I was reminded once more this week while speaking to a group of physicians that there are many, many graduating residents out there who owe $300K, $400K, or even more in high-interest student loans. If you're not going to be going for Public Service Loan Forgiveness, then it would behoove you to refinance those loans and then live like a resident until they're paid off.
I've written before about student loan refinancing. You basically couldn't do it before 2013, at all. However, since then there have been a handful of players come into the market willing to take your 5-10% loans and turn them into 3-5% loans. Better than a kick in the teeth, right? I've been so happy to see these companies pop up, that I've tried to get as many of them as possible to advertise with me on the blog. Although every reader (especially residents) doesn't qualify to refinance their loans, many do and should. It's really a win-win-win situation. The companies make money, the doctors save thousands in interest, and I make a few bucks by selling ads or through affiliate agreements. [Full disclosure: I have a financial relationship with all of the companies mentioned on this page.]
One of those companies, Social Finance (SoFi), surprised me this last week when they announced they were lowering rates again. For the first time since 2003 or so, when my cohort got out of medical school, it is actually possible to refinance your loans to a rate under 2%, and I think that's pretty exciting. Sofi's new rates are as follows:
| Period | Fixed | Variable |
| 5 Year | 3.5-5.5% | 1.9-4.2% |
| 10 Year | 4.6-6.5% | 2.7-4.5% |
| 15 Year | 5.1-7.0% | 3.0-4.9% |
| 20 Year | 5.4-7.2% | 3.3-5.2% |
[Update 2/2017- These rates are now out of date on this nearly 2 year old post. You can find current SoFi rates here. Also, their disclaimer. All rates, terms, state availability, and savings calculations are current at the time this article was written. Rates, terms, state availability, and savings calculations may update in the future. For current rates and terms visit SoFi.com]
I was so excited I tweeted it out and even mentioned in the monthly newsletter. My contact at Darien Rowayton Bank quickly wrote back to let me know that they also had lowered rates recently. (No surprise as this marketplace is pretty competitive.) Here are their current rates:
| Term Option | Fixed APR* | Variable APR* |
|---|---|---|
| 5 – Year | 3.50% – 4.75% | 1.92% – 3.68% |
| 10 – Year | 4.50% – 5.50% | 2.63% – 3.88% |
| 15 – Year | 5.00% – 6.00% | 2.98% – 3.98% |
| 20 – Year | 6.25% | 3.98% |
Then, two days before this post was supposed to be published, I got an email from blog advertiser CommonBond. They've gone ahead and lowered rates too.
Here are their new rates:
| Term | Fixed | Variable |
| 5 Years | 3.89-5.99% | 1.92-5.29% |
| 10 Years | 4.74-6.49% | 3.41-5.29% |
| 15 Years | 5.62-6.99% | 3.71-5.54% |
| 20 Years | 5.99-7.24% | 4.29-5.67% |
CommonBond also has the hybrid loans (fixed for 5 years, then variable) I wrote about recently and are now lending to a lot more physicians, dentists, accountants, engineers, attorneys, healthcare executives etc.
New Blog Advertiser CU Student Loans has also lowered rates recently. They only offer 15 year variable loans, but the rates for that particular loan are competitive with on the low end at least. (2.76%-8.01%.) They also work with group that offers some other options, such as a 15 year fixed loan.
Although it sucks to have a savings account paying less than 1%, at least this era of historically low interest rates gives a chance for graduating docs with massive student loan burdens to lock in the low rates my classmates got back in 2003. Please don't miss it. Also keep in mind that YOUR rate may not be lower with any given lender than with the other lenders, so it pays to look at all of them. But nevertheless, this is a drop of up to 0.75% across the board. Take advantage while you can. Also, keep in mind if you refinance with SoFi or Common Bond through the links on this page, not only do I make some money, but they'll pay you $300. DRB will also match that $300. I suggest you put that toward the principle on the loan.
Check Your Rate with SoFi today!
Refinance with DRB today!
Refinance with CommonBond today!
Refinance with CU Student Loans today!
Have you already refinanced your student loans? Why or why not? Are you glad you did? Which company did you use? How was your experience? Comment below!
Thanks for posting this!
