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To refinance or not to refinance?
June 24, 2016
1:00 pm
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Mallory
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Hello! I’m seeking some advice as to whether or not I should refinance my private student loans. Here’s my scenario:

I went to a private undergrad without any financial support or advice from family. When my first year full-ride scholarship turned out to be non-renewable, I did the only thing I could think of at the age of 19 to do: I took out private student loans through Sallie Mae. Between undergrad and grad work, I ended up with a total of about $42,000 in private loans and $40,000 in public loans.

I refinanced my public loans about 5 years ago and am currently doing IBR and going for public service forgiveness (I work in higher education at a public institution). Over the last 18 months I’ve been attacking my private loans (now serviced by Navient) like crazy. I have five total loans with them: One at 8.75%, one at 6%, and three at 5.5%. All have a variable interest rate. I’ve been making 5x the minimum payment on the 8.75% one plus diverting any extra cash towards it and have paid it down from about $10,000 to almost nothing (I only have a month or two left until it is done). I’m now down to about $32,000 total between my remaining four private loans, most of which are at about 5.5%.

My question is this: is it worth it to refinance these with someone else? Obviously Sallie Mae/ Navient is where dreams go to die (I have yet to have a positive experience with them). If I do refinance, who should I consider? I’ve read your reviews about companies like SoFi, but the consumer reviews are pretty mixed. I currently make about $50,000/year, have over an 800 credit score, and have never missed a payment. I also have a mortgage with my husband (who makes an additional $55k annually) but we file taxes separately so that my IBR payments stay nice and low until they are forgiven.

Another question is this: is it possible that Navient/Sallie Mae either made a mistake or royally screwed me over by changing my rate to variable? I could swear that the rate was fixed when I took out the loan (even then I knew better), but I honestly do not remember as it was 10 years ago.

Thanks in advance! I look forward to any advice you can offer!

June 27, 2016
10:31 pm
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Indiana
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Forum Posts: 334
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May 3, 2014
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Mallory,

It sounds like you have put a well thought out plan into place.

I’ll start with your concern about changing your rate to variable. I’ve never heard of this happening, but I would not put it past them. If you are really concerned about it, you could file a complaint with the consumer financial protection bureau. That being said, interest rates are really low right now. At the rate you are eliminating debt, you may have it knocked out before rates go up.

Additionally, if you take your business elsewhere, the switch from variable to fixed will not matter. If you do choose to apply, I’d suggest waiting until that 10k loan is paid off entirely. Having that payment eliminated will make a big difference in your debt to income ratio.

As for the mixed reviews, I’d highly recommend shopping around. There are at least 10 different companies competing to provide the same service, so I’d suggest calling a few and getting a feel for what they provide, etc. You can even ask questions about any negative reviews that are concerning to you. If you don’t like the answers you get or it seems to good to be true, move on to the next lender.

Good luck!

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