SoFi

It’s no secret that Americans are facing down substantial student loan balances. What is a secret—or might as well be—are the numerous government programs designed to help.

Income-contingent repayment programs such as PAYE might just sound like another government acronym, but considering this program could lower your monthly payments, it’s worth looking into. Expecting new graduates to pay high monthly installments is a tall order, which is why plans like this exist. The government (surprisingly enough) has some options to alleviate your student loan debt burden.

What is the Pay as You Earn Plan?

The PAYE, or Pay As You Earn Plan is exactly what it sounds like; The plan bases your monthly student loan payments on your income, not your debt. PAYE is a government program geared toward aiding graduates struggling with loan payments. So, say you’re having trouble meeting your monthly payments.

With programs like PAYE, your loan payments are tailored to what you can afford. That means if you’re making $30,000 a year, payments might be limited to $100 a month, whether you owe $5,000 or $50,000 in student loans. And, under this plan, if you’ve been making qualifying monthly payments for 20 years, your outstanding debt could be forgiven.

There are other, private-lender options to lower your monthly payments, such as refinancing your loans. But before deciding if that is the right route for you, we put together this helpful guide on the PAYE plan.

How Does PAYE Work?

For those who qualify and sign on for PAYE, payments are generally around 10% of your discretionary income . If your income increases, and your monthly payments get recalculated, your payments will never exceed what you would be paying under the standard plan , as long as your income is still under the qualifying threshold.

So what’s the catch? For one thing, lower monthly payments will, of course, mean a higher accumulation of interest. And while your loan balance could be eligible to be forgiven in 20 years, that forgiveness in many circumstances is seen as income in the eyes of the IRS. So if in 20 years you still owe, say, $20,000, even if the total balance is forgiven, you might have to pay taxes on that $20,000 the same year its forgiven.

Am I Eligible for a PAYE Plan?

Not everyone is eligible for the PAYE program. First off, PAYE only works for federal direct loans. And because PAYE was created for those struggling to meet loan payments, PAYE is only available to those who can demonstrate financial hardship. This makes sense, of course, because 10% of a high discretionary income would be a high monthly payment and over the payments of a federal standard plan.

PAYE plans are given to those whose monthly payments are lower than they would be on the standard 10-year payment plan. You can use the Department of Education’s income-based loan Repayment Estimator to compare this to your payments under the standard plan.

What Are My Other Options Outside of PAYE?

If PAYE isn’t right for you, there are plenty of other options offered by the federal government or by private lenders. If you have federal loans, there are three other income-driven repayment options:

• Income-contingent repayment (ICR), which asks for generally 20% of your discretionary income. Your loans are eligible to be forgiven after 25 years. And just like the PAYE loan forgiveness option, you could be taxed on the amount that’s forgiven.

• Revised Pay As You Earn (REPAYE), which takes generally 10% of your discretionary income. There is a forgiveness option after 20 years if you’re paying off your undergrad degree, or 25 years if you’re paying off undergrad and grad school loans.

• Income-based repayment (IBR), which takes generally 10% to 15% of your discretionary income. Your loans are forgiven after 20-25 years, though you could be get taxed on the amount that’s forgiven.

To see what you would pay under the different plans, just plug your information into the Department of Education’s IBR calculator .

Those looking to lower their interest rates may also want to consider student loan refinancing, especially if you have a combination of private and federal loans. Increasingly, private lenders are offering rates lower than the federal government’s, making refinancing a popular option.

Essentially, refinancing means replacing your student loans with one, brand-new loan with a lower interest rate. If you have a good financial history and a steady income, you are an especially good candidate for loan refinancing.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi does not render tax or legal advice. Individual circumstances are unique and we recommend that you consult with a qualified tax advisor for your specific needs.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment, Income Contingent Repayment, or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

SLR18110

Along with fireworks, the flag, and a deep appreciation of cars, the college debt crisis is unfortunately about as American as apple pie. The average student borrower has about $34,000 in loans to pay off today. The student debt crisis isn’t going anywhere either.

As of March 2018, there were 44.5 million borrowers in the United States who owe over $1.3 trillion, according to the Federal Reserve . And that’s not even the scariest part. The US student loan debt is growing bigger every day as Americans are paying more on average than they did a decade ago for school.

