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Mingo Was His NameO
LSU Fan
318
Member since Mar 2016
3698 posts
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When should I refinance my student loans?
So I have about 28.5k of students loans. I have one with an interest rate of 6.5% that has a balance of just a little over 5k. The rest are in the 3.5-4.5% range with one closer to 5%. This is my first and only debt so I'm pretty ignorant as far as refinancing. I understand the premise and how it works, but I've never done it so looking for some help.

I'm doing all I can to pay the one with the bad rate off. Right now I pay about $650/month on it and I'm still in the grace persiod so it's not affecting any others negatively. I also should finish my aggressive savings towards my emergency fund so I'll be looking to add a little bit to the loans probably starting February. What's my best plan of attack here?


lnomm34
USA Fan
Louisiana
Member since Oct 2009
10006 posts
 Online 

re: When should I refinance my student loans?
With those rates in the 3.5-4.5% range, the interest rates you have are probably as good as you can get.


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tduecen
LSU Fan
Member since Nov 2006
133736 posts

re: When should I refinance my student loans?
All through Navient?


Mingo Was His NameO
LSU Fan
318
Member since Mar 2016
3698 posts
 Online 

re: When should I refinance my student loans?
quote:

All through Navient?


Yes. I guess I should add my credit score is over 700 and maybe 750 so I have a good score. I don't know if that will matter in this instance but just trying to provide all relevant info.


tduecen
LSU Fan
Member since Nov 2006
133736 posts

re: When should I refinance my student loans?
In my experience they've been good working with me. I currently do the income repayment option which was cheaper than them just sending me the bill.


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Puffoluffagus
LSU Fan
Richmond, VA
Member since Feb 2009
3414 posts

re: When should I refinance my student loans?
Theres not much downside to refinancing your higher interest rate loan. I wouldn't bother with the lower interest ones as you are unlikely to get get a better rate.
You can probably find a 4-5% rate for the highest rate one.

The only caution is that when you finance you lose your option to forbearance, hardship deferments, various repayment options assuming the loan you want to refinance is a federal loan. So something to keep in mind if you don't already have an emergency fund or job is tenous, etc.


Mingo Was His NameO
LSU Fan
318
Member since Mar 2016
3698 posts
 Online 

re: When should I refinance my student loans?
quote:

The only caution is that when you finance you lose your option to forbearance, hardship deferments, various repayment options assuming the loan you want to refinance is a federal loan. So something to keep in mind if you don't already have an emergency fund or job is tenous, etc.


So looking into refinancing the high interest rate is something I should look into? I plan to have it paid off by the end of the year and I know there's costs associated with the refinance. I would think I would really be saving any money by doing that. It also looks like I may just be better staying put on the others.

Repayment isn't something I'm worried about. I am pretty much doubling the minimum payment, and I'm in accounting so my job is fine, and I should expect a raise once I finish the CPA.


GaryMyMan
USA Fan
Shreveport
Member since May 2007
13495 posts

re: When should I refinance my student loans?
Realistically you're only going to save, at most, 2% interest on that 6.5% loan by going with some lender like Sofi. They'll do a hard-pull on your credit, take up your time, possibly add some fees, and you'll end up worse off than if you had just focused on paying the loan. (that is if you really stick to the plan on paying it in a year).

Rather than doubling the payment on all your loans, use that excess money to pay the expensive one faster.
This post was edited on 1/2 at 4:22 pm


LSUSUPERSTAR
LSU Fan
TX
Member since Jan 2005
12690 posts

re: When should I refinance my student loans?
quote:

Realistically you're only going to save, at most, 2% interest on that 6.5% loan by going with some lender like Sofi. They'll do a hard-pull on your credit, take up your time, possibly add some fees, and you'll end up worse off than if you had just focused on paying the loan. (that is if you really stick to the plan on paying it in a year).


That is good info except for the fees part. SoFi charges no fees to refi the loan with them.

quote:

Rather than doubling the payment on all your loans, use that excess money to pay the expensive one faster.


This is good advice.


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LSUSUPERSTAR
LSU Fan
TX
Member since Jan 2005
12690 posts

re: When should I refinance my student loans?
You can check on SoFi's website with no credit pull to get an idea of what refinancing will do for you.

I had a student loan through the Dept of Ed that I refinanced with Sofi and saved me a ton of money. But I was able to reduce my years to 5 and still make the payment. My interest rate went from 6.125 to 3.865 with my wife cosigning.


Mingo Was His NameO
LSU Fan
318
Member since Mar 2016
3698 posts
 Online 

re: When should I refinance my student loans?
So if I were to refinance could I make the payment with a credit card? Navient only allows checking accounts, but if I can do a credit card I'll do a 12 month no interest and save a lot.


Stateguy
Baton Rouge
Member since Dec 2006
594 posts

re: When should I refinance my student loans?
From my experience with med school loans (a lot more than you mentioned).

Consider consolidation if it drops the rate. Lose benefits below though

Look into the reduced payment plans if continuing $650 is not an option or if that amount won’t cover the total when the regular payments are due. Paying that much - seems like you’ll have them paid off in 5 years or so. Can also just file for reduced payments and pay extra also


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thegreatboudini
McNeese State Fan
Member since Oct 2008
3869 posts

re: When should I refinance my student loans?
It sounds like you got a pretty good deal going right now with your rates. Sofi will be more hassle than it's worth to get that 6.5 down to like 5.25-5.5, and you'll end up in the same boat you're in. Pay off that big one then start knocking out the others.


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