Sunday, January 25, 2015

My Student Loan Refinance Story

I'm one of those rare breeds.  I'm a happy lawyer.  There was one thing that made me unhappy though, my student loans.  They were a necessary evil.  I was lucky enough to have family and scholarships that got me through undergrad with just minimal loans (more on that story in a second post) but my family couldn't help me with law school, nor would I have asked them to.

I was lucky to live in a state with in-state tuition so that saved me a lot of money. Nonetheless, I financed all three years of education and living expenses with loans.  I graduated with  $93,572 in student loans.  $59,500 of that were federal Stafford loans and $34,072 of that was from a private loan.  

My private loan caused me the most worry.  My husband had co-signed it and it was not dischargeable at death.  It also had a high variable interest rate in the 8's.  I called one day to inquire how high it could go and learned it was capped at 19%! If interest rates were to rise, I would be screwed.  I had other issues with this private lender too.  I had signed up for a 10 year loan but somehow was placed on a 15 year repayment plan.  It took me a year to find out that error and they refused to fix it.  They just told me to pay more to pay it off quicker.  Yet, no matter how much I paid, it seemed my balance wasn't going down. They also kept advancing my due date.  We had many a debate over whether they were properly applying my overpayments to principal or not.  

I eventually learned of SoFi from one of the commenters at Corporette.  When I first checked them out, I was intrigued but disappointed to see that they only offered refinance to graduates of certain schools.  The concept is alumni fund the refinance.  I entered my email address to be notified if my school ever became eligible.  About six months later I got an email that my school was now eligible and I could apply. I hear that most schools are now part of the program but they are still a bit fussy about who they will lend to.  You need a good job and to show you can repay.  

As I evaluated my options, I was dismayed to see that in the 4 1/2 years that I had been paying back my law school loans I had paid back less than $3,000 in principal on my private loan!! By contrast, I had paid $18,562 in principal on my Stafford loans. Something had to change.

SoFi offered me a five-year loan with no co-signer and a fixed interest rate of 5.375% (so long as I pay with automatic electronic payments, and 5.625% if I opt out) to refinance $72,222.  I jumped at the opportunity and I'm so glad I did.  Their customer service has been great.  The process was quick and they were even great at working around obstacles.  For example, my registrar was slow in responding to a request to confirm I graduated.  SoFi called and had me text a pic of my diploma on my wall instead.  Easy peasy.  Post refinance, they sent me a soft t-shirt and a wine/bottle opener.  As of January 25, 2015, I have made eight months of SoFi payments and my new balance is $61,736.23.  It is so nice to see that balance finally going down.  

Student loan refinance isn't for everyone.  I did lose some of my federal protections like IBR. However, IBR was not a program I was using.  SoFi offers unemployment protection and their network will also provide career assistance.  After all, they want you working so they get paid back! 

If you want to check out SoFi, use my link.  If you get approved, you get a $100 cash bonus.  Full disclosure, I get $100 $500 (new promo!) too.  However, I would recommend them either way.  I am saving a minimum of $17,000 in interest over the life of my loans! 

UPDATES - oldest update to newest update:

April 29, 2015 update:

I have had many people ask me if SoFi loans are discharged on death or bankruptcy disability* like federal ones.  The answer is yes.  Here is pdf that compares the benefits through SoFi to federal loans. [1/28/16 Update.  SoFi removed the pdf I linked from their website, likely because the interest rates might be a little dated.  I was able to post an archive to the link for now.  Keep in mind, interest rates might not be the same but I believe the benefits are**.]

I'm now one year in to my refinance and my new principal balance is $58,423.56.  That's with regular payments on my SoFi plan.  Right now all my extra payments were going to pay off what was left on my low interest undergrad loan. That should be paid off in a month!

Other SoFi program of interest.  SoFi has started a personal loan program too.  This can be used to pay off high interest credit card debt many students incurred while in school.  Luckily, I wasn't in that situation so I have not personally used this service.  This link is for the personal loan app only.  Use this one for student loans.  

I'm happy to answer any other questions!

*May 6, 2015 - oops, that was a big typo.  I meant to write disability, not bankruptcy.  They are likely still not dischargeable in bankruptcy. 

*July 27, 2015 Update - I changed the links for the student loan application.  With the new link, you get $100 and I get $500.  Awesome SoFi promotion.   The personal loan is still $100 each.  If you came here via the 12/15/14 Corporette post, please use the link on this blog page, and not the one on Corporette.  That one is outdated.  

*January 28, 2016 Update - SoFi is open to general investors now and not just alumni.  That might make it a little easier to get approved.

**May 19, 2016 update - One of my readers informed me that she thinks SoFi no longer offers forbearance.  Their FAQ still says they do but that page was written years ago.  I will reach out to them for clarification and update.  As of this date my student loan balance is under $30,000! It was so awesome to see a number that started with a 2.  Many people buy cars on a loan the size of what I have remaining.  I can really see the end of the tunnel now.

One other update on SoFi is that they are no longer relying on your credit score but rather review your situation as a whole.  That's a great update for grads that didn't have credit cards during college or otherwise build credit.  

** January 27, 2017 - the best update ever!! I paid off the remainder of my loans! All gone!  Thanks SoFi!