:::: MENU ::::

Loan Refinancing


Has anyone had any luck with refinancing student loans?

To my knowledge, you can consolidate one time through federally-backed programs, but they use an average of your current APRs, so there’s not a real possibility of any huge reduction in interest rates. This is the main reason why I haven’t done any type of consolidation – I just don’t see the point!

Then I was scrolling through Facebook and a sponsored ad popped up (scary how well they know us!) for a company called Common Bond that was boasting student loan refinancing programs with rates as low as 1.93% APR.

Of course, there are reasons why its safer to stay with a federally-backed loan company (e.g., options for forbearance or deferral in certain circumstances). But, of course, these companies aren’t known for their customer service, so there are some downfalls to doing business with them, too.

To be completely honest, I literally JUST came across this Common Bond ad so I haven’t done any due diligence yet with checking them (or other companies) out. I wanted to pose the question to you guys. Has anyone gone this route before? Any success or horror stories? With my interest rate on my student loans so high (from 6.55% through 8.25%), I would LOVE to be able to refinance and score a great, lower APR. Hey – it worked wonders for my auto loan (when I refinanced I went from 7.75% down to 2.49%!) Just curious what others’ experiences have been.

Thanks for sharing!!


  • Reply adam |

    I consolidated undergraduate loans a long time ago…it was nice to get down to 1 payment, but it made it harder to pay off because I couldn’t knock them out individually.

    I avoided consolidating my grad school loans for this reason. Although I had been seeing some ads for a company called Sofi that advertised rates lower than one of my grad school loans, so I considered it. But at that point it was so close to payoff that I just didn’t worry about it. You might look into them.

    You have to make sure you don’t lose all your gains to fees etc. I’d worry about consolidating into one huge payment. What if the day comes when you couldn’t make that big payment?

  • Reply adam |

    Also if you re-fi any federal student loans into private loans, you may lose some of the options you have available like deferrals, income-based repayments, etc. So you have to weigh the benefits of a lower APR/payment against the risk of losing the pretty friendly policies on federal loans (that you pay for in interest).

    • Reply Ashley |

      Yikes – yeah, that’s a really good point since right now I’m on income-based repayment (and unpaid interest is being forgiven!) Maybe something to think about when I’ve got a few more debts knocked out and can really turn my focus squarely to the student loans. I just can’t bring myself to do that with the car loan still hanging around.

  • Reply Angie |

    I’ve heard some success stories from SOfi and the like. Although they advertise 1.9% APR, I think that’s for like 5 year or adjustable rate payment schedules. With talk of the rates expecting to raise soon it would provide relief now but may not be great long term. As its usually set up as something like 1.9% + the LIBOR which is currently at 0.29% and historical lows. My private student loan is based on the LIBOR and was 8+% in 2007/8 when the LIBOR was 5%. So depending on your anticipated payback it may or may not be beneficial long term.

    The actual rates I’ve heard people get are closer to 5-6% with excellent credit scores and a co-signer. That’s another big distinction, the co-signer.

  • Reply debtor |

    sofi and commonbond are extremely popular for mba loans…but i think it is closer to 5% or thereabouts. it’s worth exploring at least.

  • Reply scarr |

    I consolidated my loans with Sallie Mae (now it is Navient) and it was the best thing for me. My loans were at about 9% and when I consolidated them they are now 5.25% (consolidated for 5.5% but with auto-pay I save .25% interest). I have two loans – one is unsubsidized and the other is subsidized. When I make my extra payments every month, I don’t bother trying to separate the payment as all the horror stories make is sound harder than actually paying off your student loans.

    Consolidation worked really well for me and I am on track to have them paid off next April. Consolidating the loans also made my monthly payment more manageable. With all of the other consolidation options available now, I would do some research about what place will fit your needs. Good luck!

    • Reply scarr |

      I mean obvi you are doing research, I just mean when I consolidated I knew very little about the private consolidation firms. Now it seems to be a booming and competitive business 🙂

      • Reply Ashley |

        Crazy! When I talked to my loan company (at the time it was still Sallie Mae) about consolidating they said that BY LAW they had to do an average of the APRs….like, there was no way to consolidate and get a better interest rate. So it’s very interesting to hear that you went from a 9% down to 5.5%! You mind telling me how long ago you consolidated? I’m wondering if this is a new-ish (in the last year) “law” or if I was being BS-ed by the rep I spoke with? So strange!
        That all aside – YAY for reaching t-minus 1-year until no more student loans!!!!!!

        • Reply scarr |

          They do average the APR’s, if I remember correctly my unsubsidized loans had the really high interest rates like upper 8 & 9% and the subsidized loans had far lower rates, like in the low 3 & 4% I believe. At the risk of sounding like a big fat dummy, I didn’t really understand interest for an embarrassing amount of time, so I didn’t even know what the difference between unsubsidized/subsidized was in regard to my loans. Oy.

  • Reply paris013 |

    While we’re on the subject of student loans, can I ask for some advice?

    I’m about to start an MS program and anticipate my total expense to be about 12K. I’m assuming I’ll end up with 3-4 chunks of loans as a result of each semester. Does anyone have any tips or company suggestions to avoid the outrageous interest rates?
    How can I do this better in advance?

    The federal loans are currently over 6% for graduate school and subsidized is not an option either, so I have to start paying right away.


