By Dr. James M. Dahle, Emergency Physician, 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.)
Get rid of the chains. Refinance (or go for PSLF) and pay off QUICKLY.
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:
† 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 October 31, 2021. Free course must be claimed within 90 days of loan disbursement. To claim free course enrollment, visit https://www.whitecoatinvestor.com/RefiBonus.
Student Loan Refinancing Disclosures
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!
I graduated residency in 2015 and started working as a hospitalist. Had 120k left after i had paid off a bunch with moonlighting income during third yr of residency. Refinanced with sofi in Dec 2015 at 2.2% from 6.8%. Went aggressive on the loans. Gone by January 2017. I felt a weight lifted off me. Saved thousands of dollars. One of my best financial decisions.
Well done. Doubt you’ll regret paying off those loans off quickly even at 2.2%.
My wife and I each had about 240k after graduating. I’m going for PSLF. She refinanced with SoFi into a 10 yr loan, paid it down to 7 years and then refinanced again. The second refinance got us down to a 2.335% on her loans by shopping around and bringing SoFi a competitors rate. It really made a huge difference!
http://pediatricianfindsfi.com/2018/04/02/how-we-scored-a-2-335-interest-rate-at-sofi/
I refinanced during the end of my fellowship once I had a contract in hand to a 7 year 3.6% variable rate. Enjoyed the customer experience and have been hammering away at the debt ever since. I should have $185,000 in student loans paid off in two years after finishing training.
I hate debt more than anything, but we are also on a time-line to move to get my little girl in a better school by the time 3rd grade starts for her. She is in 1st right now. So, that has provided a little more incentive to “get the job done” paying off our debt.
It really is good advice to refinance early and often. You can refinance as often as you’d like, and get the referral fee each time! So, that’s a nice thing to take advantage of.
Nothing like getting rid of debt to improve your cash flow is there.
This survey/post was a great idea! Always see questions about what rates others are getting.
Nice summary. I love the comparison of companies at the end. I was paying mine off during residency. My loan burden was not too high, $18,000, due to having the Navy pay for my last 3 years of medical school and getting a scholarship to attend Stanford for under graduate training. When we got married I was an intern. We decided to live on half of our income and save the rest. Each time one of my loans came out of deferment and required payments and interest, we just sent in a check and paid that one off. I left residency with less than $6,000 in student loan debt at 3% and around $50,000 of savings. My starting salary was about $21,000 and my ending salary was in the low $30,000 range. You can save in residency and pay off your debts too. I had fellow residents who felt they needed to spend all the money they made. They had no room for saving or paying down debts. You have options.
Dr. Cory S. Fawcett
Prescription for Financial Success
My wife finished residency in summer of 2017. We just refinanced 350k of her med school debt from about 6.8 to 4.2 with CommonBond. I picked them due to better rates and because they offered a hybrid loan: fixed for first 5 years then variable the next 5 years. Plan is to pay them off in 6 years at the longest so not too worried about the variable component.
One item that threw me off was the second I finalized the loan, CommonBond sent me to a separate company to service the loan. I wasn’t aware this would happen. It’s not a huge problem, and there is a way to go direct to the service company from CommonBond, but I did have to create a new account etc. Otherwise happy with my experience.
I used common bond as well and had the same thing happen. I bet they all outsource the “servicing” of the loan. I did mine variable rate from the start and the rate changed once. I ended up having a financial “awakening” after refinancing and ended up killing it off in less than 1 year…probably didn’t save much and thank goodness there weren’t “closing costs” or it wouldn’t have been worth it
It’s pretty common. If it is really important to you (and I don’t know why it would be) some of them hold these loans in house I believe. I can’t remember which ones off-hand though.
This is the only thing I wish I had done differently! I finished residency in 2014, loans gone within 3 years but would have been faster if I knew to refinance. Hope this post motivates others to refinance and pay them off quickly!
Im not sure why Firstrepublic bank doesnt get more press time but if you live close to one of the bank branches theyre going to give you by far the best rate (Im at 1.95% interest.) They give you 2% of the original balance back if you pay it off before 4 years. Cant be beat
First Repbulic does have the best rates, but they only lend to very specific geographic regions of CA, NY, MA, FL, CT and OR. Also, they have arguably the most stringent underwriting process of any company. As mentioned above, they require a percentage liquidity on the total loan amount in addition to good credit and a strong DTI ratio. Further, they cap their total loan amount at $300k and recently increased their rates. Also, they require you do your banking with them.
With that being said, I would absolutely recommend refinancing with them IF possible. I think their rates are still unbeatable. I also had a positive experience with their loan officers who seem quite knowledgeable.
Absolutely should be included in your search if you’re in one of the limited geographic areas where they lend. But just like everyone else, they can’t do everything for everybody and there’s a certain “match” that needs to be made between what a company is offering and what you need.
I’ve given them lots of press, but the reason you don’t hear about them more is exactly what you say- the geographic limitations.
My wife and I (both dentists) refinanced her student loans (~$524,000) just last month after weeks of communication with several loan companies (two of which denied us).
The application process was wildly different for each company as each touts its own unique, “proprietary” underwriting criteria. It’s also amazing/disheartening to see how much interest rates have increased over the last couple of months let alone the last couple of years.
There’s some sound advice here for people looking to refinance. I think the value of a strong co-signer needs to be considered as well. It can be the difference between approval/denial or good/okay interest rates. It certainly was the case for my wife.
