Author Topic: Refinance 49k in student loans or not...  (Read 397 times)

lduhaime1

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Refinance 49k in student loans or not...
« on: February 25, 2020, 07:30:26 PM »
Hi All, I posted a case study and one of the recommendations I received was about refinancing student loans - I currently have 5 posted below

Provider                      Initial        Current     Monthly payment
MGL 1 @ 4.2%      11755   9551      89
MGL 2 @ 6.5%        17600           7600          145
MGL 3 @ 6.3%          1300         6000        155
Discover @ 4.75%   12500   8852         142
MOHELA @5.5%   26500   16000   385

Current left on the loans is about 49k and my monthly total payments are around 900. We just had our first baby YAY and are going through our finances with a fine tooth comb. So my question is - does it make sense to combine all loans into one larger refi? I am accepted for a refi through Earnest at 4.2% for 7 years making a monthly payment of 600.  I could shorten the duration of the loan and lower the apr but having the extra cash on hand would be nice.

It seems like a good idea but for some loans (like the MOHELA and My Great Lakes (which is through government), I have less than 7 years left.  Would consolidating them all add to the total interest paid? Does that really matter if the apr and monthly payment is lower? Should I leave the one loan through the government at 4.2% alone and refi the rest?

Thanks for all your help!

Sibley

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Re: Refinance 49k in student loans or not...
« Reply #1 on: February 25, 2020, 08:02:36 PM »
You are missing one piece of information to do the analysis: how much it would cost to do the refi. There will be fees.

However, you would be lowering the interest rate on all but 1 of the loans, and paying them off faster. Without doing the math (sorry, but it's bedtime!), you're likely to save a decent amount in interest plus shorten overall duration to pay them off. If you can pay more over the minimum, that would decrease cash flow but would knock the loan out faster. About 98% its a yes, but you do want to do the math for the exact picture.

FatFI2025

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Re: Refinance 49k in student loans or not...
« Reply #2 on: February 25, 2020, 10:44:01 PM »
I see from your post history that you taught in MA -- are you inside the First Republic service area for Boston? If you feel like your job security is high, I'd strongly consider taking their 1.95% at 5 years. I did it and it's amazing how fast the principal pays down.

The other question that comes to my mind is your existing loan durations. Hard to compare 4.2% 7 year fixed against the others without knowing the term. Guess I could do the math based on the original balance, monthly payment, and interest rate, but it's late and I'm lazy.