By Dr. James M. Dahle, WCI Founder
Unlike these readers, I've never refinanced student loans. In fact, when I started this blog, I tried to ignore them because I didn't know much about managing them. Fortunately and unfortunately, I was forced to learn all about them because they play such a huge role in the financial lives of my readers. Unfortunately, it turned out to be surprisingly complicated. Fortunately, it turned out to be a great business move as I recognized just how beneficial student loan refinancing would be for my readers just as soon as DRB (now Laurel Road) started doing it in late 2013 and partnered with them.
White Coat Investor Student Loan Refinance Reader Tips
We're going to peer into the real lives of real WCI readers. Some gave permission to share their name, but most asked to remain anonymous.
Refinance ASAP and Pay Off Quickly!
Greg Floerman is a hospital-employed general surgeon who finished residency in 2015. He applied only with SoFi on the recommendation of his financial advisor and refinanced into a 15-year fixed loan because it fit his budget at the time for what he wanted to pay monthly. He recommends you “Look at all companies to compare rates. Do it ASAP. Pay them off in the shortest time possible.”
An anonymous attending finished residency and applied to Sofi and Laurel Road a few months later. She notes a better customer service experience with SoFi, but went with Laurel Road because of slightly better rates. She chose a 5-year fixed loan at 4.3% and paid it off over the next 2.5 years. Her advice? “Refinance ASAP! It wasn't that hard and so worth it.”
David Michael Fredric Anderson is an attending who applied and refinanced only with SoFi and chose a 10-year fixed loan for “a good mix of liquidity and acceptable rate” and feels like he can always pay extra if he wants. He recommends you shop around (even though he didn't) and advises there is no reason to pay 6.8% interest if you're actually paying off your loans.
Nicole Kohan is an optometrist who refinanced with SoFi “because I'd actually heard of them and they offered good customer service and rates.” She went for a 7-year fixed loan and recommends “Do it sooner rather than later. It's something that I procrastinated with a bit, but once everything was done and payments were automated, it's easy. I also got a small discount on the rate because I set up the automatic payments, which was nice.”
A private practice attending applied only to and refinanced with First Republic because “their rates were far and away the best.” She obtained a 15-year fixed at 2.95%. She notes “I would have preferred a shorter term, but my husband and I have a lot of combined school debt, and this is the only term they would approve. Once my husband’s loans are paid (he has loan repayment through a federal grant—will be paid in 4 years), we will throw more money at my loans.” She recommends that you consider First Republic Bank if you're in an eligible location and that you refinance ASAP if you aren't planning for PSLF. “I'm mad at myself for waiting 1.5 years to do it.”
Greg Reichert is a family doc in North Carolina who refinanced twice, once with Laurel Road to a fixed 4.5% a year out of residency and then again with SoFi when he switched to a 10-year variable loan. He says he took the variable loan “based on your post and my desire to get aggressive with it and not caring if the rate went up when I was lump summing extra at it. I wish I had gone with the 5-year but was worried about being locked into that higher payment.” His recommendation? “DO IT, it gets frustrating because it takes time but so worth it. DO NOT get overwhelmed with the loan vs invest question, get this thing done. I actually increased my payment to what my estimated payment would be after refinancing to convince myself I could afford it and that really helped.”
An emergency doc in Oregon is 3 years out of residency and has paid his loans down from $310K to $185K. He refinanced with Laurel Road and then First Republic Bank. He also applied to SoFi. He saw that First Republic “had the BEST rates but I was just outside of the First Republic Bank physical catchment area to qualify to refinance and was initially turned down. I live 110 miles from a branch location. After persistence and multiple phone calls and about 6 months in between, I convinced them to let me apply and was approved.” He got a 5-year fixed at 2.5% and recommends you “shop around, pay them off as fast as you can and try to live like a resident until they're paid off.”
