Refinance Student Loans

Graduated with $47,000 in student loans back in 2016. Interest rates were all over the place – had one federal loan at 6.8%, another at 4.5%, and a private loan at like 9.5% because I was an idiot who did not understand what I was signing.

Refinancing saved me probably $8,000 over the life of my loans. But it was not without trade-offs. Here is what I actually learned from going through it.

What Refinancing Actually Is

Pretty simple concept. A private lender pays off all your existing student loans – federal, private, whatever. Now you owe them instead. Hopefully at a better interest rate.

Think of it like consolidation but through a private company. One monthly payment, one interest rate, one lender to deal with. That alone made my life easier.

The catch? If you refinance federal loans, you lose federal protections. Income-driven repayment, forgiveness programs, forbearance – gone. That is a big deal for some people. Was not for me, but I will get into that.

Why I Did It

That 9.5% private loan was killing me. Even the 6.8% federal one felt high. I was three years into my career, making decent money, and my credit score had improved a lot since I was 22 and clueless.

Checked rates and got offered 4.5% from SoFi. That was a no-brainer for the private loan. The federal ones were trickier – had to weigh losing protections against the interest savings.

Ended up refinancing everything. My job was stable, I had an emergency fund built up, and I was not planning to pursue public service loan forgiveness anyway. The math made sense for my situation.

The Application Process

Honestly easier than I expected. Filled out online applications with a few lenders (more on that in a sec), uploaded some documents – pay stubs, loan statements, ID – and waited.

Got decisions within a couple days from most places. The whole thing from application to my old loans being paid off took maybe 3 weeks.

One thing that tripped me up: they needed statements from all my current loans. Had to track down login info for servicers I had not thought about in years. Start gathering that stuff before you apply.

The Lenders I Looked At

Checked four or five. Here is my take:

SoFi

This is who I went with. No fees, competitive rate, and they have unemployment protection if you lose your job. The member perks are whatever but the core loan product was solid.

Earnest

They let you customize your payment amount which is cool. Rates were comparable to SoFi. Would have been fine going with them too.

CommonBond

Similar deal. They do some social impact stuff if that matters to you. Rates were in the same ballpark.

LendKey

Works through credit unions. Might get slightly better rates if you are already a member of a partner credit union. Worth checking.

Honestly the rates between these were all pretty close. Maybe 0.2-0.3% difference. I went with SoFi because the process was smooth and I liked their forbearance options.

What Actually Matters for Your Rate

Credit score is the big one. I had like a 750 when I applied – that got me the lower end of their range. Below 700 and you are probably looking at higher rates or needing a cosigner.

Income matters too. They want to see you can actually pay. Debt-to-income ratio, employment stability, all that.

My rate was 4.5% fixed on a 7-year term. Shorter terms get lower rates but higher payments. Longer terms are the opposite. I picked the middle ground.

The Federal Loan Trade-Off

This is the thing nobody explains well enough. Federal loans have protections that private loans do not:

• Income-driven repayment plans (payments based on what you earn)
• Public Service Loan Forgiveness (if you work for government or nonprofits)
• Generous forbearance and deferment options
• Death and disability discharge

When you refinance federal loans with a private lender, all of that goes away. Forever. Cannot undo it.

For me that was fine. I work in the private sector, was not planning career changes, and had enough savings to handle tough times without forbearance. But if you are pursuing PSLF or might need income-driven payments, think really hard before refinancing federal loans.

Did I Actually Save Money?

Yeah. Here is the rough math:

Old loans: ~$47,000 at blended rate of about 6.8%, would have paid roughly $58,000 total over 10 years.

Refinanced: $47,000 at 4.5% over 7 years, paid about $51,500 total.

Saved around $6,500 and paid off three years faster. Monthly payment went up a bit but not dramatically. Worth it for me.

Mistakes I Almost Made

Only applied to one lender at first. Dumb. Should have shopped around from the start. Rates can vary more than you would think.

Almost picked a variable rate because it started lower. Glad I did not – rates went up a lot in the following years. Fixed rate all the way unless you are paying off fast.

Did not read the fine print about autopay discount. Most lenders give you 0.25% off for autopay. Set that up from day one.

When Refinancing Does Not Make Sense

If you are going for PSLF – do not refinance federal loans. Period.

If your income is unstable – federal income-driven plans are valuable. Private lenders will not care if you lose your job.

If your credit is rough – you might not get a better rate than what you have. Check first but do not assume refinancing equals savings.

If you only have a year or two left – closing costs and hassle might not be worth it for marginal savings.

The Bottom Line

Refinancing worked great for me. Saved real money, simplified my life, and I paid off everything faster than planned.

But it is not for everyone. Think about your job stability, career plans, and whether you might need federal protections. Do the math on actual savings versus what you would give up.

If the math works and your situation is stable, go for it. If there is any doubt about your ability to make payments without federal safety nets, maybe hold off.

My loans have been paid off for two years now. That is a nice feeling regardless of how you get there.