which didn’t feel bad at all as I got raises over the years). To me, this made more sense than refinancing because I only had a few high interest loans, and it was better to just get rid of them quickly than to refinance and lose the benefit of federal loans/low interest on other loans.

      • Anon Snowball :

        Second the snowball method for knocking out student debt without losing federal loan protections. I came out of undergrad and started working in finance 6 months before Lehman. At the time my entry level salary could only handle the basic payments on $50k of student loans. However, I set a tight budget that included padding a sizeable emergency fund (since layoffs were constantly being announced) and threw any unexpected income at the loans.

        Fast forward 6 years – I’ve been using the snowball method to attack my student loans for the last few years and should have everything paid off by the end of next summer. That may seem like a long time, but I also paid cash for grad school (MSF) as I wanted to avoid any additional loans. I’ve also advanced in the industry and put bonus/promotion funds against the loans.

        My standard of living is neither meager nor extravagant and I will be debt free before 30. To celebrate I’ll roll my old loan payments into down payment savings on a home. This should be fun – prices are up 10-20% YoY in my target neighborhoods (urban northeast).

    • Blonde Lawyer :

      Have you checked recently? Their website says they are operating in 45 states. I know when they first started the schools were limited. I registered anyway and I was notified when I was accepted. If they get enough interest from your state they will likely apply to do business there. Might be worth registering anyway (and I get no money for just that lol). I do not make a big law salary. I am dual income no kids, however.

      When I was considering SoFi, I also looked into DBR and Wells Fargo. You could see if those could offer you a better rate.

  15. Anon @ 2:43-

    I strongly agree. If there are blogs or other advice for people with high debt and moderate incomes, please share!

    These methods are based on faulty assumptions, as if most people are either in BigLaw, government or non-profits or have $$$ spouses or families. I had a low-paying private sector attorney job at one point, and it was unpleasant navigating the system. In fact, before a coworker quit, I was about to reduce my hours in order to work as a lifeguard at a public pool for the student loan discount.

  16. Do you think there is a minimum interest rate below which it doesn’t make sense to refinance? The remainder of my husband’s student loans are private loans with pretty low rates (though variable)…I think 2.75% and 3.5%ish. I had thought that these were low enough that SoFi wouldn’t really be able to offer much, but I’d be interested to hear if anyone had an experience to the contrary.

    • Blonde Lawyer :

      I think they publish their highest and lowest interest rates offered. If yours are lower or the difference is small then don’t bother!

  17. As an attorney with a fair amount of expertise in this area and personal experience with managing student loan debt, I would caution strongly against refinancing. Borrowers who want to pay off their loans early can do so by making additional payments directly to principal. Borrowers who are struggling and need to lower their payments can take advantage of the federal government’s repayment options, including IBR. Public service loan forgiveness is currently not treated as taxable income, although it is true that no one has yet taken advantage of this program yet or will be able to until at least October 2017. The federal government’s student loan options and servicers are certainly not perfect but at the end of the day the government simply is not incentivized by profit in the same way that private firms are. If times are good for you and you have extra income, refinancing to take advantage of lower rates may seem attractive, but if circumstances change you will likely regret losing the protections that federal loans offer. Please contact an attorney or financial advisor knowledgeable in this area before refinancing.

    • Blonde Lawyer :

      I think you are cautioning against refinancing federal loans. While I did go that route, I was most interested in refinancing a private loan. I think SoFi offers me more protection then my former private loan did.

  18. I recently refinanced two small private loans with Darien Rowayten Bank.

    As I mentioned upstream, I’m counting on loan forgiveness for the bulk of my loans. But five years out of law school, I still had two (relatively) small private loans that were ineligible for forgiveness. One had a very low, but variable, interest rate. The other had a fixed rate around 8%. Total balance between the two was around $14k. And the kicker was that neither lender would release my original cosigner from the loan, even though I had never been late with a payment in more than five years of repayment, have an excellent credit score, make a very good income (not Biglaw good, but government lawyer good), and my cosigners are both retirees with teensy incomes.

    I requested refinancing with both SoFi and Darien Rowayten Bank. DRB offered me a much better fixed rate, so I went with them. On the positive side: I got an excellent fixed rate (just over 3%) on a five-year term. Once the loan was funded, they became easy-peasy to work with. Buuuut . . . they were awful to deal with during the loan closing process. I just bought my first house a few weeks ago, and that was both easier and faster to close than this small student loan from DRB. They assign you a point of contact, but mine did not return a single phone call. Literally. Not one call back. And this was not a complex loan. My phone calls were just to figure out what the eff was going on, since it was just radio silence from them.

    So the moral of the story? If you’re dead-set on refinancing with a private company and are willing to put up with terrible communication in exchange for a great rate, check out Darien Rowayten Bank.

  19. newlawyer :

    Does SoFi allow you to pay your loans off early?

    • Anonymous :

      Yes.

      To all: Just FYI, you can get $200 for referring yourself rather than sending $100 to someone else. Just set up an account as a referrer (a referrer does NOT have to be a current SoFi borrower), and then refer yourself using a different e-mail address. Easy $100.

      There also seems to be quite a bit of misunderstanding of how loans work generally in BL’s post. If you are making the automatic minimum payments every month, any extra you make IS GOING TO PRINCIPAL. STOP FREAKING OUT THAT IT’S NOT. Sorry for the Ellen caps, but seriously. And the reason BL had paid so little on the private loan versus the Stafford is wholly explainable by the significant difference in interest rates, and the initial incorrect payment amount based on a longer-term repayments. To anyone still reading, it is incredibly easy using Excel or Google to figure out what a loan payment should be by entering the principal, interest rate, and desired repayment term. Use this to check your payments. Play with the different variables and see how refinancing to a lower rate could reduce your payment and/or pay the loan off earlier, or how changing your payment could pay it off earlier or later. If you are a professional adult who took out five to six figures of debt, you should know how to do this. Do not rely on a lender, servicer, your school, or Mommy and Daddy to do it.

      • Blonde Lawyer :

        The terms of SoFi’s referall program prohibit that now. I think they caught on unfortunately. I guess you could still get away with it with two emails and addresses etc.

      • SoCalTraffic :

        Re: automatically going to principal – not necessarily. Some lenders will put the “extra” payment towards the next payment due while others will give you the option of “towards principal” or “next payment”. Perhaps the company you work with (or for) does it automatically but not all do this.

        • That’s why I said “if you are making the automatic payments every month.” If they apply it to your next payment, you are not in that group continuing to make the regularly scheduled payments every month that I was addressing.

    • Yes. You can payoff early without penalty.

  20. KateMiddletown :

    Bumping this thread as I’m working on refinancing what’s left of my loans this week. Citizens Bank is offering an attractive 5 year rate right now, but I just bought a car, so I’m looking at 10 years. I am a financial advisor. I’ll let ya’ll know how this goes.

    • Good luck!

      • KateMiddletown :

        @BlondeLawyer did you/have you used any of the other benefits that SoFi offers? They just sent me a follow-up email talking about their networking groups, career services, etc. They are really pushing the network idea. Plus offering to send me a free pound of coffee from one of their “partners”… Is this going to be a marketing-heavy experience?

        • Just saw your comment. I have not received marketing following my refi. Maybe one email a month at most. I may have signed up for their networking but I haven’t ever signed back in.

  21. Updated referral link:

    https://www.sofi.com/refer/234/8854

    You still get $100 if approved.

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