“Finance Spouses” Are a Doc's Best Friend Getting Loans Refinanced and Paid Off Fast
Tara is “just the finance spouse” of a physician that graduated in 2019 from an EM residency. They refinanced with Earnest, twice actually, once right after medical school graduation in 2016 and again in summer 2017. She notes the process was “straightforward and easy. We planned to pay off the loans aggressively, so sliding the term length all the way left to ‘5 years' and variable interest rate instead of fixed saved us the most money. We refinanced [later] with the same company to get a slightly better interest rate for free, and to get a referral/signup bonus we missed on the first go-around, which they honored. By the way, nice of them to do that, they certainly didn't have to. We lived on rice and beans through medical school and residency to pay off the loan (in January 2018) and the lower interest rate was going to save us several hundred bucks even if it did creep up (as it did). By the time the rate equaled what our fixed rate would have been, we were already more than halfway done with payments.” She recommends, “You should probably do it right away, it saved us a lot of money. I recommend Earnest because I had a good experience with them but I'm sure their competition is similar. If you're not planning on paying your debts down ahead of schedule, I think it's a bad idea to choose a variable interest rate.”
This one also came from the wife of a physician. They refinanced after applying with Laurel Road, SoFi, and CommonBond on the recommendation of their advisor. They went with CommonBond because they offered the lowest rate. They chose a 20-year fixed loan because they also had 19% credit card debt. She notes that “I wish we had known about the recommendations tab on the WCI webpage and received a credit to apply to loans.”
You Can Use Multiple Companies
An emergency physician attending applied to CommonBond, Earnest, Laurel Road, Lend Key, Credible, SoFi, and Link Capital, noting it was “very easy to obtain estimated rates based on a soft credit pull.” He has refinanced multiple times and due to his large loan balance ($450K) he actually ended up with loans with multiple companies. The companies didn't like the severely lopsided debt to income ratio and so didn't allow him to put all of the loans into one big loan. He also discovered that he could get lower rates with smaller loans. At the time he emailed me, he had the following loans:
- CommonBond: $30K, 5-year variable, has increased from 2.67% to 3.37%
- Earnest: $192K, 7-year fixed, 4%
- Laurel Road: $173K, 15-year fixed, 4.75%
With his current $5K/month payments, he expects to get out of debt by 2026 but hopes to make more money sooner and pay them off quickly. His tip had nothing to do with student loans but more with income—“Beware of partnership buy-ins, whether sweat equity or cash” as they impede your ability to pay back loans, especially if you give up significant income to be in that partnership track and then it doesn't work out.
An attending couple, (rad onc and peds GI) refinanced their $190K and $210K (half of which is on track on PSLF) respectively. He applied with ALL the companies on the WCI site, at least up to the point where they do soft credit pulls. He ended with Laurel Road and she ended up with Earnest because they gave her the best rate. They plan to pay off their loans in 2-3 years so went with fixed-year loans due to “comfort of predictability” and worry about “worst-case scenario…given we already had large monthly payments.” They recommend “do it early in your attending life, if not sooner if able, to slow down interest accrual and to get away from FedLoan and their constant screw-ups.”
Shop Around to Get the Best Rate (Companies Will Fight Over You!)
Sara Barcia is an attending who applied to SoFi, Laurel Road, and First Republic. She refinanced the first time with SoFi, then again with First Republic for a lower rate, although they note they needed 10% of the loan amount (20% if joint ownership) in either cash or home equity to refinance with First Republic. She chose a 10-year fixed loan at 2.9% because she “needed the lower minimum payment in case I lost my job as I build up an emergency fund. I plan to pay it off in 4 years though.” She says that “Companies will fight over you if you are a good applicant. Get the best rate you can, shop around. Use referrals. I have made about $1,000 by using the referral through WCI and by referring others.”
Kaitlyn Le says she was “looking for an article like this one when I refinanced a few years ago” and was glad to participate. She is a pediatric hospitalist who finished training in 2015. She applied to Earnest and SoFi, refinancing first with Earnest in 2016 and then SoFi in 2018 because they “had the best online reputation with a user-friendly interface, easy access to live phone help, and low reported interest rates.” She took a variable 5-year loan to get the lowest rates available since she “had the ability to pay the loan off at any time” but is preferentially funding retirement accounts right now. Her initial rate of 2.2% has increased to 2.5%. She recommends “Don’t delay! It initially seems daunting, but really takes only about half an hour of your time to look into a couple of online refinancing options, and you can apply online. The difference between a few percentage points at face value seems insignificant, but when you crunch the numbers, refinancing a 7% loan to a 3% loan can mean the difference of thousands of dollars EACH YEAR on a $200K loan!”
