Let’s Get Out of Student Loan Debt

From talking with the people on /r/lawschool/ it sounds like there are a lot of questions about:

  • student loan debt,
  • the best way to break free from debt,
  • how to still live your life when you owe six figures (like buying a house); and
  • even whether you should be investing while you’re in debt.

People don’t like talking about student loan debt because it’s overwhelming.

You are not alone.

Literally just about everyone around you is suffering through the same problem. People need to understand that folks with student loan debt aren’t a financially reckless minority. High student loan debt is basically a prerequisite to becoming a lawyer these days.

The ABA conducted a survey recently. Here’s what they found:

  • The median cumulative student loan debt is $160,000.
  • More than one of every four has $200,000 or more in debt.
  • 95% of survey respondents took out loans to attend law school.

Why is it so bad?!?

You can blame it on rising tuition or a federal loan program with free flowing funds, but it’s definitely not inflation or you “making poor choices.”

Let’s start talking about how you can get control of your debt so you can go back to living your life.

The first thing you’re going to see below this intro text are a bunch of refinance offers. You do NOT have to refinance from a federal loan to a private loan. In fact, there are plenty of reasons not to. (See below for information about programs like PSLF).

These refinance offers are at the top because in our survey nearly 20% of responses indicated they will refinance and there’s not a lot to discuss about it beyond looking at the available interest rates and making a choice. Because the /r/lawschool community is so active we negotiated some special perks. The more people that use it the better perks we can get for you guys.

The next largest cohort of responses indicated that they have no idea what they’re doing. If you’re in that group skip to the next section.

Static Title One

A relatively new player on the market, backed by Southeastern Bank, ELFI has been aggressively expanding in the market. For you, that means they might be willing to offer a lower rate, although it will depend on your particular circumstances. I’ve noticed more readers going through the process with ELFI lately, which I take as a vote of confidence that they are finding good rates.

Ready to get started?

  • Interest Rates: 2.39%+
  • Bonus Cashback: $350
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 10
    • 15
    • 20
    years
  • Rating: 7/10
    3.5 rating

Static Title One

A relatively new player on the market, backed by Southeastern Bank, ELFI has been aggressively expanding in the market. For you, that means they might be willing to offer a lower rate, although it will depend on your particular circumstances. I’ve noticed more readers going through the process with ELFI lately, which I take as a vote of confidence that they are finding good rates.

Ready to get started?

  • Interest Rates: 2.39%+
  • Bonus Cashback: $350
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 10
    • 15
    • 20
    years
  • Rating: 7/10
    3.5 rating

Static Title One

Needing no introduction, SoFi is the grandfather of student loan refinancing companies. Given their standing in the market, they can be selective about who they are willing to refinance and the rates they offer, which is good news to our readers. There are other reasons that you might want to refinance with SoFi: (i) they offer experiences for members (networking events, dinners, happy hours), which I'm sure will be back once the pandemic ends; and (ii) SoFi's expanding product offering of additional financial products means you can simplify things by doing business with a single company.

Guaranteed Rate Match. For a limited time, SoFi has launched a Guaranteed Rate Match where they'll match a lower competitor rate and give you $100 for your trouble.

* See SoFi disclosures.

How the cashback bonus is paid

Once the terms and conditions are met and the loan has been disbursed, you will receive your welcome bonus from SoFi via automated clearing house (ACH) into your checking account within 30 calendar days.

Ready to get started?

  • Interest Rates: 2.25%+
  • Bonus Cashback: $500
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 10
    • 15
    years
  • Rating: 8/10
    4.0 rating
  • Important Disclosures: See SoFi Disclosures

Static Title One

Needing no introduction, SoFi is the grandfather of student loan refinancing companies. Given their standing in the market, they can be selective about who they are willing to refinance and the rates they offer, which is good news to our readers. There are other reasons that you might want to refinance with SoFi: (i) they offer experiences for members (networking events, dinners, happy hours), which I'm sure will be back once the pandemic ends; and (ii) SoFi's expanding product offering of additional financial products means you can simplify things by doing business with a single company.

Guaranteed Rate Match. For a limited time, SoFi has launched a Guaranteed Rate Match where they'll match a lower competitor rate and give you $100 for your trouble.

Ready to get started?

  • Interest Rates: 2.25%+
  • Bonus Cashback: $500
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 10
    • 15
    years
  • Rating: 8/10
    4.0 rating
  • Important Disclosures: See SoFi Disclosures

Static Title One

Through its social mission CommonBond donates money to Pencils of Promise for each funded loan. They also have a dedicated legal group that can help oversee your application. It’s also the only student loan refinancing company that allows 3L students to refinance on the strength of an offer letter (while delaying payments until you begin work), although this program has been temporarily suspended during COVID. Many readers have reported good experiences with CommonBond and good rates. * See CommonBond disclosures.