Between 2001 and 2016, the real amount of student debt owed by households more than tripled. This scary rise of college loans has many experts saying we’re in the midst of a student debt bubble .

In 2016, an average college student with a bachelor’s degree graduated with $28,446 in debt . Students entering college now could end up paying even more by the time they graduate.

To put it into perspective, in the past 10 years, student loan debt in the US has grown by 170% . With 45% of recent graduates carrying student debt, the class of 2018 expects to retire by 72 .

Will the Growth of Student Loan Debt Slow Down?

Answer: probably not. In the past 10 years, US student loan debt grew to be worth more than car loans or credit card debt. It is the second-largest source of household debt and the only kind of personal debt that grew in the wake of the Great Recession.

As US student loan debt continues to grow, experts are saying this could be a student debt bubble, as the growth of debt looks eerily similar to the housing bubble of 2008 .

Similarly to how the housing market collapsed in 2008, many worry that as student debt increases and grows larger than what a borrower could reasonably repay, there will be an increase in defaults.

A new study found that using default rates from 1996, nearly 40% of 2004 borrowers may
default on their loans by 2023 . What does that mean for 2014 borrowers, who have taken out even bigger loans than there 2004 cohorts?

How U.S. Student Loan Debt Grew So Big

Although many in the media like to bemoan the increase of people attending colleges who are not qualified, the student debt bubble has little to do with more students enrolling in university. Only one-quarter of the aggregate increase in student loans since 1989 is attributed to students attending in college.

There are a few surprising factors that are causing the unruly rise of the college debt crisis. For one, education costs are continuing to rise – and not in line with the rest of the market. The headline consumer price index between 2016 and 2017 was 2.7%, while tuitions rose by 9% at state universities and 13% at private colleges . If the cost of higher ed continues to rise more than the cost of living, borrowers will continue to feel the pain.

In addition to rising college costs, experts say the monumental amount of debt is linked very directly to the collapse of the housing market. When the housing market crashed in 2008, parents who could borrow against the value of their homes were no longer able to do so, forcing more students to take out debt in their own names.

One economist estimated that a $1 drop in home equity loans due to a plummeting house prices leads to 40 to 60 more cents in student loans.

While it helps to know you are in good company, news of the student debt bubble might have you kvetching. The only thing worse than owing thousands of dollars of money to Uncle Sam is hearing that the millions of others in the same boat might end up tanking the US economy.

Can Refinancing Help with Student Debt?

But don’t run for the hills just yet. If you’re worried about the student debt crisis, you might want to consider refinancing. By refinancing student loans, you can consolidate existing private and federal loans into one new student loan with a lower interest rate. Not only does this mean you’ll only have one payment to worry about, it means you could pay less overall.

According to the Department of Education , interest rates on student loans can range from 3.5% to 8.5%, with most in the 5% to 7% range. Not only is that extremely high – consider the typical auto loan or mortgage rate – but if your interest rates are punishing, it only means you’ll remain in debt longer.

With borrowers paying off around four student loans on average, refinancing would also mean less paperwork each month. Between 2011 and 2016, online lenders have refinanced around $6 billion in student loans . Consolidating loans is a great way to make payments more manageable depending on what kinds of debt you have.

Researching Refinancing Options

There are a wide range of student loan refinancing options available. But it’s important to do your homework as the student debt crisis grows larger, because there are many predatory companies that might take advantage of your financial situation.

A study found that when plagued by anxiety over debt, borrowers were more likely to fall for a scam. With the US student loan debt exponentially rising, this has led to an increase in bad actors. Some estimate that there are over 130 companies that run student loan scams, which could result in even more debt in your lifetime.

But that doesn’t mean refinancing isn’t right for you. Not only could it mean consolidating all your payments into one monthly bill, but you could qualify for a lower interest rate which over your lifetime could spell big savings. It also means you’ll become debt-free sooner. Can you say score?

Although there are ways to consolidate federal loans with the government, refinancing involves a private lender. All of your student loans – both federal and private – are consolidated through refinancing. A private lender typically offers a lower interest rate, depending on a number of factors like your credit score, your payment history, and how much you still owe. This lets you pay your loans off at a more competitive rate, which can translate into thousands of dollars in savings.

