Refinance Student loans?

[TheGadfly]

I'm wondering if anyone has ever successfully refinanced a student loan to get a significant interest rate reduction.

Here's what my situation looks like:

Me:
$3,600 @ 5.35% (federal)
$3,600 @ 5.75% (federal)

Wife:
$20,000 @ 7% (private)

Is it possible to consolidate these loans and get a sub-6% interest rate?  I realize that this might not be worth the hassle, especially since our high-gear debt repayment will eliminate all of this in the next year or so.

Does anyone have any success/horror stories with the loan companies that offer to refinance your loan for "interest rates as low as 2.92%"?

Thanks

[nereo]

Yes, I have known several of my cohort who have successfully refinanced their student loans into a single loan with a much smaller payment. None as low as 2.92%, but many in the mid 4% range.

Just be aware that when you refinance your loan, you may loose some of the protection that having federal loans offers, like an income-based-replayment plan and loan-foregiveness.  If you don't anticipate ever using those, then it makes sense to at least find out what your loans could be morphed into.

[JJ-]

Yes. You can find many of those stories on these boards if you look hard enough. I refinanced all of my 6%+ fed loans to a 2.5% variable and have not regretted it. Most use SoFi. I went through TruFit.

[LawyertilRetire]

Count me as one who refinanced using SoFi. Cut my interest rate by over 2.5% with a fixed rate. You will lose some of the protections of federal student loans but the reduced interest rate saved me a bunch of money.

[goldenboy]

I also refinanced using Sofi. I went from averaging 5.5% interest to 3.4%. I also went from fixed to variable and from 10-year to 5-year and lost some of the other options/benefits associated with federal student loans. Sofi does apparently give you a 3-month leeway if you become unemployed though, so that benefit is still available at least to some extent.

I've found the experience thus far to be pretty trouble-free. I also am not worried about the rate being variable as it is tied to LIBOR, which I doubt will rise substantially in the near future. At any rate I am paying it off pretty quickly so future rate changes aren't a big issue - I just wanted to save a few hundred dollars in interest in the meantime.

The referral bonus is also a nice plus. You and I will both get a referral bonus of $100 if you begin your application from my link below.

www.sofi.com/refer/5/17836

There is also another board somewhere on the Forum, as others have referenced, that has multiple Sofi loan refinancing stories. I don't recall reading anything negative although I'm sure someone somewhere has had a negative experience.

One last thing of note is you need at least 10k in student loans in a single person's name to be able to refinance, so out of the two of you only your wife would be able to refinance with Sofi. Since she has a pretty high interest rate it should still be worthwhile.

[GetItRight]

I refinanced some of my higher interest loans which were in the 7%-16% range. I did a 401k loan for about $14k. Sent about $12k to PenFed credit card with a zero fee and 5% for life balance transfer. They are a credit union and you must be military or donate a small amount to an approved charity but if they're still doing that offer it's great and was an easy process. I refinanced another large chunk with Wells Fargo at 5.75%. They had turned me down about a year or two prior but after paying off more, increasing my income, and transferring some to the 401k and PenFed CC they wanted me as a customer.

Citizens Bank started doing student loan refinancing and offers some decent rates. Fixed at 4.74%-5.19% or variable at 2.32%-2.57%. I intend to transfer my 5.75% balance with Wells Fargo to CB at some point soon.

I have about $93k left to go and should be done within 2.5 years at a cost of about $5k interest. Refinancing won't decrease payoff time and will only save about $1500. May as well do it, but if it were closer to 6 months until payoff I probably wouldn't bother.

[Numbers Man]

I refinanced some of my higher interest loans which were in the 7%-16% range. I did a 401k loan for about $14k. Sent about $12k to PenFed credit card with a zero fee and 5% for life balance transfer. They are a credit union and you must be military or donate a small amount to an approved charity but if they're still doing that offer it's great and was an easy process. I refinanced another large chunk with Wells Fargo at 5.75%. They had turned me down about a year or two prior but after paying off more, increasing my income, and transferring some to the 401k and PenFed CC they wanted me as a customer.

Citizens Bank started doing student loan refinancing and offers some decent rates. Fixed at 4.74%-5.19% or variable at 2.32%-2.57%. I intend to transfer my 5.75% balance with Wells Fargo to CB at some point soon.

I have about $93k left to go and should be done within 2.5 years at a cost of about $5k interest. Refinancing won't decrease payoff time and will only save about $1500. May as well do it, but if it were closer to 6 months until payoff I probably wouldn't bother.

I didn't know about Citizen's Bank. Thanks for the information!

[ILoveMyBlondeStache]

I too had a good experience with SoFi, cutting my interest rate dramatically.  If you're interested in the referral bonus, see the link in my signature below. :-)

[pinkfloyd4ever]

I too am trying to figure out the best way to go about refinancing my student loans. I have

$16000 private loan (Discover SL) at 3.0% fixed
$27000 in various federal loans (10 total loans ranging from 1.73% to 6.8%, principals from $209-$6780)
for a total of $43k :-(

I'm not sure I can get a lower rate than 3% on the Discover loan.

As I understand it, if you consolidate your federal loans through the government you basically lump all your federal loans into one and get an interest rate that's a weighted average of all your previous federal loans. I'm not sure if having the "additional protections" available through the government is worth it to me or not. My wife and I make a combined $91k per year (pretax) but we also want to buy a house ASAP, and what if one of us loses our job? She's a brand new employee at a company that was just acquired. They claim there won't be staff cuts but you know how that often goes.

So anyway, if I apply for a refi through SoFi, should I apply for a loan just for the federal loans? Or would I possibly be able to get a lower rate by refinancing all $43k at once?

Also, if I were to consolidate the federal loans through the government, wouldn't the interest dollars accrue faster even with the weighted interest rate, since the principal would be $23k as opposed to 10 smaller principal amounts?

Finally, does anyone have experience with CUStudentLoans, the credit union based refi program?

[GetItRight]

Do not consolidate your government loans with the government. It's just a weighted average like you mentioned, which eliminates your ability to repay the higher interest loans first. If you just paid minimums for the life of the balance I suppose it wouldn't make a difference, but really there is no point.

I paid off my government loans first as they were the highest interest after refinancing. Any "additional protections" are worthless, they are just promises from politicians which can change at any time for any reason or no reason at all.  Since you are on this site you will never fall into that category. I'd say keep any fixed rate loans under 4% and refinance anything over 4% into whatever lower rate you can get. After that prioritize payment toward variable rate loans first in case they raise the interest rate on you.

Leave the 3% fixed where it is, that's a good rate and you won't find a lower fixed rate.

[GetItRight]

Has anyone used Earnest https://www.meetearnest.com? They offer variable rates down to 1.90% and fixed down to 3.54%. They appear more focused on your career, income, savings, and investments rather than the absurdity of most banks (SoFi and many others) only doing business with people who have a degree or went to a particular school. They require linking your LinkedIn profile among a few other differences from most banks. Anyone have experience with this bank? 1.90% is attractive and would save me about $3100, getting into tangible money range, and also shave a month off the time to repayment. Their soft pull rate calculator was not useful as it returned an error about unable to calculate without a full application, typical.

[Sibley]

SoFi has a minimum of $10k I believe. I don't know if they'll consolidate 2 people's loans into one.

MMM has a $300 referral link (you get all of it, he gets none), so use that one.