    • Reply Ashley |

      I totally agree with Adam. When you said the cost was going to be $12K my first reaction was to yell: WORK!!!! Not in a mean-yelling type way. More of the I’ve-been-there and I want to help you do better than I did type of way. Avoid the debt if at all possible. Also…you think it’s 12…but 12 is so easy to morph into 15. Or maybe you think you’ll take out just a little extra to help with living expenses and you end up at 18. Then it’s 20. 25. You get the picture. Just avoid it if you can.

      • Reply paris013 |

        Thanks for the advice!

        I couple things I should mention though. #1 I work full time, make fairly good money, and have been able to pay off my consumer debt completely except about 3K left on my undergrad student loan, which I intend to pay off by this July. #2 My husband has been unemployed while he finishes his undergrad degree, but will be back to work this June so we’ve already been on a pretty bare bones budget. #3 We were late bloomers in the “finishing education” realm of life so we’re really looking to have a baby around the time I finish the Masters program, so I’ve been shoveling extra money towards savings for that as well.

        Would you suggest using some of that savings? Or just continue to funnel the $465 I currently spend on debt to a secondary savings to cover what I can of tuition?

        I’m assuming interest begins applying from day 1 on these student loans.

        • Reply Walnut |

          Hold off as long as possible before you take out any loans. Tuition won’t be due on the first day of school and you’ll only pay one semester at a time. Decide how much in savings you want to reserve as emergency savings and then plan to use the rest for your first semester of tuition. When your husband begins work again, continue with your bare bones budget for as long as you can to shore up the tuition fund. Since a baby is still two years off, I wouldn’t be concentrating on saving for that as much as in cash flowing your masters program.

          And…just one more thing to consider…will the masters program actually net you higher pay at the end? If not, seriously evaluate whether or not it is actually worth the time and money commitment.

          Blog managers – I would love to see a guest post from this reader. I think the community would have some really helpful advice.

        • Reply adam |

          depending on your insurance coverage, baby costs may not be as high as you think, or they may be higher. it’s great you’ve been saving for it. but here’s the thing: student loans accrue interest every day. medical bills usually do not. If you had to choose, financially it’s probably wiser to put the baby money on the tuition.

          I can appreciate that you already work full time, but you don’t have kids yet – could you do a yard sale, sell some things on ebay or amazon, or some crafts on etsy, or look in the “gigs” section of craigslist for odd jobs? maybe pick up a summer job or a nights and weekends gig. really is better than accumulating debt for a masters degree. Also, nothing says you have to do the degree all at once. Just do the amount you can afford to pay cash for, then take a semester off to save/earn more money, and then do the next semester when you can afford it.

          Since it’s not a huge amount of money, I just really strongly advise you to figure out a way to get this done without debt. you’ve just worked hard to pay off your undergrad debt – why would you want to add to the pile again? you can do it!

        • Reply Ashley |

          I agree with Walnut and Adam – hold off on the debt as long as possible (even if it means using your savings for your degree). I also strongly encourage you to think long and hard about what Walnut said – will this degree actually net you more money? This is something I’ve seen a LOT in my field – a ton of highly educated people with a ton of debt that end up unemployed or making a very small wage (“small” relative to the size of the education debt). Is it absolutely necessary to get the degree you want? If so, how much more money will it make you? Are you sure you’ll be able to land a job when you get out? Is there any other way to get the education debt free – like work (for free!) as an intern for the place you eventually want to work and have them pay for your tuition?
          Also, what are your plans once baby comes? Do you plan to continue working? It sounds like you’ll be on the job market right as you’re about to be due with the baby. There are laws in place to protect pregnant women from discrimination on the job market, but it’s a very real thing to think about (i.e., difficulty landing a job when the employer knows you’re about to go on maternity leave. That’s a big expense for them!)
          Alternatively, maybe you could put off the master’s program a year, get fully out of debt, and save up enough for tuition in the meantime. Then, even if you have the baby during your program, you’ll be doing everything 100% debt free! I know it seems difficult but it can be done (I had my twins during my last year of grad school. It can absolutely be done!) Also, even though master’s programs can be intense, they actually offer more flexibility than many jobs would offer, so it might not be a bad idea to have a baby while still in the program. Just lots of things to think about. Hope this helps!

          • paris013 |

            I intend to continue to work at my current job (unrelated to my education) through my pregnancy and would likely just not come back after maternity leave so long as I have a job in my major field lined up.

            I’m thinking savings not just in terms of medical costs but also reduced income during maternity leave.

            I already sell stuff constantly on Craigslist, half.com, ebay etc. But unfortunately garage sales don’t seem to do well in my neighborhood. I have yet to try resale shops though, so I’m going to look into that for old clothes.

            I’m going to do some number crunching tonight and see how I can pull off paying tuition in cash but still have a hefty savings for my level of comfort.

            Thanks for all your advice and making me wake-up!! I’d love to do a guest post and get more advice!

  • Reply adam |

    @paris013 – the federal loans I think are locked at 6.8%. you do get a 6 month break after graduation before you have to pay them.

    But, if your total cost is only going to be $12K, then why not just work really hard to try to scrape together the cost and pay in cash? if you are in the US, you can come up with $12K in a matter of months if you pick up a couple side gigs, have a yard sale, cut your budget down to nothing, etc. Better than being in debt. spoken as a voice of experience.

So, what do you think ?