When refinancing, it’s also possible to change the term length of your loan. If you’re feeling tight on cash with big monthly payouts, consider a longer term. If you’d rather get rid of your student debt as soon as possible, opt for a shorter term with larger payments.

Use a student loan calculator to see how much you can gain from refinancing. All you need to know is how much you owe and what your interest rates are across both federal and private loans. At SoFi, you can request a quote without actually committing to refinancing, which makes it easier to decide on next steps.

Refinancing with SoFi can help ensure your loans are consolidated and managed properly. Similarly to how using a Certified Public Account to file taxes can save you bundles of moolah, using a reputable lender can help you save money on your student debt. SoFi can help evaluate repayment strategies and potential forgiveness options while staying on top of pesky paperwork.

Scared of the looming student debt bubble? Consider refinancing your student debt with SoFi for one easy monthly payment and potentially thousands in savings.

Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi doesn’t provide tax or legal advice. Individual circumstances are unique. Consult with a qualified tax advisor or attorney.

SLR18159

When it’s time to start repaying your federal student loans, your options can be confusing. It’s not as simple as sending your loan servicer a universally fixed payment or paying whatever you think you can afford. How much you owe each month can vary dramatically depending on how you choose to repay your loans.

The government currently offers eight repayment plans that let you knock out your student loans in as little as 10 years or as many as 30 years. Five of the options take into account how much money you make. Income-driven repayment plans are geared toward making the process affordable for everyone, but each is slightly different.

Choosing the right plan depends on many factors, such as the types of student loans you have, when you took them out, and how much you are making. You can switch plans anytime over the life of your student loans as your circumstances and income change.

Income-driven repayment plans may lower your monthly payment, which can be a lifesaver. But keep in mind that if you lower your monthly payment you might be done by extending the length of the loan. If that is the case, you’re also likely to pay more overall, because the interest adds up over a longer period.

Here’s a roadmap to understanding income-driven repayment and which plan is right for you.

What is an income-driven repayment plan?

An income-driven repayment plan makes your monthly student loan payments affordable by tying them to how much money you earn. These types of student loan repayment plans allow you to take more time repaying your loans than most plans that aren’t tied to your income. Most of them forgive the remainder of your student loans as long as you make the required payments for 20 to 25 years (but keep in mind you may have to pay taxes on the forgiven amount).

Your monthly payment under each plan will change each year depending on your situation. Four of the income-driven plans calculate your monthly student loan payment based on your discretionary income , which is defined as the difference between your annual income and either 100% or 150% of the poverty line .

Your monthly payment is recalculated every year based on your current income, family size, and in one case, the amount of your student loans. (There’s also an income-sensitive repayment plan which bases your payment on gross annual income.) You can figure out how much you’d pay under each plan on the Department of Education’s website .

Types of Income Driven Repayment Plans

Here are five income-based repayment plans that you can choose from:

Revised Pay As You Earn Repayment Plan (REPAYE)

● Your monthly payment is generally 10% of your discretionary income and is recalculated each year.

● Any remaining student loan balance will be forgiven in 20 or 25 years.

● This applies to Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans to students, and Direct Consolidation Loans, that don’t include Direct PLUS Loans (Direct or FFEL) taken out by parents.

Pay As You Earn Repayment Plan (PAYE)

● Your monthly payment is generally up to 10% of your discretionary income, but never more that the 10 year Standard Repayment Plan amount, and is recalculated each year.

● Any remaining student loan balance will be forgiven in 20 years.

● This applies to Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans to students and Direct Consolidation Loans that don’t include Direct PLUS Loans (Direct or FFEL) taken out by parents.

Income-Based Repayment Plan (IBR)

● Your monthly payment is generally 10% or 15% of your discretionary income, depending on when you became a borrower, but never more that the 10 year Standard Repayment Plan amount. The amount is recalculated each year.

● Any remaining student loan balance will be forgiven in 20 or 25 years.

● This applies to Direct Subsidized and Unsubsidized Loans, all PLUS Loans to students, Subsidized and Unsubsidized Federal Stafford Loans, and Consolidation Loans (Direct or FFEL) that don’t include Direct PLUS Loans take out by parents.