A new attending applied to SoFi (“because their advertising is omnipresent”) and Earnest (“because a friend had refinanced with them”) and went with Earnest because the rate was lower (3.5% for a fixed 7-year). Due to the low rate, he actually revised his original plan (pay off his $240K loan in 2-3 years) but still plans to pay it off at least a year early. He liked Earnest's “slider tool” that allows you to see the APR for a given payoff term length. Since there was a special rate for 7 years, he took that. He also didn't want to overcommit to a short loan length with a baby on the way and a 15-year mortgage. He notes that the amount you're originally approved for may differ from your actual debt load due to uncapitalized interest, so watch out for that. He says “Overall, this was a pretty low-stress undertaking…I thought it would much worse (piles of papers like mortgages).”
“Saildawg” from the WCI Forum, applied widely 3 years ago when he became an attending – Credible, Laurel Road, Earnest, SoFi, and Lendkey. The first time he refinanced with Laurel Road (5-year fixed), and then refinanced the remaining $80K two years later with Lendkey (5-year variable) “for the variable rate and another sign-up bonus.” He did a fair amount of complex credit card and gift card “hacking” in order to get even more benefits out of this whole process (sent me a three-page article about it). He recommends “Make it a priority to pay off your student loan quickly. Refinance for the best rate and signup bonus. Apply to multiple companies as their rates can be quite different.”
Alex M is an attending who had a financial advisor who recommended he apply with SoFi and Laurel Road. He went with a fixed 5-year from Laurel Road because they had the lowest rate. His recommendation? “Shop around!”
Mindy Juan may win the most persistent award. She was rejected completely at SoFi and Earnest before CommonBond not only approved her but offered her a great rate. She also loved the charitable mission of CommonBond. When asked which loan she took, she said:
“Variable 5-year. I’m betting that interest rates won’t rise too much in the next 5 years, and I’m hoping to pay these off sooner than that! The rates were lowest for this type of loan, and I can afford the slightly higher payment. If you can afford the payment, refinance at the lowest rate! It’s like free money (compared to staying where you’re at). Another thing, watch out for the hit your credit score might take when you open up a big brand new loan and the years of good credit history you had with the old loans disappears. This is important when timing the buying of a house, for example.”
Refinance Early and Often
An anonymous dentist 1.5 years out of school has already refinanced his student loans three times. This last time he applied with SoFi, Earnest, and CommonBond. He applied to Earnest “because I had previously refinanced with them and found their customer service and servicing interface to be top-notch.” He applied to the other two “mainly because of hearing good things about them, mostly from sites like WCI. I did not apply with Laurel Road, as my loan was currently with them.” He chose CommonBond based on the lowest rate “this go around” and chose a 15-year fixed loan. “I'm definitely paying it off much faster than that, but I knew I was going to possibly change jobs soon and wanted the flexibility of lower payments should there be a period of unemployment.” He recommends, “Apply with several and then take the best rate. Definitely do it through WCI so you get the bonus.”
Brian is an attending anesthesiologist who “loves WCI and is happy to be able to contribute a little bit.” He initially refinanced with SoFi into a 4.8% 10-year fixed loan, and then a few months later refinanced with First Republic to a 10-year fixed at 2.6% because “they had the best rate available of any company I was looking at. They did require some cash reserve on hand in order to be approved but they were super easy to work with and were always ready to help. They have one of the best customer services I have ever experienced.” He chose the 10-year fixed because “it was a good balance between manageable monthly payment and acceptable length of payment for me. I didn’t want to go as long as a 15-year term.” He recommends “make sure your credit score is decent. Make sure you have some savings on hand (I think I needed to have 15% of the total refinancing amount in savings to qualify) so you can get approved for competitive rates. Shop around.”
Adam Powell is a new anesthesia attending who refinanced twice during training, as an intern into a 4.25% 15-year fixed and later as a fellow into a 2.9% 5-year variable. He chose Laurel Road for the best rate and the low payments. He says “Do it ASAP, I've saved over $20K in interest alone during my training, and that's before any compounding.”