Ready to get started?

  • Interest Rates: 2.49%+
  • Bonus Cashback: $400
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 10
    • 15
    • 20
    years
  • Minimum Credit Score: 660
  • Rating: 9/10
    4.5 rating
  • Important Disclosures: See CommonBond Disclosures

Static Title One

Through its social mission CommonBond donates money to Pencils of Promise for each funded loan. They also have a dedicated legal group that can help oversee your application. It’s also the only student loan refinancing company that allows 3L students to refinance on the strength of an offer letter (while delaying payments until you begin work), although this program has been temporarily suspended during COVID. Many readers have reported good experiences with CommonBond and good rates.

Ready to get started?

  • Interest Rates: 2.49%+
  • Bonus Cashback: $400
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 10
    • 15
    • 20
    years
  • Minimum Credit Score: 660
  • Rating: 9/10
    4.5 rating
  • Important Disclosures: See CommonBond Disclosures

Static Title One

Although it can’t directly refinance your loans, Credible is a marketplace of lenders with a single application process that can let you compare rates across a variety (but not all) lenders. Many of the major lenders are not on the Credible platform, so you will still likely need to apply to multiple places. However, if you’re looking to compare offers, Credible offers a lot of value in that you can get a lot of different rates quickly. If you already have an offer from ELFI, SoFi, Earnest or Commonbond, Credible becomes a smart second choice so you can check rates against your original offer. * See Credible disclosures.

Loan Amount Bonus
$0-$100K $500
$100K+ $1,000

How the cashback bonus is paid

Credible pays the welcome bonus via e-giftcard.

Ready to get started?

  • Interest Rates: 2.15%+
  • Bonus Cashback: $1,000
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 8
    • 10
    • 12
    • 15
    • 20
    years
  • Rating: 8/10
    4.0 rating
  • Important Disclosures: See Credible Disclosures

Static Title One

Although it can’t directly refinance your loans, Credible is a marketplace of lenders with a single application process that can let you compare rates across a variety (but not all) lenders. Many of the major lenders are not on the Credible platform, so you will still likely need to apply to multiple places. However, if you’re looking to compare offers, Credible offers a lot of value in that you can get a lot of different rates quickly. If you already have an offer from ELFI, SoFi, Earnest or Commonbond, Credible becomes a smart second choice so you can check rates against your original offer.

Ready to get started?

  • Interest Rates: 2.15%+
  • Bonus Cashback: $1,000
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 8
    • 10
    • 12
    • 15
    • 20
    years
  • Rating: 8/10
    4.0 rating
  • Important Disclosures: See Credible Disclosures

Static Title One

Low interest rates, flexible and easy to navigate, Earnest focuses on your individual financial circumstances (beyond your credit score), consistently producing good results for a variety of readers like you, which is why it qualifies as our top pick. If you’re only going to apply with one company to check your rates, Earnest should be it. Important note: Bonus cannot be issued to residents in KY, MA, or MI. * See Earnest disclosures.

Loan Amount Bonus
$0 – $100K $0
$100K+ $500

Ready to get started?

  • Interest Rates: 1.88%+
  • Bonus Cashback: $500
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    years
  • Rating: 10/10
    5.0 rating
  • Important Disclosures: See Earnest Disclosures

Static Title One

Low interest rates, flexible and easy to navigate, Earnest focuses on your individual financial circumstances (beyond your credit score), consistently producing good results for a variety of readers like you, which is why it qualifies as our top pick. If you’re only going to apply with one company to check your rates, Earnest should be it. Important note: Bonus cannot be issued to residents in KY, MA, or MI.

Ready to get started?

  • Interest Rates: 1.88%+
  • Bonus Cashback: $500
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    years
  • Rating: 10/10
    5.0 rating
  • Important Disclosures: See Earnest Disclosures
Show All Lenders

Our reviews are biased. The FTC requires websites to disclose whenever there could be hidden interests or unspoken biases related to recommendations. It’s impossible to write about money without there being some conflict of interest. Please assume the following: you got a cashback bonus and Dumpster Phoenix got paid. The student loan company bought us coffee or lunch at least once. We probably have a student loan refinancing water bottle somewhere around the office. This compensation may impact where products appear (and in what order) throughout the site. Read more about how we manage conflicts.

Start Here

The first step to taking control is easy but painful. You need to create a simple spreadsheet that consolidates your understanding of your loans. Most people end up with loans from various lenders (Stafford, Grad Plus, Undergraduate, Private, Bar Prep, etc.) and it’s essential to understand the balance owed, interest rate, date payments begin.

To make that easy for you, here’s a template Google Sheet you can use and the link to Federal Student Aid which will have a record of all your federal loans. Complete this step before moving on to the next step.

