Lately, I’ve been chased with offers to refinance my student loans. I swear I get a new direct mail piece from SoFi every other week. Most recently, I received an ad in my Facebook newsfeed from CommonBond targeted specifically at U-of-M grads. I’m a bit ashamed to admit the ad grabbed my attention and made me wonder if I could actually refinance for a better rate. I’m fortunate enough to be able to make my monthly loan payments, but I was tempted by the prospect of reducing the “second (more expensive) mortgage” in my household.
Resolved to look into refinancing options, I started at my law school’s financial aid website. I found familiar-looking information about programs for income-based repayment assistance directly from the school. (I benefited from one of these programs when I had to take a low-paying job initially after unexpectedly switching legal markets.) The programs had expanded since I graduated, however, so I made a mental note to check back each year to see if I fit into any of the plans. There were also helpful links to websites discussing federal loan consolidation and federal loan repayment plans.
I was really more interested in refinancing my private loans. These have a slightly higher interest rate than my federal loans and have more limited (read: used-up) forbearance options. A link on my law school’s website took me to information about private loan consolidation, including a chart of lenders offering this service. I researched a few of these programs, even applied for one, but ultimately decided none were a good fit. The really great rates like 2.65 percent were of course variable and not an option for a risk-averse person like me. I did find a fixed rate at 3.65 percent, which prompted me to start an application. After getting further into the application process, however, I discovered it applies only on a five-year repayment schedule. Not possible while we have a “third mortgage” (child care). Still, it may be a good option for those willing and able to bite the bullet and make bigger payments now. In the meantime, I’ll keep my fingers crossed for favorable student loan legislation. Or, as is more likely, winning the lottery.