So I have ~$150,000 of FedLoan Subsidized and Unsubsidized loan @ 6.25% that is associated with the Public Service Loan Forgiveness program. I also have ~$36,000 of ECSI loan (private loan my med school offered) @ 8.0%. I have been making IBR payments for the Fedloan loans to reach the goal for forgivenss, but I have been deferring the ECSI loan payments as they consider residency/fellowship an equivalence to a grace period and will allow to delay payments until after training with no penalites. I have another 1.5 years of fellowship left.
My question is, if I refinance with, let’s say SoFi, will I need to begin repayment right away, or do I also get a grace period until after training? If I need to begin repaying now, would it be better to refinance now vs. wait to refinance until closer to the end of fellowship, knowing that the interest rate could be higher?
Another interesting program is the NIH Loan Repayment Program. The basic concept is that if you participate in qualififed research for 2 years (from any location), NIH may repay up to $35,000/year of student loans, including academic institutional loans like ECSI (from my understanding). In my subspecialty, you have to do research anyways, so I was thinking about enrolling in this program after training. Not sure how competitive this is though! I’m also not sure if I could consolidate with SoFi now, and eventually enroll for the NIH program. This would create a layer of safety if the NIH program does not approve to repay.
http://www.lrp.nih.gov/about_the_programs/index.aspx
The general rule is don’t refinance is you either 1) Expect forgiveness or 2) Need lower payments for a while. For this reason, fellows probably shouldn’t refinance most of the time until graduation. Besides, you probably don’t qualify until you hit your attending income.
Dr. Dahle- I am 5 months out from finishing fellowship and have been debating when to apply to these companies to refinance my $170,000 in loans. My loans are in forbearance for this year (I’ve been paying the interest and even some of the principal) so my understanding is if I refinance now the repayments still wouldn’t start until the forbearance ends (at the conclusion of my fellowship). I have a contract signed for a $350,000 base salary so I would think I would qualify for a decent rate. Is this incorrect? Should I go ahead and apply now or just wait it out 5 more months? I guess if i do a variable rate but don’t start repayments until August there is no benefit to refinancing now. Only benefit would be in getting a fixed rate? Thanks for all you do. Definitely will link both sofi and drb from your site whenever I do refinance
1) Once you refinance any forbearance goes away. That’s from your government loans. If these companies are going to loan you money, they want to be paid for it, starting the first month. No big deal. Just don’t refinance until you finish fellowship.
2) You don’t necessarily get a better rate for having a high salary. However, if your salary to debt ratio is too low, they just won’t refinance you at all.
I’d wait a few more months.
I have been waiting to do this until I’m done with residency so I can take advantage of a physician home loan. My concern about refinancing is that my loans would turn into private loans, which would alter my debt-to-income ratio and affect my future mortgage rates. Is this the case or would I be okay to do this now?
Having interest rates this low would alter how quickly I pay them off. Some of these rates seem better than mortgage rates! I would need to do the math, but it seems it may be wise to divert more to retirement accounts because they historically have higher rates of return than the interest rates listed here.
Good points. I doubt refinancing is going to hurt your getting a doctor mortgage loan.
I would say that refinancing your loans could hurt your chances for getting a doctor loan. Many mortgage companies don’t count loans in forbearance against your debt to income ratio, since the refi companies expect payment immediately then your DTI will surely go up fast. However, if you live according to the WCI code (like a resident) and buy a nice little home for less than $250,000 (as a new attending) then you should be able to do both.
Keep in mind that once you’re an attending you won’t be able to deduct the $2,500 / year in student loan interest on your taxes. Same goes for PMI payments on your fancy mortgages. For me, as an attending 4 years out of residency with over half of my student loans paid off (the stuff at 6.8% apr) and over $100k equity in my $450k house, I’m trying to find a home equity loan that would be something like a $80k 5-year Home equity loan at 4%, which after taxes would be like a student loan at 3%, which would be pretty sweet. Then I could use that loan to finance my next car and also pay down $30k – $50k of student loans that are at 5% apr. mathematically, this is what I’m still looking for, and not really seeing in this space. I guess I need to talk to my mortgage broker, not student loan refi companies.
Beware the AMT. If you get hit with it your up to $100k in HELOC deductions (for non-home improvement costs inclusive of buying a car and paying off student loans) vanish in smoke.
Good point.
WCI
I’m assuming there’s some income driven approval for student loans, like any other loan out there.
As a resident, is it reasonable for me to even attempt applying to refinance my ~200K in student loans on an income of ~54K per year as a resident? Even my FICO > 750 probably won’t help approval with that debt-to-income ratio!