Income-Contingent Repayment Plan (ICR)

● Your monthly payment is whichever is less: 20% of discretionary income or the amount you would pay if you spread your payment evenly over 12 years, adjusted based on income and is recalculated each year.

● Any remaining student loan balance will be forgiven in 25 years.

● This applies to Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans to students, and Direct Consolidation Loans.

● This is the only income-based repayment option for parents who took out Direct PLUS loans. They can access this plan by consolidating them into a Direct Consolidation Loan.

Income-Sensitive Repayment Plan

● Your monthly payment is based on your annual income, with the formula varying depending on your lender.

● You have 10 years to repay the loan.

● This applies to Subsidized and Unsubsidized Stafford Loans, FFEL PLUS Loans, and FFEL Consolidation Loans

How to Qualify for Income-driven Repayment

You’re not eligible for an income-driven repayment plan if you’ve defaulted on your student loan. (If you’re in that situation, there are options for getting out of default.

Anyone who has taken out eligible federal student loans can opt in to the REPAYE and ICR plans. To be eligible for the PAYE plan there are additional requirements to qualify. First, you need to be a ‘new borrower’ as of Oct. 1, 2007 and have received a loan disbursement on or after Oct. 1, 2011 You are considered a new borrower if you had no outstanding balance on a Direct Loan or FFEL Program loan on or after Oct. 1, 2007.

In addition, you can only qualify for the PAYE and IBR plans if your monthly payment is lower than what you would pay under the Standard Repayment Plan, which spreads your balance over 10 years. That means you’re generally eligible if your student loan balance represents a major chunk of your annual income or exceeds it.

What student loan repayment options exist besides income-driven repayment?

If you work in public service, you qualify for an even better deal: Public Service Loan Forgiveness . Under the program, you need to make 120 qualifying monthly payments under an income-driven repayment plan, working for a qualified employer and your remaining balance is eligible to be forgiven.

Related: 20 Year Student Loan Refinance vs Income-Driven Repayment

The payments don’t have to be consecutive, but if they are, you could be free of your student loans in 10 years. Some eligible employers include various levels of government, a 501(c)(3) nonprofit, even an organization that provides certain public services, such as law enforcement, public interest legal services, the military, public health, and more.

If you’re not in public service and an income-driven repayment isn’t right for you, that doesn’t mean you’re stuck with impossibly high payments. One option is to choose the Extended Repayment Plan, which lets you spread your student loans over 25 years and pay a fixed or graduated amount each month.

A second option to consider if you’re having trouble paying your student loans because of a temporary situation (say you went back to school or can’t find a job), is applying for deferment or forbearance . These are short-term solutions may reduce your student loan payments for a limited time.

Another option is consolidating your student loans. Consolidation may give you more time to repay your student loans or lower your interest rate.

A Direct Consolidation Loan from the federal government can also give you access to income-driven repayment programs that you might not have otherwise qualified for based on the student loan you had. (Keep in mind that consolidating your student loans may force you to give up credits you’ve earned toward loan forgiveness.)

Another potential way to save money is student loan refinancing. A private lender may help consolidate both federal and Private student loans to provide a new interest rate based on your credit and current finances. That could substantially reduce the interest you pay on your student loans, but it disqualifies you from federal student loan benefits, such as income-driven repayment and public service forgiveness plans.

Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
SLR17109

The average Class of 2016 graduate walked down the commencement aisle with $37,000 in student loan debt . We all know that higher education is expensive, but that’s a big responsibility for a 22-year-old to be saddled with as they start their career. The interest payments on a $37,000 loan alone could afford the average new grad a whole lotta revolutions through the Taco Bell drive-thru and pairs of polyester work slacks. (Or better, the ability to start saving some money!)

If you have student loans, there is a way to reduce the amount of interest you pay over the lifespan of your loan or loans; It’s called student loan refinancing. There are people who have refinanced their loans and saved tens of thousands of dollars—and it’s possible you could too.

