Are you struggling with student loans? I know how difficult it can be. When my husband and I got married, we had a combined total of $117,000 of student loan debt. Being buried in six figure debt is overwhelming – I felt trapped and hopeless.
*Disclosure: This post contains affiliate links. Read our full disclosure policy here.
Nearly 50% of my net income at the time was going toward making the minimum payments (on a 10 year repayment plan) on my student loans.
If you also see a huge chunk of your income going toward your loans, I bet you’d love to find a way to reduce your monthly payment. One obvious way to do this is to extend your payments over 25 years. I don’t recommend this option because even though it will reduce your payments, you will pay much more in interest than you would on a 10 year plan.
I briefly considered switching to a 25 year repayment plan until I realized that I would end up paying over $100,000 in interest alone. I would also be 50 years old by the time I finally made my last payment.
What if there was a way to reduce your monthly payments and say goodbye to your loans sooner than you ever thought possible?
This CAN be done! The way to do this is through refinancing your student loans. When you refinance your loans, a third party buys your loans from your current servicer (Navient, Sallie Mae, etc.). This third party charges you a lower interest rate. While many student loans have 6-7% interest rates (or higher), refinancing companies such as SoFi offer interest rates as low as 2.795%.
Lower Monthly Payments
The most obvious reason to refinance your student loan payments is to reduce your monthly payment. The average SoFi member saves $288 per month. Imagine what you could do with nearly $300 extra each month!
Adding a few hundred dollars to your budget could help you stop living paycheck to paycheck. You could invest that money in retirement accounts, build an emergency fund, use it to make extra payments on your loans (so you can pay them off as quickly as possible), or use it as “fun” money.
Pay Less Interest
With a lower interest rate, you would pay less in interest over the life of the loan. When I first finished grad school, I was shocked when I realized that only half of my $816 monthly student loan payment was going toward the principal. The other $408 was going to interest. It’s crazy how much Sallie Mae profits off of students.
In contrast, a SoFi loan has a low interest rate, so you would pay much less in interest overall. The average SoFi member saves $22,359 total.
Release a Cosigner
When you signed up for student loans, you probably had a cosigner (typically Mom or Dad). When you refinance your loans, your cosigner would be released. This means that if for some reason you couldn’t pay back your loans, your original cosigner is no longer liable to pay back the debt.
Some people hesitate to refinance their public student loans because refinancing public loans turns them into private loans. Private loans lack certain protections that public loans have. For example, public loans have the options of deferment, forbearance, or income-based repayment during times of unemployment or serious financial hardship.
The great thing about SoFi is that they offer unemployment protection to their members. If you lose your job, they’ll temporarily pause your payments and they’ll even help you find a new job. They have career coaches who help SoFi members to advance in their careers and negotiate their salaries.
SoFi is an awesome company because they actually care about helping millennials to succeed financially. If you refinance your loans through SoFi, there are numerous perks, including:
Job placement assistance
Wealth advisors to help you manage finances and investments
The ability to consolidate and refinance both federal and private student loans
No origination or prepayment fees
A cosigner is not required
More About SoFi
SoFi is short for social finance, and SoFi is an unusual type of finance company. They take the social part seriously and believe strongly in helping millennials to succeed. In addition to helping young people pay off their loans sooner, SoFi also offers career and salary guidance to its members, community events, and a program for entrepreneurs.
SoFi isn’t limited to student loan refinancing. They also offer great deals on mortgage loans, personal loans, and wealth management services. SoFi is committed to long-term partnerships with its members.
Are you ready to pay less on your student loans? You could end up paying $300 less each month – $20,000+ over the life of the loan. Who wouldn’t want to shave $20k off their student loans?! Check out SoFi today and find out how much you could save.
Do you have student loans with a high interest rate? Would you consider refinancing?
Other stuff you might like:
How to Ditch Your Student Loans With the Debt Snowball
20 Things I Could’ve Bought Instead of Student Loans
The Solution to the Student Loan Crisis
3 Reasons Why Student Loans are Not “Good” Debt
My Personal Finance “Aha” Moment