I’d love to take advantage of these lower rates (and help you out in the meantime with a few bucks for helping me out with this blog), but I can’t see how on earth I would be approved.
Thanks
No, it’s not reasonable. I won’t loan you money and neither will anyone else. Besides, how will you afford the higher payments? Sure, everyone would like to take advantage of these rates, but are you really willing to give up lower PAYE/IBR payments plus the possibility of PAYE/PSLF forgiveness? Probably not. Besides, they won’t loan you money because your DTI ratio is terrible as a resident.
Even for those not going for PSLF, you get a 3 year subsidy on from the government the first 3 years of repayment under IBR/PAYE on your subsidized loans.
Yes, but those are disappearing fast. None for medical students since 2012. Those graduating this year only got them their first year.
Many residents have subsidized loans and will continue to get them during undergraduate studies. Most residents I work with have between $25,000 and $50,000 of subsidized loans. Yes, this is a minority of the total loan portfolio but when only a portion of the IBR/PAYE is applied to this amount it equates to free money the first 3 years of IBR/PAYE. I created a spreadsheet if you want to take a look. Remember the first year of IBR (if done right) is $0 per month and the 2nd year is roughly $30-50 per month.
I disagree and think it’s worth a shot. If you have no other debts and monthly obligations, you could probably meet the debt to income ratio. I want to say DRB has a ~45% requirement. $54k is ~$4,500 a month, and at 4% a 15 year note on $200k would be $1,479, or 32%.
If you can get a cosigner then it also should be pretty easy as well, depending on the debts of the cosigner.
Now, if you have a car loan, a home loan, etc. then you’re probably not going to clear the requisite ratio. And some companies like SoFi don’t want to talk to you if you’re still a resident.
I have been reading your posts for several years, first on Bogleheads forum, then here. Your insights and information are exceptionally helpful.
My situation is this, having 70k (at 5.6%) to pay in student loans (from original 350k), I am in a position to pay this off completely in 2015. I am 10-15 years away from retirement (went from VMD to MD in my 40’s). Does it make sense to refi for 5 years at a variable rate and put the 70k instead in a taxable account meant for retirement (all pre tax accounts are maxed out)? A home equity option is not in the cards as housing prices in my state have yet to rebound. Thanks!
Pay off your debt in 2015.
Don’t linger with it.
I’d probably just pay them off this year. Mathematically there is a good chance you will come out ahead investing on margin like you’re talking about, but there is also the possibility of coming out behind. I certainly wouldn’t invest on 3-5.6% margin. Maybe 1-3% like my after-tax mortgage rate.
WCI, this is great news, thank you for posting. I wish I could get my government backed loans to be at these low rates.
You mentioned above that a resident might not even qualify for refinancing so I was wondering if you knew what the criteria esp debt/income ratio required for qualifying. I am also assuming that as a resident even if your debt/income ratio is high and you qualify, you would probably get the higher rates, rather than the lower ones, even with a great credit score?
How about married residents, do they consider the combined family income?
Yes, they’ll look at your combined income, but you still probably want to wait until residency graduation to refinance. Each bank has different criteria and they don’t really publicize them. You have to apply to find out!
DRB will consider combined income if the other spouse co-signs. However the cosigning spouse then is liable for that debt, so he/she better be pretty confident about that relationship 😉
Sofi will not talk to you if still a resident, even with a cosigner.
I have about 400,000 in loans with varying interests rates (some as high as 8.5). While in residency someone recommended a company that would take care of them for you. Needless to say my loans were all consolidated so now I’m stuck as you can’t do that again from what I’ve been told. I’ve tried to see about IBR but through the screening process they said I likely won’t qualify. Any thoughts? I looked into private consolidation but most seem to have a cap on the total amount of loans you have. I feel like you need either a business degree or someone dedicated just to your loans to get through all of this. Any thoughts?
Both Sofi and DRB say on their website that there is no maximum amount of qualified loans to refinance. Its certainly possible that the amount is still contingent on your income/credit/etc, though. Sofi explicitly states: “Whether you previously consolidated federal loans through the government’s Direct or FFEL consolidation programs or you did a “consolidation loan” with a private lender, you can still apply to refinance the consolidated loan through SoFi”. (From the FAQ section of their webpage.) I haven’t refinanced yet since I’m still in residency, but good luck; I hope this helps!