A doctor in his senior year of residency chose Link Capital due to the personal attention of a representative who called him up a couple of days after he started but didn't complete an application. “She was knowledgeable and detailed in her responses to my questions. It was this coupled with lower rates that made my decision fairly easy.” The residency loan was a 7-year fixed at 4.42% in late 2015. He then refinanced again with Link Capital as an attending, a 5-year fixed at 3.62%. About the fixed vs variable decision, he says, “I probably could have (and should have) selected a variable loan, but I enjoy the comfort of knowing exactly what my obligatory payment will be and can choose the add extra payments as I see fit. Mathematically, I would have come out slightly ahead with a variable loan as I am on track to finish paying off the loans in about 2.5 years from residency graduation.” He recommends, “Apply to multiple companies at the same time (at most within 30 days for all of them to ensure only one hit to your credit). Once you have the rates available to you, run the calculations to see how much interest you are likely to end up paying in terms of real dollars. Once you know how much each loan will cost, you can make a choice based on cost and other factors, like the ability to make your monthly payment using a credit card so you can get cash back or earn points along the way. (Hint: You can do that with Aspire Loan Servicing, which is the company that LinkCapital sends your loan to for servicing.)
Take Advantage of Trainee Program
Chris Tang is a brand new pediatric surgeon who refinanced just a few months ago as a fellow. He only applied to SoFi “due to the good reviews and the recommendation of a friend.” He was very happy with the trainee program ($100/month) and the 6-month “grace period” after attendinghood where you can continue to make trainee payments. He took a 15-year fixed, because between his wife and himself, they owe $650K and his income will be ramping up slowly. They were still able to knock about 2% off their previous rates. He recommends “Don't be afraid to refinance! I was basically just going to suck it up after training with Navient, but my co-fellow said he had a really easy time refinancing, so I figured why not. I was in forbearance before because Navient didn't have the grace period, so all that interest was just racking up while I was in training. At least this way, I get a few months after graduating fellowship to get my financial feet under me to start paying down the loans.”
Pay Off Student Loans Aggressively (3-5 Years)
Sean Britton, a dentist in South Carolina, graduated with $350K in student loans and bought a practice right out of school. He consolidated his loans at 7.12% and started repayment in January 2013 and had trouble refinancing because not many companies were doing it. He was turned down twice due to a bad debt to income ratio but finally was able to do it with Laurel Road in early 2015 when he had $185K left. He paid off the loan in 2017, 5 years after graduation, and now puts most of that payment into index funds. He applied with SoFi and Laurel Road and only Laurel Road agreed to refinance him. He went with a 5-year variable loan (2.48% initially but increased to 3.2%). “I went with the lowest rate knowing I was going to pay it off early.” He recommends, “Dentists should always refinance unless you don't have a stable job or at some point would like to go back and specialize.”
A sports medicine doc and his physical therapist wife paid off their loans last year. He is 3.5 years out of training and refinanced with Earnest because he liked the ability to choose a customized repayment interval. He used their slider bar and found the best combination was “something like 6.2 years to give us the lowest payment in times of a lean quarter (winter and spring are lower-earning quarters in sports medicine) and nearly the same rate as a 5-year loan.” They paid off both loans in about 3 years using the “extra” income from his higher-earning quarters and appreciated the flexibility of Earnest that allowed him to do that with the best possible terms. They chose a “fixed rate because it was minimally different than a variable rate at the time, though a variable rate was certainly reasonable.”
Be a Little Uncomfortable with Your Payment
Andrew (a trauma surgeon) and his wife (OB/GYN) are just a couple of years out of training. They went with SoFi due to the ease of application and most competitive rates. They initially chose a fixed 10-year loan, then a year later refinanced both to fixed 7-year loans at 3%. Why fixed? He says he wasn't willing to tolerate much fluctuation in the rate and blames his choice mostly on a lack of knowledge on the subject. He recommends:
“Refinance early and often if a better deal comes along. Make your terms as short as you possibly can. Choose a payment that is a little uncomfortable and make your budget conform to paying the debt, not the other way around.”
Andrew had emailed me for advice a couple of years earlier and then subsequently read the book, followed the podcast, and even took the Fire Your Financial Advisor online course.
“After years of trying to find someone else to manage my finances I decided to handle the task myself, and as my knowledge increases, my anxiety about debt and wealth management decreases.
