I Refinanced my Student Loans!

[onecoolcat]

I recently refinanced my student loans. I have $47,000 in law school debt that had a 6.5% interest rate.  My original plan was to save every penny and throw it at my student loans to pay them off within two years.  So whats the goal now?  Make minimum payments (as long as the rate is under 4.5%) and throw everything I can at my 401k and IRA.  MMM forums inspired me.

If anyone else is interested in refinancing their student loan debt, you can use my referral link. You will get $100 if you accept a loan from Sofi with my referral link below. Full disclosure, I will get $300.

https://www.sofi.com/refer/5/11233

I'm at 3.8% variable, but you have to be mindful that you give up certain benefits when you refinance federal student loans to a private servicer. You lose IBR and PLSF opportunities and its more difficult to get forbearance if you run into tough times. Refinancing made sense with me personally and I'm willing to take a risk on a variable rate to get a lower interest rate since my loans are relatively small and I have a wife to spot me incase I need to pay them off sooner. You have to decide whether its right for you before you decide to refinance.

[josstache]

I wish I had done this -- though part of that is hindsight as the market increased a lot faster than my interest over the period I paid off my student loans.

One thing I'm curious about: do the loans become dischargeable in bankruptcy when you refinance them?

[SaintM]

You generally cannot discharge a federal or private student loan in bankruptcy. Nor can you discharge a different kind of loan if you took it with intent to pay off a student loan and then file bankruptcy.

[MichelleD1977]

I had looked into this before, but am applying right now. Can't believe I didn't go through the application process before, as even the fixed rate is lower than what I was paying.

A question you may or may not know the answer to- how fast does the variable rate pick up? I think what scared me before was the possibility that we were going to all of a sudden have a higher than 6.5% rate and be able to do nothing about it.  Right now we're planning on paying off the loans in 1.5 to 2 years anyways. That probably will not change.  How long have your had your loans for and how much has the rate changed?

Thanks!

[onecoolcat]

I had looked into this before, but am applying right now. Can't believe I didn't go through the application process before, as even the fixed rate is lower than what I was paying.

A question you may or may not know the answer to- how fast does the variable rate pick up? I think what scared me before was the possibility that we were going to all of a sudden have a higher than 6.5% rate and be able to do nothing about it.  Right now we're planning on paying off the loans in 1.5 to 2 years anyways. That probably will not change.  How long have your had your loans for and how much has the rate changed?

Thanks!

I actually haven't made my first payment yet, I just signed the acceptance last week.  The variable can rise month to month because its tacked to the 1-month LIBOR index.  Its definitely a concern but I wanted to refinance and I figured the 1-month LIBOR would have to rise nearly 1000% for me to break the fixed rate amount, which is actually very possible.  The 1-month LIBOR has been pretty low for a few years now and most people don't anticipate it will stay this low much longer.  However, if I can get a year or two out of a lower interest rate it will have been a good gamble for me personally as I have a relatively small amount of loans and will hopefully be in a position to pay them off 2 years from now.  If rates stay low though, I wont pay them off sooner.

[onecoolcat]

I applied to refinance twice.  The first time Sofi rejected me because they were unable to verify my identity, address, and I had insufficient work experience (that one was my fault).

I don't know why they weren't able to confirm my identity and address, I gave them proper information (the same info they later approved me with).  The employment thing was my fault because I inadvertently said I had 0 years of work experience when I really have 9.  I emailed them and someone called me the next day who basically reapplied for me.

So if you get rejected the first time, try try again.  The second application (under the same account) was under review for over a week.  Then they actually sent me a second rejection based upon the second rejection that included all of the same grounds plus some.  I thought it was bizarre since I was really anal about sending them everything they wanted plus some as I really wanted to refinance.  I emailed them a second time and then a day later I got a phone call telling me I was approved.  Still have no idea why my second application was rejected initially.  Thought I would share incase some losses hope after a first rejection.  If you feel like a lock for refinancing, you probably are.