I consolidated during residency and refinanced with DRB after finishing residency last summer. I don’t know if any of these three have a cap on total amount, but you do have to qualify based on debt to income so 400k might be too much unless you’re in a very high paying specialty. I qualified for 210k on a salary of 172k at the time (also factoring in a modest mortgage, etc in debt).
You can still refinance even if you previously consolidated. They may not refinance you if you have a high debt to income ratio, but it’s definitely worth looking into, especially when you’re at 8.5%.
Be sure you’re not passing up any PAYE/PSLF. I’d be looking very carefully at that if I had $400K in loans.
Courtney,
Curious as to with whom you consolidated? Was it through http://www.studentloans.gov? If so, your loans should be federal students loans eligible for IBR, possibly PAYE. You can verify if you have federal student loans at http://www.nslds.ed.gov. If there outstanding balances listed on http://www.nslds.ed.gov, contact the loan servicer(s) to discuss repayment options.
WCI, I took your advice previously and refinanced with DRB last summer, and I’m glad I did. I got a 10 year variable at 3.4% which has stayed at that rate since the 90 day LIBOR hasn’t changed. My income has gone up since then thanks to moonlighting and I want to start making double payments soon once I’ve paid off a small credit card debt. My goal is to have the student loans paid off in 5 years or less but keep the flexibility of paying less if needed for unexpected expenses since my emergency fund isn’t very big yet. Given that rates have dropped this much, do you think it’s worth refinancing again to get a lower rate? I’m not sure if I would stick with the variable or convert to a fixed rate.
Probably not worth it. You can ask, but if you want a 10 year, you’ll probably end up with a similar variable rate. But it isn’t like there is a fee to refinance them. Plus if you go with SoFi or DRB you may get another $300 for your trouble (and I’d get another commission!)
I am fresh out of residency. I paid a third if my income towards the $160k in residency and was able to keep my total debt at only $150k by graduation. In the past 6 months we have continued to live like residents and now are down to $98k. Not knowing anything about refinancing other than it would lower my interest rate, would it makes sense to refinance the remaining $98k at 6.55% if I will have it paid off in 10 months? Or are there refinance fees, early repayment fees, too much headache for less than one year of change, etc, that would make it better to stay where I am. Either way it will be paid by the years end.
No fees. If you can go from 6.55% to 2%, you may save something like $2K. If that’s worth it to you, then refinance. If not, then don’t.
Just a little “Buyer Beware”: I know a lot of physicians who refinanced into these private loans who heavily regret the decision since it takes them out of the Loan Forgiveness program. If you think you may end up at a 501(c)(3) hospital, you may want to keep your options open. The difference is hundreds of thousands of dollars.
You know “a lot” who didn’t know they wouldn’t be eligible for PSLF and PAYE forgiveness after refinancing?
IN CASE ANYONE HAS MISSED THIS ALL THE OTHER TIMES I HAVE WRITTEN ABOUT THIS. YOU ARE BETTER OFF NOT PAYING YOUR LOANS BACK AT ALL THAN PAYING THEM BACK COMPLETELY AT A LOWER INTEREST RATE.
Definitely do not refinance until you know whether or not you will be working at a 501(c)3.
Many docs on the floor regret having gone to a private lender because they didn’t know they would come to work for a non-profit. They simply jumped at the first opportunity to get a “great rate” (which you emphasized in your post today!). So while others talk about PSLF and IBR, they grumble.
When does it become clear that you won’t go to a 501(c)(3)? There are residents here saying they want to refinance now. Some one year out, others five years… It is a harder decision than you make it out to be.
It’s easy for a resident- don’t refinance. They won’t refinance you anyway. It’s easy for a doc working for a 501(c), don’t refinance. But for a doc 1 year out not working for a 501(c)3 who makes $300K and has $200K in loans? That’s not a particularly hard decision.
So at residency graduation- you look and see if your job is 501(c)3. If it’s not and you think you might change to one, then sure, hold off. For everyone else, refinance.
Obviously I agree with your resident scenario, don’t refi because you can’t refi. However, I don’t agree with the attendings at 501c. It depends on how much they owe, how much they make, and how long they have been in IBR/PAYE. There are many attendings at 501c’s who won’t sniff loan forgiveness but would do much better with a refi and vice versa.
I disagree. If you run the numbers, you will see that if you can qualify for forgiveness at 10 years (4-7 years after getting out of training), you should go for it.
My point is that for attendings at 501c’s it all depends on how much they, how much they make, and how long they were in IBR/PAYE before starting the attending job.