In return for that lower interest rate, there is a huge risk associated with a co-signer, especially in the event of death or divorce.
Relevant information given that I just got quotes from major lenders servicing my region this very day. (I was prompted to do so both by this blog post’s timing and because my and my wife’s variable rate already-refinanced loans are resetting in May 2018 to higher rates, up ~1% since their inception.)
Here’s what’s out there from the majors as well as what was offered to me (good DTI, high credit score, 5 year fixed):
SoFi
Published rate range of 3.25%+.
Offered rate of 3.25% with a $300 signup bonus through WCI’s referral link.
Credible
Published rates: 3.15%+.
Offered rate of 3.97%.
CommonBond
Published rates: 3.14%+.
Application under review.
Laurel Road (née DRB)
Published rates: 3.37%+.
Preliminary rate offered of 4.15%.
Earnest
Published rates: 3.25%+.
Application under review.
Thanks for sharing. Be sure to update when you sign the contract.
Beware ELFI rates and WCI bonus offer. I had to go through a lot of back and forth to get them to honor the WCI bonus. Never had that problem with another lender. Also, they are a little bait-and-switchy on the rates. Luckily we were able to refi from their variable to fixed when they adjusted our rate up literally just days after funding the loan.
Nothing but good things to say about our experience with Earnest.
Darien Rowayton/Laurel Road was also a good experience on the first refi.
If other people have this issue with ELFI, I’d like to hear about it so please keep me up to date by email.
you can also re- refinance with earnest every 6 months –
Agree with the points above in the article. Some lessons I learned:
I refinanced 200k of loans immediately out of residency as I did not qualify for loan forgiveness. I had many loans in the 6-8% range and the rest in the 3-4% range. One additional loan I needed came at a higher cost at 10% and I paid that off separately (and quickly) keeping it out of the refi. In fellowship I did not have a lot extra money to put toward loans so I went for the lowest payment I could get. It was with Sofi, 5% (which was good being that I had so much at 6-8%), 15 yr variable though. I learned despite them telling me the libor rate is mostly stable and does not change quickly, it changed quickly. Over the course of fellowship year it was up to 6.4% at the 12 month mark (hey I guess I did sign up for variable after all, just thought it would be a slower change!).
With my first real adult paycheck, I immediately refinanced. I don’t know why sofi would not give me the best fixed rate (maybe debt to income ratio?) but I have always had stellar credit (has been >800 for some time now). Maybe it was because they already had my business? I applied with a couple other companies as well. Earnest initially also offered me a subpar rate (4%, despite their advertised optimal 5 yr fixed being 3.3% at the time). I simply emailed them saying I was looking to switch companies for an optimal rate and with now significantly improved income (compared to fellowship) and stellar credit, there was no reason I should not qualify for the lowest possible 5 yr fixed. And they agreed! I was surprised that it worked, but a simple email inquiring about why I wasn’t getting a better rate was all it took.
TL;DR – as everyone says refi early, even at the 5-6% initial rate that wasnt ideal for me, it was better than the many 8% loans I had; and also, be persistent and if you think you should be getting a better rate; call or email them! It works sometimes.
Just wanted to recount a negative experience with sofi.
Psych pgy 4 – graduating in 2.5 months
800 + credit, no red flags
80 K in student debt
Signed contract in hand for 250K per annum
They could not figure out if I should use the resident loan program or non resident loan program
Constantly bounced me between the two
Eventually settled on the resident program (despite my pending graduation and fully executed contract)
Gave me a 5 year variable rate around 4.5 and told me to reapply again in 2.5 months when I am an attending and I “might get a better rate, but it’s hard to say”
Sounds like an error to me. Signed contract is supposed to get you attending rates. Let me know if you want some help with it or if you just want to apply again in a few months.
Be careful with using the term “executed”. Technically a work contract is not executed until you show up for work the first day. YMMV.
Thank you Jim for posting this information. I refinanced with DRB as a PGY 3 two years ago into a variable rate loan, and noticed that the rate had been going up recently (now up to 5.3%). This post reminded me that I should shop around for new rates, and I just signed refinancing paperwork with SoFi for a 5-year variable at 3.2% (currently a PGY 5 resident; credit score 830). It only took two days for them to get approval and turn the paperwork around. Thanks for saving me a few thousand dollars per year!
Two days is pretty impressive. Thanks for sharing your experience.
Hello,
My husband and I are looking into refinancing his student loans. We have excellent credit scores, but were concerned that credit inquiries from the refinancing companies could lower those scores when we apply. Will applying, and the credit inquiries that I assume follow, affect our credit scores?
Thanks so much. We appreciate all the helpful information!
Alexandra
Yes. So if you’re about to buy a house, get your mortgage first, then refinance. But if you’re like most docs and have been paying your bills, this isn’t something you should be worrying about.
Hi Jim,
I’m refinancing ~$180k in loans from undergrad and med school. While filling out the application, I noticed $55k was consolidated at 2.7%. I also have unconsolidated loans; the majority of which are at 6.55%.
Thus far the lowest fixed rate I’ve been offered was 4.1% by CommonBond (SoFi offered 4.09%, but I decided to go with the company with a social mission). It seems I should NOT refinance the consolidated loan, right? Seems simple, but I just caught this and want to get it right. I am very new to personal finance. Thanks for all you do!
No, I wouldn’t refinance a loan from 2.7% to 4.1%.