Student Loan Refinance

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koonja

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Hi guys,

Full disclosure on my student loan info here - looking for advice on refinancing.

I currently owe 48K through both subsidized and unsubsidized loans. I pay $500 a month towards them (probably going to up that to $600 or $700). Of that, ~$220 goes to interest before principle, which makes me sick.

I'm 29.

A friend told me to check out a site called SoFI because he was able to refinance to get them to 3.2%. I checked it out, but it estimated me at 5.7% refinance, which I was surprised by. I haven't gone as far as entering my credit info (which should help because I have ~800 credit score), but I'm thinking SoFi isn't for me.

Any advice at all? Did you talk to your personal bank? Mine is USBANK. What are the tricks of the pros. Asking you guys because you are the best ;).
 
NDRock

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My only advice would be to bust your ass and pay them off as quickly as possible. I'm very debt averse and a fan of Dave Ramsey (although he has plenty of critics) so that is where I am coming from. Others may have better solutions for your situation and your personal finance outlook. Good luck. Actually seems like 48k isn't too bad these days.
 
Henges24

Henges24

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Just started paying mine last month so I will be keeping tabs on this thread.
 
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koonja

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I submitted an app with Sofi. I'd do it just to get an idea - it's only an app and will cost you just one swipe of your credit score. I'll let you know what comes of it.
 
wizards8507

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Even if the math works out that you'd get a slightly better interest rate, it's not a good idea to consolidate. Psychologically, a bunch of smaller loans that add up to $48K is a lot better than a single $48K loan. The endorphin release of paying off your loans smallest to largest will motivate you to knock them out one by one. If you have one giant lump sum, you're more likely to view the mountain as insurmountable, even if only subconsciously.
 
tussin

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So many will disagree with me here, but there is actually some merit to NOT busting your ass and paying them off as fast as possible and only paying the minimum.

1. If you are disciplined, the extra money that you could be using to pay off your loans can be invested across a few funds and will likely get a return that outpaces your loan interest.
2. The weight of the payments is heaviest now. Meaning, the dollar payments today are worth more than they will be in the future due to inflation. Also, you probably make less money now than you will in 5-10 years -- so the increased payments have a bigger effect on your daily life.

Waiting for Wiz to blitz me like Bosa...
 
K

koonja

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Wiz has me in a negative return on my 401K investments so don't listen to him.
 
K

koonja

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wizards8507 said:
Even if the math works out that you'd get a slightly better interest rate, it's not a good idea to consolidate. Psychologically, a bunch of smaller loans that add up to $48K is a lot better than a single $48K loan. The endorphin release of paying off your loans smallest to largest will motivate you to knock them out one by one. If you have one giant lump sum, you're more likely to view the mountain as insurmountable, even if only subconsciously.
Click to expand...

FYI - my two sub/unsub loans are broken out at like 23K and 25K. So they're almost identical. They're consolidated, so I'm paying towards the greater whole at 48K.
 
dublinirish

dublinirish

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koonja said:
FYI - my two sub/unsub loans are broken out at like 23K and 25K. So they're almost identical. They're consolidated, so I'm paying towards the greater whole at 48K.
Click to expand...

are you paying both off at once?
 
woolybug25

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koonja said:
Not big ones. I respect a lot of the poster's knowledge on here.
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You need to make some real life friends...

tussin said:
So many will disagree with me here, but there is actually some merit to NOT busting your ass and paying them off as fast as possible and only paying the minimum.

1. If you are disciplined, the extra money that you could be using to pay off your loans can be invested across a few funds and will likely get a return that outpaces your loan interest.
2. The weight of the payments is heaviest now. Meaning, the dollar payments today are worth more than they will be in the future due to inflation. Also, you probably make less money now than you will in 5-10 years -- so the increased payments have a bigger effect on your daily life.

Waiting for Wiz to blitz me like Bosa...
Click to expand...