Here are two cases that I have:
1)MD has $225,000 in loans, never did IBR during training, is looking at 501c making a total of $275,000 per year. This attending won’t get anything forgiven
2)MD has $130,000 in loans, has maximum 2 years of training left. Will make $275,000 – $300,000 when finished. This MD will not even be close to having loan forgiveness.
The point here is that all residents should start IBR/PAYE 6 months after graduating medical school just in case they end up like scenario 1. Worse case scenario they got some loan subsidies and keep their loans from growing so much during training.
I would not blanket discourage all residents from refi. Residents can get refinanced especially if they have a cosigner. The difference saved on interest between 6.8% or 8% and a 3% or 4% refinanced rate can easily be $5,000 or $10,000 a year, or more.
Roping yourself into a program that might or might not exist at the end of the line while interest compounds higher and higher on your notes doesn’t sound particularly appealing. Also you’re limiting yourself to 501(c)(3) employment and face the paradox of having higher payments with higher salary. You’ve discussed the moral hazards before.
But obviously if one is $400k or more in debt, faces a long residency and fellowship, and is not set to make a particularly high physician salary, then holding out for IBR makes complete sense.
Do you know whether private loans such as these can be discharged in the event of death or total disability? Or would my spouse be liable? Unfortunately, this matters.
They would not. Be sure to carry extra insurance to cover that issue. Keep in mind the insurance is far cheaper than the interest.
Actually in case of borrower death or permanent disability, SoFi will walk away from the debt.
There is one exception, though. If the borrower added a co-signer to the loan, SoFi reserves the right to go after the co-signer for the amount owed.
Is that part of the contract, or just their current policy?
It is contractual and part of the disclaimer that the borrower signs.
Yep!!
Term life insurance is cheap. Disability is a bit more expensive but still might be worth it.
Posts like this help me realize how lucky I am….graduated about the same time as you and was able to lock in 2.5% and defer paying until after residency. Feel bad for those graduating now, but highly recommend doing a fixed and not variable rate as you never know what life will throw ur way, and u can always pay off early if u want to later.
In the middle of my intern year and in the midst of 4 year dermatology residency. I doubt I’ll be getting any public service forgiveness upon completion. I currently have 187K at 6.55% (all Stafford Loans). I am making a resident’s salary (currently 44k) but my wife is a PA making ~90-100K per year. We are already maxing out 401k, roth, hsa for each of us. Currently we are not doing IBR or PAYE because we can afford the fixed 25year plan to get things paid off sooner. We have no kids now but probably in the next 1-2yrs which could impact her salary. Additionally, I have no life insurance now (only disability) because she’s not responsible for my loans under the current plan, although if I refinanced I’d have to purchase a life policy.
I’m not sure if I’d even qualify but… with all that being said, do you feel it is worth refinancing my loans at this present time, waiting until later, or not at all? Thanks.
So you have a 33% savings rate on your gross income…which is great. You need to get life insurance immediately. You will be able to pay off your student loan your first year out of residency, don’t sweat it.
Yes, because you are not going for forgiveness and don’t need the lower IBR/PAYE payments, you could consider it. But to get the best rate, you’d want a 5 or 10 year loan. And you may not be able to afford the payments on that. If you can, great! Go for it.
But I wouldn’t feel badly at all just making payments during residency, then knocking it off in your first year or two as an attending.
If you file married filing separately your IBR/PAYE will be lower than filing joint and even as a single filer for that matter. You may be missing out on free money from the government by not being in IBR/PAYE.
Before filing separately I’d take a close look at whether the increase in Federal taxes outweighs the lower IBR payment benefit. For me the math was clear to file jointly.
If both spouses make about the same amount of money then MFJ doesn’t save that much money on taxes.
The variable vs fixed loan statement that napoloeandynomite alluded to is a bit more complex than how he writes above.
The difference between Variable vs fixed can be about 1.5%. The question that needs to be asked is will interest rates rise by over 2% before you pay off the debt. I say 2% because even if interest rates do start to rise, you would have had the opportunity to enjoy the lower rates for a period of time. Break even point may be even 2.5 or 3% if rates don’t go up for several years.
In my opinion I would rather get a few years of a lower rate and take on the interest rate risk then take on a loan at a higher rate. If rates rise too quickly I can always liquidate some equities and stop the bleeding.
