[USER]

I need help on deciding which rate I should go for refinancing my student loan .

I currently owe $54,000 with Pay As You Earn (PAYE) payment plan — paying $533.74/month with 6.55% interest rate

Breaking down of loan:
4/14/2035: $19,000
8/14/2034: $ 35,000

Thus I still have another 10 yrs to pay off my loan.
I received an offer from SoFi:

– my question is this: should I refi for 5 or 7 years? I do have the money but was planning to put some of that toward a brokerage account also. TIA

[Greg]

I’d take the 10yr plan for the flexibility. That interest rate is still pretty good.

[Max]

Seems like some refinance fees are wrapped up in there. Why not keep the loan now and pay extra each month on principal.

[Sean]

Depends on how fast you plan to pay it off. If you’ll be paying it off in 5 years anyways take the lower rate.

If the 5 year payoff plan is going to be super tight, just take the 10 year payment plan, and pay extra whenever you can, if you want to pay it down faster.

Depending on your goals, you could also just get the 10 year plan, pay it down slowly and invest the rest.

[Sarah]

Run the numbers in a calculator to see what it would look like if you keep the current loan, but pay $1006 a month instead of the $533.

[Brian]

1006$/Month for 5 years 3.99% interest paid 5,600$
or

761$/Month for 7 years 4.40% interest paid 8,700$
or

533$ /Month for 12.75 Years 6.55% interest paid 25,000$

[Sean]

Honestly, could go with any of the three, none of those rates are that bad but I’d personally probs take the 5 yr with lowest interest rate but don’t ever pay more than the minimum.

Then, keep your eyes out for rates dropping again and refinance them again.

You can often get some bonus ($200-$500) for refinancing with a new loan servicer and I would just keep refinancing these over and over again into a new 5 yr term until interest rates stop dropping.

Pay the minimum the whole time.

I believe it’s always free to refinance, and you can usually get a bonus for doing it.

I graduated with over $100k in student debt in 2014. I paid it down aggressively for the first 3 years down to $30k – biggest financial mistake I’ve ever made.

Then I learned how to properly manage money, focusing on investing at a young age over paying down low interest debt.

I refinanced my loans 6-7 times into a new 5 year loan every time rates dropped, getting a bonus each time.

Then interest rates started going up in 2020 (last time I refinanced) and now they’ll be paid off next Sept.

Your payment will go down each time you refinance, effectively giving you a “raise” while also paying the least amount of interest.

But again those rates are all low enough where I’d personally prioritize investing over paying these off.

You’ll have way more money in 30 years than if you were to pay these aggressively.

[Jason]

What ever you do, pay it off asap.
it seam line a lot of money, but hopefully you are making a lot with this college education, and you can pay this off real quick.

it’s not a question of rate when you pay off 2 k a month!

[Kiana]

If you can avoid refinancing with private lender … Stay with the dept of education unless ur plans are private already

[Sofia]

I always go for longest term with lowest interest and lowest payment.

Pay the original payment when your budget is tight but you can always add more to the payment when you can which would shorten the term and lower overall interest paid.

[Irene]

I had $100k+ of student loans at 6% and I decided not to refinance them with a private company because you lose government benefits.

If I had refinanced, for instance, I wouldn’t have been able to pay 0% interest during the pandemic when the government paused interest.

I just made extra payments (2 or 3k/month) for three years until they were gone, even though technically my required payment was “only” $1k/month.

It worked well for me and now I’m freed up to invest a lot every month!

[Author]

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