We started with around $1.1 million of collective school debt after residency and fellowship training. I had even carried about $50,000 of undergraduate debt through medical school, residency and fellowship….Every quarter we would go to the financial aid office and sign off on some new notes and honestly be told not to worry because hey, we were going to be doctors and be fine. In residency we even consulted with a physician specific ‘advisor'. We had started to make minimal monthly payments which we were told not to do because they were so small on a resident salary that they were ‘inconsequential'. He said to treat the loans like a mortgage and pay them off over 30 years once we get our attending salaries. Wow. Our loans had interest rates ranging from 4-7.5%.
Fast forward to now, 3 years out of training and making a household income of >$500,000. We live off her salary and mine goes to taxes, tithing and student loans. I've grown to despise debt and the flippant attitude that we had for so long. I am far from perfect but working to educate myself and get better every day. After searching for someone else to take responsibility for my finances for so long I feel like I am taking the steps to own my own decisions. Whew, sorry for the long post. It feels a bit like your first time at a support group.”
Let a Variable Loan Motivate You to Pay Off the Debt Quickly
An attending read through the WCI site and then waited 6-12 months before applying, which allowed her to pay down credit card debt and build an emergency fund to improve her credit score. She applied to Laurel Road and SoFi “because at the time they seemed to have the best rates and the most feedback on the WCI forums.” She went with SoFi because “the application process was so simple as far as uploading all my documents using photos on my smartphone and they got back to me fastest.” She chose a 5-year variable loan and notes “This felt like a scary decision but has definitely turned out to be the best decision for me. After looking at how fast the rates could increase and the amount of debt I was refinancing I knew I would be able to pay it faster if the rate started to go up. Instead, I feel like knowing that the rate can go up (and it has on average every two months) has kept me motivated to pay the debt down faster. It has just barely reached the rate that I was offered on a 5-year fixed loan but in the interim I have paid down over $60K over the past 18 months and so even if the rate rose quite quickly now it is exceedingly unlikely that it would be high enough that the variable rate would have been the wrong decision.” She recommends paying attention to student loan management as an intern and relates this sad tale:
“I ended up doing a 5-year residency and a 2-year fellowship and then took a job in a public university. I would literally have saved myself ~$80K if I had been doing IBR all along but I literally had no idea that [PSLF] existed so the biggest advice would be to young residents to really investigate the pros and cons of repayment strategies and the long term implications ASAP. When considering refinancing taking the extra time to understand the difference between fixed and variable rates and rate increases and what that means to your individual situation. Equally important is understanding your own risk tolerance. It might sound dumb but [being] relatively OCD in my professional life makes a variable rate feel like significant risk even though I know that it made the most sense for me by the numbers. That being said that feeling of not having control has probably been a big motivator in paying down the debt as quickly as I have.”
Lessons Learned: What Are the Best Ways to Refinance?
There are some lessons that can be learned here from these personal experiences:
- Don't refinance if you're going for PSLF (and figure out if you should be going for PSLF).
- Shop around.
- Refinance early and often.
- 5-year variable loans have the lowest rates but the most risk. Mitigate that by living like a resident for 2-5 years after training.
- Pay off loans within 3-5 years.
WCI Student Loan Refinancing Deals
Here are the current WCI deals for refinancing, including several newer companies not mentioned in this post (but who are refinancing loans for WCI readers) that you should include in your search:
Variable 5.09% - 8.99% APR
Fixed 3.74% - 8.99% APR
^Up to 0.75% off rates
Variable 3.99%-11.67% APR
Fixed 3.99%-11.87% APR
^Best Rate Guarantee
† Bonus includes cash rebates and value of free course. Borrowers who refinance more than $60,000 in student loans using the WCI links will be enrolled in The White Coat Investor’s flagship course, Fire Your Financial Advisor for free ($799 value). Borrowers will still receive the amazing cash rebates that WCI has negotiated with each lender. Offer valid for loan applications submitted from May 1, 2021 through June 30, 2023. Free course must be claimed within 90 days of loan disbursement. To claim free course enrollment, visit https://www.whitecoatinvestor.com/RefiBonus.
What do you think? Which student loan refinancing companies did you apply with and why? Which company did you end up choosing? How many times have you refinanced your student loans? What type and length of loan did you go with? What tips do you have for those considering refinancing? Comment below!