Absolutely. I agree. I’d take a rate of 3% variable over 4.5% fixed if I thought I could be out of debt within 5 years (and I think most docs should be.) Even if rates rise in 2 or 3 years, I will have enjoyed the lower rate on a larger loan for much of the time.
That said, if I was planning to spend 10-20 years paying off my debts, I’d probably rather pay the bank to take that interest rate risk for me.
Thank you very much for your articles which are always very educational.
My wife and I are both physicians currently working for a non profit hospital (501c). My wife currently has about 130K private student loans with an average variable rate of about 3.3% and we were thinking of refinancing with some of the providers that listed in the article. We have the following questions:
1. Are there any loan forgiveness programs for privately held loans if you work for a 501c?
2. If not is it worth refinancing? We are planning on having the loans paid in 4 to 5 years (hopefully 3).
3. Would you advice on a fixed or variable rate given our current situation. We have a very small debt to income ratio (actually our only debt are the student loans).
1. No.
2. If you can go to 1.8% variable with no cost, then sure, why not?
3. I’d do variable given your short time frame and relatively small loan amount. I’m also not clear on why a two physician family needs 4 years to pay off $130K in debt. Why not six months?
If I refinance my wife’s loans will we lose the ability to exempt the student loan interest paid on our taxes? I.e. the 1098-E?
Your Modified Adjusted Gross Income is the important factor to consider. Are you above the phase-out limit?
Ah thanks for the info! We’re just the below the reduced phase out and will probably stay there until she finishes residency. Unless she goes into fellowship! 😉
No. Refinancing by itself doesn’t change the ability to exempt the student loan interest. That’s all about your income.
Thank you!
Student loan interest is still student loan interest, unless you convert it into a mortgage or credit card debt or otherwise.
Like others have said it’s still deductible, but almost not worth considering since it’s capped at $2,000 and phases out completely if you make any real money.
I’m interested to see if WCI or any readers have experience on the “investor” side of SoFi or CommonBond. It seems like Lending Club with less risk, b/c the people you fund have jobs and share your alma mater (ideally that means you can trust them more than the average Joe)
My biggest complaint with some of these firms is transparency. I am a financial planner for doctors and have tried to work with one of the firms on this post. They are extremely non-committal on what rate my clients could get (even a ballpark) after I tell them all the details. 1.96% to 4.2% is a huge gap especially when I know my clients full financial situation. I never sent my clients to the lender because it seemed really shady that I couldn’t even get a ballpark. I used to be in mortgages and could give reasonable ballparks based on purchase price and FICO. The gap in the rates posted is huge.
Yes, it is annoying that to know who is going to give you the best rate you literally have to apply with all of them.
Sure there’s some uncertainty but what is certain is that all of the rates are considerably lower than the federal 6.8% subsidized rate and higher unsubsidized rates. 😉
ARGH! I just refinanced with SoFi 2-3 months ago and these rates are 1-2% lower than the ones I just got!!! But – they were great, quick, professional, will ultimately save me money and hassle and they sent me a pie as a thank you gift.
I bet DRB would be willing to refinance your SoFi loan. 😉
I’ve wondered about this already, since my wife and I didn’t get DRB’s best rate as she’s still in residency. Hopefully we’ll be close to paid off by then, but I’d love to find out if anyone has done a refi of a refi to get a lower rate.
I refinanced with SOFI and DRB.
I have about 300,000 dollars in loans all together. I was playing anywhere from 4-9.75% in interest rates.
First my experience with DRB. It took about a month and a half of back and forth communication to finally get approved. At times I was sending in documents 2-3 times. i was pretty passive initially but after getting frustrated with them I started calling every day just to make sure I wasnt missing anything and continuing to add further documents After I started calling theme every day it took about 2 weeks to complete. I was approved at a rate of 3.4% for 15 years variable. In total i have about 97,000 with them.
My experience with SOFI was about the same. It took about a month and a half to process but I did get a great rate at 2.9% variable for 10 years for a total of 176,000.
It was annoying having to deal with both these companies at times but I am greatful they are there. I would gladly spend another month and a half in back and forth conversation to save well over 50,000 dollars in interest.
Now my question to you guys is what is the best way to pay this off. I have budgeted about 4000 dollars a month for paying back the loans. Would it be better to pay 1700 dollars for the sofi loan which is the required minimum and pay 2300 for the DRB loans. This would let me pay off the DRB loans in around 2.5 years and then I could put a full 4000 into the sofi loans a month. Would it be better to pay the SOFI loans more aggressively since I have a 100,000 more in that? Not really sure what is the best way to pay them off and any advice would be appreciated.