Plus, student loan interest is tax deductible.
 
wizards8507

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tussin said:
Waiting for Wiz to blitz me like Bosa...
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:starwars:

^ That doesn't really apply but I just found out we had a Star Wars smiley and I had to use it.

tussin said:
If you are disciplined, the extra money that you could be using to pay off your loans can be invested across a few funds and will likely get a return that outpaces your loan interest.
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The math says that's true, but the math doesn't adequately compensate for risk. You might be able leverage 6% debt to make 10% return somewhere, but the 6% is definite, while the 10% is only one possible outcome on a broad spectrum of possible outcomes, including significant lost of principal. Yes, there's more potential upside to investing now and paying debt later, but the "worst case scenario" is much, much worse.

tussin said:
2. The weight of the payments is heaviest now. Meaning, the dollar payments today are worth more than they will be in the future due to inflation. Also, you probably make less money now than you will in 5-10 years -- so the increased payments have a bigger effect on your daily life.
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Koon's a single guy with three roommates. In 10 years he might be a married guy with three babies.

woolybug25 said:
Plus, student loan interest is tax deductible.
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That's the dumbest financial argument there is. People use it all the time when they talk about mortgages. Paying $3,000 in interest so you can avoid $750 in taxes ($3,000 * 25% marginal tax rate) isn't a good thing.

koonja said:
Wiz has me in a negative return on my 401K investments so don't listen to him.
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No shit, huh? I was heavily invested in the sexy Sequoia Fund and then this happened:

Two Sequoia Fund Directors Resign as Valeant Losses Mount - Bloomberg Business
 
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woolybug25

woolybug25

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koonja said:
I leverage them too. I welcome every opinion I can get.
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Then they must not be very smart, because you have to still come on the internet and get opinions from complete strangers for every life decision. Seems like you would have at least a couple living, breathing friends that you could leverage to the point of an actual decision.

Can you imagine if every poster came on here for opinions on their window quotes, how to scam out of non-competes, student loans, creepy crawl spaces and their 401k's? It would literally shut the site down.
 
tussin

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woolybug25 said:
Then they must not be very smart, because you have to still come on the internet and get opinions from complete strangers for every life decision. Seems like you would have at least a couple living, breathing friends that you could leverage to the point of an actual decision.

Can you imagine if every poster came on here for opinions on their window quotes, how to scam out of non-competes, student loans, creepy crawl spaces and their 401k's? It would literally shut the site down.
Click to expand...

Let's not turn this into another Wooly/Koon/Wiz triple-threat match.

BTW, I don't blame Koon for the non-compete thing. The fact that he even had a non-compete at his age and experience level is garbage.
 
K

koonja

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woolybug25 said:
Then they must not be very smart, because you have to still come on the internet and get opinions from complete strangers for every life decision. Seems like you would have at least a couple living, breathing friends that you could leverage to the point of an actual decision.

Can you imagine if every poster came on here for opinions on their window quotes, how to scam out of non-competes, student loans, creepy crawl spaces and their 401k's? It would literally shut the site down.
Click to expand...

I leveraged my friends to push me to apply to refinance,and then again to refinance through Sofi (or apply I should say). If you want to rip me for inquiring with really smart people (yourself, whiskey, Lax, Tussin, Wizards, and a dozen others I'm leaving out), save it. I have no shame, I'm an sponge that sucks at the *** of the IE knowledge pool lol.
 
woolybug25

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tussin said:
Let's not turn this into another Wooly/Koon/Wiz triple-threat match.

BTW, I don't blame Koon for the non-compete thing. The fact that he even had a non-compete at his age and experience level is garbage.
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First of all, Wooly/Koon/Wiz fights are as American as apple pie. You a commie?


Secondly, he was a grown man and signed a non-compete for the consideration of them paying his expenses. I don't even think Koon would agree that they didn't have that right.
 
WaveDomer

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I would say you are doing it the right way. If you have a legitimate way to refi to a lower rate and the deal is good, take it. And figure out how much you can realistically put towards paying it down and commit to that. You never know what will happen in 5, 10, 15 years. So as long as you are saving and have money put away for the bad times, I say attack debt and get rid of it.

I am 41 with 3 kids and my financial choices are a lot less open. Not a bad thing, just a fact. With no kids, you can afford to really attack debt. I wish I did at that age.
 
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Senoj13

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In going with a private company such as SoFi, you will lose all of your federal benefits such as interest subsidy while needing to defer payments and Income Based repayment plans. Also, student loan interest is tax deductible. I am not sure if remains deductible once you refi with a private entity.

Your interest may also be paid by the government on the subsidized portion of your loan if you qualified for an income based repayment plan for up to 3 years.
 
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