When I graduated law school with $190,000 in student loan debt, there were no student loan refinancing companies offering to cut my interest rate in half. Instead, the federal government saw fit to charge a fixed rate between 6.8% – 8.5% for my non-dischargeable loans. I distinctly remember (but can’t prove) that the government of Greece was borrowing money at a lower rate.
This meant the drag on my student loans exceed $1,000 a month in interest alone.
When you have to clear $1,000 each month before you even begin to eat into the principal balance, you quickly realize that these student loans are a serious problem in need of immediate attention.
But the $190,000 in debt didn’t stop there. I also had a $10,000 “salary advance” from my firm since we had a four month deferral from the usual start dates.
Despite this, I was one of the lucky ones that ended up employed during the Great Recession and I will be forever grateful that I had the opportunity to get out of debt.
I’ve written everything I know about student loan refinancing in my Student Loan Refinance Guide, which launches today.
When the refinance companies showed up on the scene (first SoFi and then DRB), there was a mad rush by professionals to refinance student loans. The demand was so high that the companies couldn’t keep up with the applications! People would apply and not hear back for months. Others would get rejected on technicalities because the companies could set high standards (student loan refinancing wasn’t even available to you if you weren’t a doctor, lawyer or other professional).
Much has changed in the industry since then.
Now there are probably more companies offering student loan refinance services than there will be in 5-10 years. This is forcing them to compete with each other to offer you the best rate and service. Since they generally sell off the loan in the market as soon as they can (but will remain as your servicer), they are incentivized to do as many deals with you as they can.
These are all great things for you.
And yet some of the student loan refinance companies have told me that up to 85% of the market hasn’t refinanced. I’m sure part of this are people that have incredibly low rates from the pre-2006 federal loans. Others are pursuing forgiveness through PSLF or an income-driven repayment plan.
But if you’re planning on paying off your student loans, it’s time to refinance them into a lower rate so that you can take advantage of historic low rates and save thousands of interest.
I’ve created a handy infographic about the state of refinancing your student loans today.
How Much Could I Save?
The guide has a calculator that shows you how much money you will save if you refinance your law school loans.
If I put in my numbers, I can see that I would have saved over $30,000 if I had been able to refinance immediately after graduation. Don’t forget that the $30,000 is after-tax savings, so represents about $55,000 or about 1/3 of my starting salary. I would love to get that money back!
But now that my loans are long gone, there’s no saving me. But there’s still time to save you thousands of dollars. You can also benefit from everything I learned when repaying my loans.
Visit the Student Loan Refinancing Guide —>!
Editor’s Note: I’ve spoken to (or physically met with) every student loan company listed on the Student Loan Refinancing Guide. In each case, I negotiated a deal with them to give you cash back if you choose to refinance with them. These should be the best deals on the Internet (if they’re not, let me know). Don’t worry, I get paid too if you decide to refinance through my links. See my disclosure policy to learn about how I’m working to be transparent to my readers on any conflict of interest.
Let’s talk about it. Did you refinance your loans? What rate did you get and how has that changed the speed at which you’re repaying your loans?
Joshua Holt A practicing private equity M&A lawyer and the creator of Biglaw Investor, Josh couldn’t find a place where lawyers were talking about money, so he created it himself. He is always negotiating better student loan refinancing bonuses for readers of the site or finding honest companies that provide student loan advice for a fair price.