Thanks and great work on the website, it has been very helpful.
I’d pay off the DRB loans first. They are both a smaller loan (the snowball/behavior effect) and the higher interest rate loan (the mathematically correct answer.)
Are there variable interest rate caps on both loans? If so, which has the higher cap? If I recall, both Sofi and DRB cap variable rates on most loans to 9%, but I know previously DRB had a rate cap of something like 18% or 20%. Probably won’t be relevant, but nevertheless something to consider.
These refinancing options are looking better and better. Will consider it for my student loans!
Agree with previous poster regarding the lack of transparency regarding interest rates. At the time I applied, common bond’s advertised rates for the 5/5 fixed/variable were like 3.8-6.8%. I filled out the application expecting to be well on the low end of that range as my debt to income ratio is good and my credit score is right around 800. The rate they gave me was 4.99%. Total bait and switch. I called up their underwriting service who confirmed my 798 Experian credit score used for their calculation but was unable to tell me how high it would have to be too qualify for the lowest advertised rate (over 1% lower than mine). I decided not to consolidate and will just pay them off quickly.
I’ve asked the companies about this. None will reveal exactly what percentage qualify for the lowest rate or what it takes to do so as they consider that a business secret. However, they do assure me that there are borrowers who get it. That assurance isn’t worth much, of course. The only way to deal with it as a borrower is to apply to all of them and take the one that gives you the best rate. If despite great credit and ratios they’re all still 1-2% higher than their lowest advertised rate, what are you going to do? It seems a chance worth taking (wasting your time) in order to save thousands to me.
In the body of the post, it says that SoFi and Common Bond are giving a $300 bonus to readers of your blog who click through ads/links on your blog and refinance with them. On some more recent posts, I’ve seen an ad from DRB offering $300 to readers of your blog who click the ad as well. If that is in fact accurate, that is great news, as it keeps DRB competitive with those other two. Can you edit the post to reflect that DRB will also pay $300? I’m really happy to see competition in this space as I feel it really helps consumers.
I am also disappointed by the lack of transparency regarding the actual rate offered, although as the advertised range of possible rates gets narrower, this becomes a less concerning issue. I would love to see someone post here saying s/he got the lowest possible rate in the advertised range. I imagine some of your readers have 800+ FICOs, have DTI’s under 20%, and are 5+ years out of residency in the same job. I would think that combination ought to get someone pretty darned close to the lowest rate in the advertised range. If not, it would make it seem like a bit of a bait-and-switch.
I do agree with you that it is probably worth one’s time to apply, and see what kind of rate s/he is offered.
It is accurate, and DRB was quick to remind me of it! Post edited.
I would also like to hear from someone who received the lowest possible rate.
I already started an application with DRB. Can I still get $300? Would I have to start a new application?
p.s. I haven’t yet completed the app yet.
I don’t know. You’d probably have to call them.
I called just now. They said they were unaware of any such promo. I referred them to your site, this exact page. They took my phone number and said they would call me back.
I’ll mention that to their president/CEO when I meet him later this month. I would be VERY interested if you are told that promotion no longer exists.
They called me this morning. They said it was such a new promotion, that their customer service people didn’t know about it yet. They were very apologetic, and said I could receive the $300 promo despite already having started the application.
Great news, glad to hear. It’s a very competitive space, and so the various companies rapidly match each others’ rates and terms.
I got the lowest published rate published at the time for DRB. 10-year variable at 2.63%. Refinanced about $145,000 at 6.8%. Have about $100,000 at mix of 2.875% and 4.25% that I didn’t think was worth moving into a variable rate loan.
I have a ~ $550K home loan (@ 3.625%) $10k car loan (@1.9%), $166k loan (ARM currently at 2.75%) for house we couldn’t sell after residency, but credit score north of 775 and no CC debt. Base salary is just north of $420k but I get production on top of that (plus pay for extra call which I am currently doing a lot of while still in the residency/fellowship mode).
Planning to sell the rental house, and pay off the car loan in the next couple of months, then aggressively attack the DRB loan while the rates are low and have that paid off in a year or two. Should be doable I think.
Thanks for sharing your experience. Looks like it’s not always bait and switch.
So all it takes is a 775 credit score and a $420k base salary?
At least on that day with that underwriter….