Author Topic: Student Loan Refinancing  (Read 2056 times)

DCbywayofMN

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Student Loan Refinancing
« on: August 26, 2016, 10:20:58 AM »
First post, so bear with me.

I'm looking for some help doing the math on a student loan refinancing. (http://www.mrmoneymustache.com/2015/05/06/sofi-review/)

I'm in an awkward situation with my dad who insisted on funding my college education on loans and I was stupid enough not to look for too many grants. He's consolidated the nearly 200k in a single loan at 8.5% (!). He's an older (70+) guy and I want to help him with the payments. Without making any lifestyle changes or touching my 401k max contributions and some other savings, I could contribute about 600-800 per month. I think I could make some simple changes and contribute 1k+ per month.

But, he's got this mindset that he wanted to pay for college and not burden me with debt. So, I've managed to convince him that it's good for my credit to have an installment loan (currently I only have revolving credit paid off each month) and that I'd get a tax benefit (kinda doubtful given my income right on the MAGI border).

Anyway, my question comes from how all the refinancing calculators are for the whole loan, rather than a portion. How much interest would he (I) save by if I refinanced 10k, 25k, or 60k over a 5 year loan at sofi's advertised (let's assume) 3.0%. I want to get him to a position where his current payments ($1600/mo) are largely going to the principal, so I also want to know if the 10, 25, or 60k would take enough off the 200k that he currently has.

Follow up question (in advance) is, besides the credit score effect, is there really that much benefit to refinancing or should I just make those extra payments straight to the loan that he already has?

note: he wouldn't qualify for the public service loan forgiveness, but I can't convince him that he should refinance his own loan, yet...

edit: To clarify I'm in my 20s and just trying to help out my still working pops. I haven't been some dead beat kid for 20 years and just getting around to realizing I have a family and stuff
« Last Edit: August 26, 2016, 01:59:25 PM by DCbywayofMN »

MDM

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Re: Student Loan Refinancing
« Reply #1 on: August 26, 2016, 04:51:52 PM »
http://www.vertex42.com/Calculators/debt-reduction-calculator.html is a decent free download for this type of problem.  You can try various options, and see the results.

DCbywayofMN

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Re: Student Loan Refinancing
« Reply #2 on: August 27, 2016, 08:14:09 AM »
MDM, thanks a lot. That is a very helpful, intuitive tool for my questions.