Do you have a SoFi student loan? Did you know you can refinance that loan to a lower interest rate—either with SoFi or someone else? Well, you totally can.
And why would you want to do that? You can lower your monthly payments by over $250 a month by refinancing—or over $16,000 over the life of the loan. Here’s a look at refinancing—what it is, the benefits and drawbacks, and how to refinance your SoFi student loan.
What is refinancing to me?
Many student borrowers have a patchwork of student loans when they graduate—some federal, some private. They’re all serviced by different lenders.
This can lead to a confusing routine of managing and making payments to numerous loans every month.
When you refinance, you take out a new loan with a new lender. The lender pays back all your loans, and then issues you a single new loan for the total amount you owe. You get a new interest rate and new terms. And you get to make only one payment per month.
See also: Everything You Need to Know About Refinancing Student Loans
What are the pros and cons of refinancing?
The most important benefit of refinancing is that you get a new—preferably lower—interest rate. This can save you thousands.
You can also increase or decrease your term—either to pay the loan off faster or reduce the amount you pay per month. Depending on your financial goals, either choice could work really well for you.
You also get different perks. If you have federal loans, you lose the federal benefits: deferment and forbearance, income-based repayment, and student loan forgiveness. That’s one of the major drawbacks.
However, some private lenders offer flexibility if your finances change. SoFi offers a deferment program for those who qualify, for instance. Some lenders will let you make interest-only payments over the life of your loan, or will work with you individually if you need help.
It’s worth checking with any new lenders about their policies and programs in this area if you’re considering refinancing.
See also: How Long Does it Take to Refinance Your Student Loans?
Should I refinance through SoFi?
If you’re considering refinancing, SoFi is a strong choice.
They offer both variable and fixed interest rates, and those range from about 3.890%-8.074% (for fixed-rate loans) or 2.500%-7.115% (for variable rates).
They put a lot of effort into building a community and fostering careers for college grads. Their programs include a career advisory service, where an advisor helps you hone your resume and refine your personal brand.
They also support entrepreneurs by offering an accelerator program highlighting member companies. If you’re starting a business, they’ll give you a six-month deferment to get it started. And they even offer seed capital for select businesses.
Their member events go beyond careers, though. They offer cooking classes, wine tastings, yoga classes, happy hour meet-ups, cycle classes, and more in major cities throughout the country.
Should I refinance elsewhere?
Maybe. Even if you like SoFi, it’s worth it to shop around.
Here are some questions you should ask:
Can they offer a better interest rate than what you're currently paying? Lenders all have different criteria for deciding what interest rate to offer you. It’s usually based on your credit score, payment history, employment situation, and current debt load, among other factors.
How long is the term of the loan? A shorter term will result in a higher monthly payment, but you’ll get your loan paid off faster—while paying less interest.
A longer term will reduce your monthly rate, but you’ll pay more interest over the long term and take longer to pay back your loan.
What makes this lender stand out? Does the lender offer flexibility if you hit a financial snag? How socially responsible is this lender--and are they known for giving back to the community? Any other perks, like the ones for entrepreneurs and career-minded borrowers like SoFi offers?
What are the fees? SoFi doesn’t charge an origination fee, and most reputable lenders don't. But a few do, and it's always worth checking. Other fees are sometimes charged for late payments, providing loan verifications or histories, and other things. It's a good idea to ask for an itemized list so you aren't hit with surprises.
What are the discounts? Most lenders—SoFi is one—will take off 0.25% if you enroll in AutoPay. Some lenders offer additional discounts on top of that--for instance, if you open an account with them.
What do their customers say? Check out forums and review sites, and talk to people you know who’ve refinanced with specific lenders.
Refinancing with SoFi could be an excellent financial decision. But there are lots of other great lenders out there as well. Do some research and compare rates, and you should find the one that’s right for you.
Use our online calculator to find out how much you could save by refinancing. There's never been a better time to find out!
