Although I try my hardest to be frugal and save money when possible, there are some debts that are darn near (I say near because some escape it) impossible to escape and one of those is student loans.
I have amassed quite the chunk between undergrad and law school, so I was desperately seeking ways to save on interest rates.
I did a lot of research before I settled on refinancing my student loans. I heard some people say “oh well when Obama wraps up his presidency he’s going to forgive all federal government student loans”. I took this to heart and took about a year researching this claim.
First I spoke with a friend at the Department of Education and her response was that there was no way he could patently forgive “all” student loans. Meaning, if loans were forgiven it would be within a very narrow set of margins.
For example, Obama recently decided to forgive student loans of a narrow group of borrowers who are in default and have disabilities. While this is a very big deal, it certainly with not spread and affect every borrower who took out loans at any time. Obama did reform part of the direct loan program which now says:
“Borrowers of new loans starting in 2014 will qualify to make payments based on 10% of their discretionary income. New borrowers would also be eligible for student loan forgiveness after 20 years instead of 25 on qualifying payments.”
I think that’s the best that we can get.
So last summer I decided to pull the trigger and I refinanced my student loans using using SoFi.
I choose SoFi after applying on a few different sites and getting different rates. They gave me by far the best rate at 10 years and 5%. My student loans were mixed between 6.8% and 8% so this made a HUGE impact.
Before my refinance my repayment plan had me paying over $700/month and my total repayment over 10 years was about 140,000 which was a LOT more than my loan amount and a huge chunk of that is interest.
Through Sofi my monthly payment is a little less, $650/month, but my total lifetime payment is much lower (approximately 40,000 lower) and my total interest paid is HALF of what it was before.
This savings is HUGE! The extra tens of thousands that can be saved can be used towards a down payment on a home or a car or a crazy vacation!
I would recommend shopping around for the best rate you can. If you have a partner who is willing to cosign for you, your wait will be lower so that is also a huge help. Don’t just bank on someone swooping in and providing a blanket forgiveness on everything you took out, I wish it could happen but it won’t. And that’s okay, too. Student loans are just part of life. We took them out and now we have to pay them back which is annoying but we can do it! And if we can do it while paying less interest, even better!
Check back later this week for my next post!