You’ll often hear the terms student loan refinancing and student loan consolidation used interchangeably, but they’re technically different. Only student loan refinancing has the potential to reduce how much you pay in interest. If your goal is to reduce what you owe, you’ll need to learn how to refinance student loans. Because it’s important to understand which is right for your situation, let’s hash out the definitions and details of both options.

Student Loan Refinancing Breakdown

Okay, so your current loans are either obtained through the government (that’s the most common route) or a private lender, like a bank (less common). Each loan has an interest rate—likely, a fixed rate of interest—set at the time you took out that loan. (If you have loans issued before 2006, there is a possibility that rates on your loans are variable, which means the interest rate may fluctuate.)

When you refinance one or all of these student loans, you’re basically just swapping out the old loans and replacing them with a fresh, new one in hopes of getting a better rate or more favorable terms.

Quite literally, the new lender pays off your old loan(s) and provides you with a spankin’ new loan. Now, the reason it’s worth it to learn how to refinance student loans is because it can lower your interest rate or term, thereby saving you money. A better interest rate or term can either lower your monthly payments or reduce the time it takes to pay off the loan, respectively.

Getting Started With Refinancing

The first step is to explore whether refinancing is the right option for you. Refinancing has historically only been available for federal loans, but there are a handful of lenders who refinance private loans as well. This is not the case for simple loan consolidation, which can only be done with federal loans.

If you’ve got federal loans and are taking advantage of income-based repayment or the Public Service Loan Forgiveness program, it may not be worth learning how to refinance student loans; Those programs (and other benefits) won’t transfer to your new loan . If you have no plans to take advantage of any federal debt-relief program, it’s time to look into refinancing.

Local banks and credit unions often offer student loan refinancing, but online lenders like SoFi tend to offer more competitive rates. Each lender has its own criteria for determining your rate, but it’s generally based in part off credit score and income.

Student loan refinancing is generally available to folks who are in better financial situations than when they first took out loans, whether through increased salary, improved credit score, or another circumstantial shift, like marriage. Refinancing can also help if you have loans with exceptionally high interest rates.

Even a seemingly small improvement in your loan’s interest rate could save you a lotta scratch in the long run. (Which could amount to hundreds, potentially thousands more T-Bell odysseys! Or some extra money for retirement or a down payment, your call.)

Often, you’re able to get pre-approved for refinancing online in a matter of minutes. After pre-approval, you select the loan you want, fill out a full application, upload or mail in some key financial documents, and voilà! You’ve done your part.

Here’s the Difference Between Student Loan Refinancing and Consolidation

Consolidation is exactly what it sounds like; You’re consolidating multiple loans into one loan. And that’s it! Because you’re just smushing all of your (federal) loans together without any accompanying re-evaluation of your credit, your interest rate won’t change. The rate on your new consolidated loan will simply be a weighted average of your current loan rates. Your monthly payment would only decrease if your payback period was extended, which would actually cost you more in interest over time.

Loan consolidation is typically done using a Direct Consolidation Loan through the government. This is why you can only consolidate federal loans and not private ones. The benefit to consolidation is creating one payment instead of dealing with multiple loan payments. It is also possible to detach or add cosigners and switch from a variable to a fixed rate.

It’s worth noting that refinancing is sometimes referred to as “private loan consolidation.” And yes, when you refinance multiple loans, you are inherently consolidating them. But for the sake of keeping the two mentally separated, consider consolidation and refinancing as two different actions.

Benefits of Refinancing Student Loans

Ideally, a student loan refinance would benefit you in the following ways:

1. You could pay less in interest over time, which can mean lower monthly payments.

2. It can also shorten your loan term, allowing you to pay debt off sooner.

3. You get to enjoy the benefits of consolidation with one monthly bill.

4. There are both variable and fixed rate loans available. The benefits of having a lower monthly payment or a shorter payback period need no championing, but it is pretty sweet to think about what you could do with all that extra cash. SoFi estimates that the average customer saves $30,069 in interest over the lifetime of their loan.