Resources

👉 Google Sheet

👉 Federal Student Aid

Refinancing Options

Should you refinance in June 2021? Probably not. If you have federal student loans, you are currently paying 0% interest and $0 payments until September 31, 2021. The only reason it might make sense to refinance federal student loans today is if you think interest rates will increase in the next six months and you want to lock in a low interest rate for your student loans today.

Should you refinance after September 2021? People refinance their loans to save money on interest, get a lower monthly payment or both.

If the median cumulative student loan debt is $160,000 and the average interest rate across all loans is 7%, you would save $26,248 over the lifetime of paying off the loans in 10 years if you refinanced to a rate of 4.25%. If you could get the rate down to 3.5%, you would save $33,067. If you’re not pursuing a forgiveness plan, you will likely save tens of thousands of dollars by refinancing.

Who should you refinance with? The market is hot with student loan refinancing lenders competing for your business. We list the top lenders and keep the rates updated so that you know where to find the lowest rates. Because everyone’s situation is different, we suggest rate checking with a few lenders and selecting whoever offers you the best deal.

How often should you refinance? Refinancing your student loans costs $0 (other than your time). There are no prepayment penalties, origination fees or service fees. You should check rates every six months to see if you can find a lower rate as your debt-to-income ratio improves.

Income-Driven Repayment Plans

When people hear “IDR” they often get confused with “IBR.” So what is income-driven repayment? IDR refers to the four student loan repayment options where payments are calculated as a percentage of your income.

Income-Based Repayment (IBR). Under IBR, you pay 10 to 15% of your income over 20 or 25 years depending on when you originally took out the loans and whether the loans were for undergraduate or graduate school.

Learn More: Income-Based Repayment.

Income-Contingent Repayment (ICR). ICR is the oldest IDR plan dating all the way back to 1994. ICR calculates the monthly payments based on your income or a fixed repayment amount over 12 years, whichever is lower.

Learn More: Income-Contingent Repayment.

Pay As You Earn (PAYE). PAYE requires monthly payments equal to 10 percent of your income over 20 years. If your monthly payments don’t cover the interest on your subsidized loans, the government will pay the remaining interest for the first three years (this does not apply to unsubsidized loans).

Learn More: Pay As You Earn.

Revised Pay As You Earn (REPAYE). REPAYE requires monthly payments equal to 10 percent of your income over 20 years (for undergraduate loans) or 25 years (for graduate loans). If your monthly payments don’t cover the interest on your subsidized loans, the government will pay the remaining interest for the first three years and half the interest for another three years after that. The government will pay half the interest on your unsubsidized loans at all times.

Learn More: Revised Pay As You Earn.

Forgiveness Options

Public Service Loan Forgiveness. The PSLF Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer. To qualify, you must be employed by certain public service organizations or non-profit 501(c)(3) tax exempt organizations and make eligible payments on your federal student loans.

Learn More: Public Service Loan Forgiveness.

Income-Driven Repayment Loan Forgiveness. Each income-driven repayment plan has its own forgiveness program that typically results in the loans being forgiven after 20 or 25 years. Prior to March 2021, loans forgiven under these programs incurred a “tax bomb” in that you were responsible for including the forgiven amount in your taxable income the year the loans were forgiven. For now, student loan forgiveness is tax-free until 2026. Congress may choose to extend such tax-free forgiveness but we likely won’t know until 2026.

Buying a House While Managing Debt

Most lenders look at your debt-to-income ratio as an important metric for deciding whether to offer you a mortgage. If your student loan debt is high, this can obviously be a problem. Thankfully, there are a bunch of banks that understand selling mortgages to lawyers is a good long-term bet because they want those lawyers as long-term customers. Even better, these lenders understand that a typical recent law grad hasn’t yet had an opportunity to save up significantly for a downpayment, so they offer down payments as low as 0%. Ultimately, your student loan debt shouldn’t keep you from getting a mortgage.

Investing While You Owe Student Loan Debt

There’s an age old question about whether you should invest or pay down debt. There’s generally two main arguments: (1) you should pay down all debt as fast as you can; or (2) you should always invest if you think your expected rate of return is higher than the interest rate on your debt.

Generally, it’s up to you to figure out what feels most comfortable. Some people don’t like debt, so they pay it off. Others are comfortable with debt, so they invest while carrying large amounts of debt. One way to reframe the question is, would you borrow the amount you have today in student loans from a bank at the same interest rate in order to turn around and invest the money? Most people wouldn’t, which is why paying off your debt is usually a good move (there’s not a lot of rich people that also have student loan debt).

More important than deciding whether to pay down debt or invest, is to make sure that your net worth is moving in the right direction each month. Focus on increasing your savings rate and soon it won’t be an either/or question and you’ll be able to do both.


