Should I Refinance My Student Loans with SoFi?

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The student loan refinancing is the process of taking out a new loan to pay off your existing student loans. When you refinance your student loans, probably you qualify for a lower interest rate and a different repayment timeline, that could help you save money on interest or lower your monthly payments.

Student loan refinancing is only offered through private lenders, although you are able to refinance both private and federal student loans.

Should I Refinance My Student Loans with SoFi?

Should I Refinance My Student Loans with SoFi

If you are thinking about refinancing your student loans, you may have heard that interest rates are low, or at least lower than what you are paying. Probably you are looking to pay down your loans faster, or maybe you only want to lower your monthly student loan payments. If your student loans are federally held, you have not had to make payments since the passage of the CARES Act last year. Thanks to President Joe Biden’s executive order, the payment holiday, that includes 0% interest, has been extended through September 2021. However, the pause is finite (although being extended three times) while interest rates could rise before the holiday ends. Also, there is the option of consolidation to take into account.

According to the research, SoFi is one of the best Student Loan Refinance rates in June 2021. Below are the best Student Loan Refinance rates in June 2021.

Lender Best For Fixed APR Variable APR Loan Term Loan Amount
SoFi Overall refinancing 2.74% to 6.74% 2.27% to 6.39% 5 to 20 years $5,000–full balance of education loans
Earnest Flexible repayment options Starting at 2.59% Starting at 1.88% 5 to 20 years $5,000–$500,000
Laurel Road Students in health care 2.25% to 5.75% 1.64% to 5.65% 5 to 20 years $5,000–full balance of education loans
CommonBond Forbearance protection 2.59% to 6.74% 2.49% to 6.84% variable, 2.87% to 6.56% hybrid 5 to 20 years Up to $500,000
Citizens Bank Available discounts 2.69% to 9.15% 2.24% to 8.9% 5 to 20 years $10,000–$750,000
LendKey Comparing multiple lenders 2.95% to 7.63% 1.9% to 5.25% 5 to 20 years $5,000–$300,000
College Ave No fees 2.99% to 4.89% 2.94% to 4.79% 5 to 20 years $5,000–$300,000
Splash Financial Low rates 2.49% to 6.25% (without autopay) 1.89% to 6.15% 5 to 25 years $5,000–full balance of education loans

Why Refinance Student Loans with SoFi?

Here are some reasons why you have to refinance your student loans with SoFi:

  • Serious savings

You will be able to save thousands on average when you refinance to a shorter term.

  • Low rates

Low variable and fixed rate options will be able to reduce your interest rate.

  • Federal and private

You are able to consolidate and refinance both federal and private loans.

  • No extra fees

No application/origination fees or prepayment penalties.

  • Membership perks

There are membership perks such as career coaching, financial workshops, networking happy hours, and more.

How to apply?

Here are some steps to apply:

  • At the first step, you have to find your rate at SoFi.com/MiDental.
  • If approved, you are able to choose your rate and term.
  • Please upload identity, income, and loan information.
  • Finally, you are going to celebrate your savings.

What is Federal Student Loan Refinancing?

With SoFi, you are able to consolidate and refinance both federal and private loans. By the way, what is Federal Student Loan Refinancing? Well, in the text below, we are going to explain about what Federal Student Loan Refinancing is.

If you graduated with student loans, you probably have a combination of private and federal student loans. Direct Subsidized Loans or Direct PLUS Loans are examples of federal student loans. Interest rates on federal student loans are fixed. It is set by the government annually, whereas private student loan rates are set by individual lenders. If you are unhappy with your current interest rates, you are able to refinance your student loans with a private lender. However, when you refinance a federal student loan into a private loan, you are going to lose the benefits and protections which come with a federal loan, like deferment and public service-based loan forgiveness, that are worth considering. But, the new loan could mean paying less interest over the life of the loan and paying off loans sooner.

What are Potential Disadvantages to Refinancing Federal Loans?

When you refinance federal loans with a private lender, you are going to lose the benefits and protections that come with government-held student loans. Those benefits fall into some categories:

  • Deferment

Most federal loans will enable the borrowers to put payments on hold through deferment when they are experiencing financial hardship. Student loan deferment offers you to pause subsidized loan payments without accruing interest, while unsubsidized loans will still accrue interest. Student loan deferment allows you to reduce or pause payments, however interest usually accrues during the forbearance period. Some private lenders offer deferment, so you have to check lender policies before refinancing.

  • Special Repayment Plans

Federal loans will offer extended, graduated, and income-driven repayment plans that allow you to make payments based on your discretionary income. It is important to note that those plans usually cost more in total interest over the life of the loan.

  • Potential Student Loan Forgiveness

Some federal student loans are eligible for forgiveness. Common forgiveness programs are for teachers or public service workers, or those who have participated in an income-driven repayment plan for 20 or 25 years, depending on the plan.

Should I select a Fixed or Variable Rate Loan?

Most federal loans are fixed rate, meaning that the interest rate stays the same over the life of the loan. When you apply to refinance, you are probably be given the option to select a variable rate loan. Here is what you should know:

Fixed Rate Refinancing Loans:

  • Typically have a rate that stays the same during the life of loan.
  • Have a higher rate than variable rate refinancing loans.
  • Payments which stay the same over the life of the loan.

Variable Rate Refinancing Loans:

  • Typically have a rate related to an index rate.
  • Have a lower initial rate than fixed rate refinancing loans
  • Payments and total interest cost which change based on the interest rate changes.
  • Have a cap, or maximum interest rate.

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