Additional Refinancing Considerations

When you refinance, not all lenders will give you the same repayment options that federal loans offer. This is important to consider, especially if you work in an industry sensitive to economic cycles. As with any financial decision, refinancing should only be done after considering all of the trade-offs.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
SLR17108

Graduating from college and starting your career is a time filled with questions and excitement. On the one hand, everything is new and getting to check all the “firsts” (first solo apartment, first salaried job, first absolutely terrible post-grad roommate) off your list is incredibly rewarding. On the other hand, some of those first financial questions can be just a bit overwhelming, especially when it comes to student loans.

Understanding your student loans, whether they are private or federal, and how much you need to pay to make a dent is all new territory and brings on even more questions. But know that you’re not alone. The latest numbers suggest over 44 million people in the country have a total of $1.4 trillion in student loan debt.

As you start managing your post-grad budget, you might realize that student loan payments are a large portion of your monthly bills. If that’s the case, it’s a good idea to start learning about student loan refinancing. Can it get you a lower interest rate? How does refinancing differ from student loan consolidation? And will any of this save you money?

The most important answer, first: Yes, student loan consolidation and refinancing can save you money. However, they are both different, and you’ll need to figure out which option is a better fit for you. Now let’s get into the nitty-gritty.

What is federal student loan refinancing?

If you graduated with student loans, you likely have a combination of private and federal student loans, which are loans funded by the federal government. Direct subsidized loans or Direct PLUS loans are both examples of federal student loans.

Interest rates on federal student loans are fixed and set by the government, so you can’t refinance at a lower rate and keep it as a federal loan. However, you can refinance your federal student loans into private loans with a new—ideally, lower—interest rate.

When you refinance into a private loan, you lose some of the benefits that come with a federal loan, which is worth keeping in mind. However, the new loan (and the new interest rate) could translate to a lower interest rate and paying off loans sooner.

What is the difference between federal student loan refinancing and student loan consolidation?

Student loan consolidation and student loan refinancing are not the same thing, but it’s easy to confuse the two. In both cases, you’re essentially signing new loan terms that replace your old student loans.

Consolidation takes your student loans and bundles them together. This allows you to work with the provider of your choice and qualify for new repayment options. Consolidation, however, does not get you a lower interest rate. Refinancing, on the other hand, takes your old loans and finances them at new interest rates with a private lender.

You can consolidate federal loans into a federal Direct Consolidation Loan at no cost. This keeps your loans federal and can give you a longer repayment timeframe, and simplifies the repayment process to help you not miss payments. But it doesn’t necessarily save you money. Generally, the new interest rate on your federal direct consolidation loan is the weighted average of your original loans’ interest rates. For some people, even if it doesn’t save them money, the streamlining of loans is worthwhile.

What are the benefits to federal student loans?

There are a number of benefits to federal loans that aren’t always available for private loans. For example, you may be eligible for the Public Service Student Loan Forgiveness program if you’re working in public service and have made 120 loan payments.

You may also have access to certain income-based repayment plans or protections on your loans if you default or miss payments. However, as with all things, there are pros and cons. Loan forgiveness is great if you qualify, but double-check the requirements before thinking you can just write off all that debt. And income-based repayment plans can be a life-saver if you’re in between jobs or just getting started, but it may mean you pay more over the life of your loans.

Should I refinance my federal student loans?

It depends on how much you might save with a lower interest rate from a student loan refinance, versus how likely you are to use the benefits that come with having federal student loans.

First, you can use the SoFi student loan calculator to figure out how much you might save with a lower interest rate. In general, borrowers often refinance federal graduate student loans and PLUS loans, since those have historically offered less competitive rates.

Next, ask yourself: Are you going to use the programs or benefits that come with federal student loans? These include income-based repayment plans , as well as loan forgiveness for teachers, doctors, or even lawyers in public service. If that’s you, great, but if it’s not, that’s OK too. (There is also some concern Public Service Loan Forgiveness programs could disappear .

There are some downsides to income-driven student loan repayment plans, too. You can end up paying more in interest or get hit with a higher tax bill after your loan is forgiven. However, depending on your financial situation, that flexible repayment plan could be a saving grace. It depends on how much you have in federal student loans and how confident you are about your repayment options.

The last thing you’ll want to consider before you opt to refinance your student loans is the terms of your new student loan. Weigh all the costs and benefits, and figure out what makes sense for you. We know you can do it. After all, you’re a college graduate.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
SLR17108