Credible

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Credible takes a unique approach to student loan refinancing. They don’t refinance any loans themselves, they are basically a marketplace that gives you loan options from multiple different banks. This can be especially helpful for people who don’t have the best credit or who might have been rejected by other lenders. You will see options from several different banks and you can choose the best one for you.

If you click this link, Credible will give you $200 (if loan is >$30k) or $100 when you refinance.

Refinance with Credible

Laurel Road

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Laurel Road was previously known as DRB and despite some minor confusion with the name change, they are developing a strong following. Rates are low, generally around 2.8%-7%. They have multiple term options including 5,7,10,15 and 20 year options. They also allow parents to refinance PLUS loans and they will allow medical residents to refinance. They offer really good rates, and several people have reported that they offered lower rates than any other company that they tried.

If you use this link, Laurel Road will give you $200 when you refinance with them!

Refinance with Laurel Road

Earnest

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Earnest is another one of the more established student loan refinance companies. They have some of the best rates as well. Many people have found that Earnest gave them the best rate when shopping around for the best company for them. Their rates are generally around 2.6% – 6.3%.

One of the nice things about Earnest is their custom loan terms. For instance, you can look for an exact loan term even down to the month or shop by payment amount. You may find the best loan for you is 7 years and 3 months, who knows? Shorter terms generally have better interest rates and their tool gives you the flexibility to find the perfect rate, payment and loan term for you!

If you click this link, they will give you $300 if you refinance with them!

Refinance with Earnest

SoFi

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SoFi is one of the more established student loan companies. They are known for having solid rates and great customer service. Generally, their rates are going to be 2.6%-7% with the lower rates for short term variable rate loans.

SoFi also allows medical residents to refinance. This is a great option even though the rates likely won’t be as good as they will be after residency. You would be smart to refinance now and then refinance again after finishing your training.

If you use the link on this page, SoFi will give you a $300 credit when you refinance your student loan!

Refinance With SoFi

Who Shouldn’t Refinance

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Ok, the last post made me sound like a big cheerleader for refinancing student loans. I am a big cheerleader of refinancing for almost everyone. The math just works out. Lower interest rate = lower payments or shorter loan term and saves you alot of money in the long term. I said almost everyone, though. There are some people who are better off keeping their federal student loans the way they are.

If you can afford your loans and you are not in any special loan repayment programs, refinancing is almost certainly the way to go. If you are in a special loan repayment program or loan forgiveness program, you need to look at your options.

If you cannot afford your loan payments you may be in an Income Based Repayment (IBR) or Pay As You Earn (PAYE) plan. These payment plans will reduce your payment to a percentage of you income and in some instances they will forgive whatever is left after 20 or 25 years. If you are in this situation, go to the federal student loan website to look at your options.

https://studentaid.ed.gov/sa/repay-loans/understand/plans

There are also some federal programs that can lead to loan forgiveness after 10 years. If you qualify for the Public Service Loan Forgiveness (PSLF) plan, you make payments based on your income for 10 years and then the amount left is forgiven.

There are some caveats, though. Many people will have a high enough income that the loan will be repaid after 10 years so the forgiveness is not worth anything. You also must work for a qualifying employer. Often these are government or nonprofit organizations that would pay less than an equivalent job in the private sector. You will have to look at the specifics of your situation and weight the pros and cons. This program will also lock you into the employer for 10 years so your job mobility may be effected.  Go here for more information.

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service

 

Should I Refinance?

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Refinancing student loans is a great option for almost everyone. You can usually get a lower payment and pay off your loans more quickly through refinancing.

Most federal student loans are set at 6.8% and some private loans are much higher. Many people can refinance at 3-4%.

If you can refinance at a much lower rate, you can get a lower payment or a shorter loan term. Sometimes you can have both!

Here is a quick example. Let’s say you have $100,000 in loans at 6.8% and you are paying over 20 years.

Monthly Payment – $763.34

Total Amount Paid – $183,201

Ok, now let’s see how it looks if you refinance at 4%. Same loan, $100,000 over 20 years.

Monthly Payment – $605.98

Total Amount Paid – 145,435

Wow! You would save over $150 a month and you would save almost $40,000 over the life of the loan. Seems like a no-brainer.

You could go another way, you could try to pay the loan off faster with about the same payment as before.

Let’s take the same $100,000 loan and pay it off over 15 years instead of 20. Five years is a long time, I’d sure like to get my loan paid off 5 years earlier. Refinance at 4% again, now over 15 years.

Monthly Payment – $739.69

Total Amount Paid – $133,000

Now you’re saving $24 every month and you’re saving $50,000 over the life of the loan all while paying it off 5 year sooner! Definitely a great deal.

You don’t have to have $100,000 in debt for refinancing to work for you. It works wether you have $5,000….$10,000….$20,000….or $200,000.