All Student Loan Refinancing Companies Compared

Note: I’ve negotiated a special deal for our readers. If you use these links, you will get the bonus and you’ll help support the growth and development of this site.

Lender

Bonus Cashback

Variable Rates

Fixed Rates

Loan Terms

Variable Rates:
2.39%+
Fixed Rates:
2.58%+
  • Fixed
  • Variable
Loan Terms:
  • 5
  • 7
  • 10
  • 15
  • 20
years
Variable Rates:
2.25%+
Fixed Rates:
2.74%+
  • Fixed
  • Variable
Loan Terms:
  • 5
  • 7
  • 10
  • 15
years
Variable Rates:
2.49%+
Fixed Rates:
2.59%+
  • Fixed
  • Variable
Loan Terms:
  • 5
  • 7
  • 10
  • 15
  • 20
years
Variable Rates:
2.15%+
Fixed Rates:
2.16%+
  • Fixed
  • Variable
Loan Terms:
  • 5
  • 7
  • 8
  • 10
  • 12
  • 15
  • 20
years
Variable Rates:
1.88%+
Fixed Rates:
2.59%+
  • Fixed
  • Variable
Loan Terms:
years
Variable Rates:
1.88%+
Fixed Rates:
2.54%+
  • Fixed
  • Variable
Loan Terms:
  • 5
  • 8
  • 10
  • 12
  • 15
years
Variable Rates:
1.99%+
Fixed Rates:
2.97%+
  • Fixed
  • Variable
Loan Terms:
  • 5
  • 7
  • 10
  • 15
years
Variable Rates:
1.91%+
Fixed Rates:
2.95%+
  • Fixed
  • Variable
Loan Terms:
  • 5
  • 10
  • 15
  • 20
years
Variable Rates:
1.99%+
Fixed Rates:
2.80%+
  • Fixed
  • Variable
Loan Terms:
  • 5
  • 7
  • 10
  • 15
  • 20
years
Variable Rates:
1.88%+
Fixed Rates:
2.85%+
  • Fixed
  • Variable
Loan Terms:
  • 5
  • 7
  • 10
  • 15
  • 20
years
Variable Rates:
2.25%+
Fixed Rates:
2.25%+
  • Fixed
Loan Terms:
  • 7
  • 10
  • 15
years

  • Interest Rates: 2.39%+
  • Bonus Cashback: $350
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 10
    • 15
    • 20
    years
  • Rating: 7/10
    3.5 rating
  • Visit Education Loan Finance (ELFI)
  • Interest Rates: 2.25%+
  • Bonus Cashback: $500
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 10
    • 15
    years
  • Rating: 8/10
    4.0 rating
  • Important Disclosures: See SoFi Disclosures
  • Visit SoFi
  • Interest Rates: 2.49%+
  • Bonus Cashback: $400
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 10
    • 15
    • 20
    years
  • Minimum Credit Score: 660
  • Rating: 9/10
    4.5 rating
  • Important Disclosures: See CommonBond Disclosures
  • Visit CommonBond
  • Interest Rates: 2.15%+
  • Bonus Cashback: $1,000
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 8
    • 10
    • 12
    • 15
    • 20
    years
  • Rating: 8/10
    4.0 rating
  • Important Disclosures: See Credible Disclosures
  • Visit Credible
  • Interest Rates: 1.88%+
  • Bonus Cashback: $500
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    years
  • Rating: 10/10
    5.0 rating
  • Important Disclosures: See Earnest Disclosures
  • Visit Earnest
  • Interest Rates: 1.88%+
  • Bonus Cashback: $500
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 8
    • 10
    • 12
    • 15
    years
  • Minimum Loan Amount: $50,000
  • Rating: 6/10
    3.0 rating
  • Visit Splash Financial
  • Interest Rates: 1.99%+
  • Bonus Cashback: $1,000
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 10
    • 15
    years
  • Visit Citizens Bank
  • Interest Rates: 1.91%+
  • Bonus Cashback: $300
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 10
    • 15
    • 20
    years
  • Rating: 8/10
    4.0 rating
  • Visit LendKey
  • Interest Rates: 1.99%+
  • Bonus Cashback: $300
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 10
    • 15
    • 20
    years
  • Rating: 7/10
    3.5 rating
  • Visit Laurel Road
  • Interest Rates: 1.88%+
  • Bonus Cashback: $600
  • Loan Types:
    • Fixed
    • Variable
  • Loan Terms:
    • 5
    • 7
    • 10
    • 15
    • 20
    years
  • Minimum Credit Score: 720
  • Visit Brazos
  • Interest Rates: 2.25%+
  • Bonus Cashback: $300
  • Loan Types:
    • Fixed
  • Loan Terms:
    • 7
    • 10
    • 15
    years
  • Rating: 10/10
    5.0 rating
  • Visit First Republic Bank