Is it possible to refinance student loans? [Archive] - Glock Talk

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wrx04
10-07-2012, 11:06
I have 6 figures in student loans, and my interest rate is ridiculous (7.8% on some). I kinda got shafted since the class two years before me locked in at 2%......the rates spiked after my first year of grad school.

Since the rates are so low right now, i wondered if its possible to borrow from a bank/CU at ~3.5% and pay off the high interest loans? Would there be any disadvantage to doing this? The only negative i can think of is the federal loans will allow me to defer payments if i ever get in a jam with money.

Any other things to consider?

devildog2067
10-07-2012, 11:33
The answer to "is it possible to refinance student loans" is yes.

The answer to "is it possible to borrow 6 figures, unsecured, at 3.5% from a bank to pay off my higher-interest student debt" is no.

Why would a bank lend you money at 3.5% with no collateral?

You can refinance and consolidate your student loans, but the lowest interest rates I've seen lately are still above 6. You might get a half-point off.

wrx04
10-07-2012, 11:45
Yeah, i figured i wouldnt get the full amount, maybe $25k though. Not sure it would be worth the hassle. It drives me nuts to be paying almost 8% on these things.

I assume you cant refinance with fafsa either? (if the rates drop lower in the future)

tarpleyg
10-07-2012, 11:46
IIRC, you are also only allowed to do this one time. That rule may have changed but it was in place when we refinanced my wife's loans some years ago.

devildog2067
10-07-2012, 11:47
Yeah, i figured i wouldnt get the full amount, maybe $25k though.

If you borrow $25k unsecured to pay off the higher-interest student loans, you'll be making payments on the unsecured debt and the student loan debt at the same time. As long as you can swing that go for it, but it isn't going to be cheap.

Also, I would be surprised if you can borrow that kind of money unsecured for that kind of rate.

devildog2067
10-07-2012, 11:48
I assume you cant refinance with fafsa either?

You can consolidate and refinance through a federal student program only one time.

INJoker
10-07-2012, 11:49
DD hit it on the head.

UtahIrishman
10-07-2012, 12:01
You might save a bit on re-financing but not much. Of course even a little bit could help.

wrx04
10-07-2012, 12:05
I

Also, I would be surprised if you can borrow that kind of money unsecured for that kind of rate.

This may be true. I havent really looked into what rate i could get for this type of loan. I was just throwing it out there to see if anyone else has done it.

Thanks for the advice.

wrx04
10-07-2012, 12:11
You might save a bit on re-financing but not much. Of course even a little bit could help.

Yeah, i just figured it out. If i took a $25k loan at 4.5% and paid it over 5 years, i would save ~$2300. Better than nothing, but not really a huge difference.

boomhower
10-07-2012, 12:17
You can't look at secured rates (mortgage/auto rates) and compare that to unsecured loans. Most CU's signature loans are in the 10% range. Rates are higher because the risk is higher. I don't think you'll find anyone willing to lend a signature loan at a rate better than what your paying.

after some quick persusing the lowest I found was Navy at 8.99% if you qualify for membership. DCU is at 9.5%

kiole
10-07-2012, 12:18
I feel your pain mine were at 12% luckily I built my credit up and was able to refi at a variable rate of roughly 3.25%. If LIBOR ever goes back to historical highs ill be working a street corner trying to pay them back.

I never finished my degree but luckily I stopped before hitting 6 figures as I realized my degree wasn't going to be able to pay back six figure student loans. I look at it as a very expensive vacation. I had a lot of fun I don't know if it was 75k worth though.

I'll wait until the markets recover and probably do night classes on scholarship/grants to finish up the 3 semesters I need for a bachelors degree.

UtahIrishman
10-07-2012, 12:40
This is the main reason I've chosen not to go back to school for a Masters Degree. From an economic point of view it simply isn't worth it. You spend more to get the degree than you get in return. At least in my field

devildog2067
10-07-2012, 13:06
This is the main reason I've chosen not to go back to school for a Masters Degree. From an economic point of view it simply isn't worth it. You spend more to get the degree than you get in return. At least in my field

A degree can be about more than the economic return. I did a PhD in physics simply because I really love physics. Some educational credentials are an investment in higher future wages, others are done simply because you want to learn. Either is a valid reason.

UtahIrishman
10-07-2012, 13:28
A degree can be about more than the economic return. I did a PhD in physics simply because I really love physics. Some educational credentials are an investment in higher future wages, others are done simply because you want to learn. Either is a valid reason.

I'm in agreement with that. I think one of the sad parts of the cost of education now is that the cost can get in the way of simply wanting to learn.

certifiedfunds
10-07-2012, 13:51
I'm in agreement with that. I think one of the sad parts of the cost of education now is that the cost can get in the way of simply wanting to learn.

Lots of avenues for taking free college courses if you simply want to learn.

boomhower
10-07-2012, 13:54
If you are wanting to learn just for the sake of learning there is a lot of free material out there. Particular if you are into the science/math side of the equation. Many schools are putting their courses online for free, including some of the biggest names in the land like MIT. Of course you don't get any kind of credit or record you completed anything, but again, it's just for the sake of learning.

UtahIrishman
10-07-2012, 14:28
Lots of avenues for taking free college courses if you simply want to learn.

That's true...I've taken a few of them...