Does Student Loan Refinancing Make Sense For YOU?

 September 22, 2015
Posted by Eric Simonds

Does Student Loan Refinancing Make Sense For YOU?

By Kathleen Davidson, Esq. 

We all know that one of the keys to financial success is getting out of debt and saving for the future.  For many young adults, getting out of debt can seem like a daunting experience because they are burdened with student loans.  For some graduates, the key to speeding up that debt repayment snowball is to refinance your student loans.

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Who should refinance? Refinancing is not for everyone.  First, check out the terms of your current loan.  Do you have a variable interest rate or a fixed interest rate? If it is variable, how high can it go? What is the term of your loan? In other words, how much longer will you be paying it off? Do you have a co-signor? Is it federal or private? If it is private, does it offer any protections like forgiveness on death or disability? If it is federal, do you work in public service and qualify for future forgiveness? Do you work in a low paying field where you could benefit from income based repayment? If yes to either of the last two questions, you probably don’t want to refinance.  For everyone else, it is worth looking into and comparing the terms of your current loan to what you are offered in refinance.

Here is how I benefitted.  I paid for law school entirely on loans.  That is not really a smart financial decision but this post focuses on improving the situation we now find ourselves in, and there are many people like me.  I at least qualified for in-state tuition so I saved a lot there.  I graduated with $93,572 in student loans.  Of that, $59,500 was federal and $34,072 was from a private loan.

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I decided to refinance them all with SoFi.  I chose a 5 year plan with no co-signor with a 5.375% fixed interest rate.  The loan is dischargeable on death or disability.  SoFi offers emergency forbearance and has its own career center and job network if I ever lose my job.  They also have very attractive variable interest rates with a cap but I was more comfortable going with fixed.  The process of applying and getting approved was easy.  I’m saving a minimum of $17,000 over the life of my loans.  In one year of regular payments my balance went from $72,222 to $58,423. I was finally seeing movement!  I’m now motivated to throw any extra money at my loans because it really does make a difference.

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SoFi is also now offering a personal loan program to help people consolidate other types of high interest debt like credit card debt.  The goal is to lower your interest rate so your extra payments go further.

If you use either of my referral links, you will get a $100 cash bonus if you are approved.  Full disclosure, I make some money too if that happens.  Also, this post reflects my personal opinion and does not constitute legal advice or the opinion of my employer.

More Information Here: —–> Student loans: https://www.sofi.com/refer/234/8854
Personal loans: https://www.sofi.com/refer/148/8854

 

 

Saltwater Harbor Financial, LLC makes NO money from this article nor is enriched from any reader’s action and has provided this platform free of charge for informational purposes.

 

 

 

 

 

About

Eric Simonds has a passion for helping others. Over the past 12 years, Eric has gained his skills and credentials through both private and public sector careers in policy and compliance. This experience, in addition to his Masters of Financial Planning from Golden Gate University, allows him to provide quality financial planning to all Maine families through Saltwater Harbor. Eric takes great pride in operating his own financial planning practice, knowing he makes a difference in the lives of his clients. His motivation for success is fueled by his clients’ accomplishments and ability to achieve their financial dreams with his guidance.

Eric is both a 2011 National Huguenot Scholarship recipient and the sole 2012 National Association Professional Financial Advisors Merit Scholar. In addition to his Masters in Financial Planning, Eric also holds Bachelor degrees from both the University of Maine and the University of Southern Maine. Highly involved in his local community and family, he resides in Brunswick with his wonderful wife, Kate, their two amazing sons, two naughty dogs and a cat.