3 people who refinanced their student loans and saving over $10K

3 People Close To Paying Off Student Debt Discuss Their Payoff Strategies and What They’ll Do Next

By SoFi General | Jan 04, 2017 | Career, Money, student_loan | No Comments

Life, interrupted. That’s what millennials with student loans are discovering as they try to meet their financial goals, such as buying a home.

But there’s a way to eliminate that debt faster. Refinancing your student loans to reduce interest rates is a strategic move savvy borrowers are making to save money over the life of their loans. Then they can turn their attention to saving for retirement and improving their quality of life.

We talked to three of our members, each with a different set of life circumstances, who were tired of putting their dreams on hold. For James Hilton Harrell, Melonia Bennett and Josh Grant, refinancing their student loans with SoFi has help put them on the path to a brighter financial future.

James Hilton Harrell

Age: 28

Current Town: Oakland, CA

Relationship Status: Single

Alma Mater(s): Carnegie Mellon University (2009), B.S. Policy and Management; Harvard University (2013), Ed.M. International Education Policy

Total Student Debt: $98,500

Number of Loans Consolidated: 2

Career: Network Improvement Partner with Oakland Unified School District

Annual Income: $120,000

Rent or Own: Rent

Monthly Rent: $1,600

SoFi: What made you decide to refinance your student loans?

JHH: I had initially planned to seek Public Service Loan Forgiveness after 10 years, but as I researched the program, I realized it’s dependent on Congress for continued approval and would limit my future options.

SoFi: What was your student loan interest rate and term length before and after refinancing?

JHH: In August 2014, I consolidated two 10-year loans with a rate of 7.3% to one five-year loan with a rate of 4.6%.

SoFi: When do you expect to pay off your student loan?

JHH: I am planning to pay off my loan in June. But I might try to add an extra payment, so I can be completely debt-free by my birthday in May.

SoFi: How has refinancing enhanced your life?

JHH: The biggest shift is being able to focus on things that actually matter. Harvard was essential for my personal development; it gave me the skills I need and helped me develop as a leader. However, the resulting bills shouldn’t be consuming so much emotional and cognitive bandwidth. Looking at my loans each month and not seeing the principal decrease left me feeling a bit defeated. SoFi gave me the gift of clarity so I am able to focus on the work and my personal life.

SoFi: In one phrase, how do you expect to feel when you finally make that last loan payment?

JHH: There is a scene in the movie “Legally Blonde,” where Elle Woods finds out she was chosen for an internship and pushes through everyone to scream, “Me!!!” I’d say that’s my expectation.

SoFi: What is the first “pleasure” purchase you’ll make? Do you have your eye on something?

JHH: Honestly, I lead a very comfortable life and don’t really have any wants.

SoFi: How do you expect to reallocate the money that’s now going to student loans?

JHH: I’ll focus on strengthening my safety net and saving more aggressively for a home.

SoFi: What first drew you to SoFi? How did it differ from your previous loan provider?

JHH: My debt has always been at the forefront of my mind. I studied economics and policy, so I have been mad that student loans have such egregiously high interest rates. They are guaranteed by the federal government, effectively removing moral hazard. Having a job and solid credit, I was paying a risk premium that didn’t apply to me, and SoFi addressed that.

SoFi: What do you think your life will look like five years from now?

JHH: I imagine my life will be relatively similar, and I’m hopeful that I’ll continue to be happy, healthy, and able to support young people.

SoFi: What advice do you have for recent grads struggling with student loan debt, and how should they approach getting out of debt while meeting other financial goals?

JHH: Make an annual plan and revisit it every quarter. I have a self-coaching document that details all of my goals—financial, professional, and personal—and I revisit it every three months to monitor progress and adjust them, if necessary. It keeps me focused when I don’t make the progress I want to make. Sometimes I overspend or have to dip into savings, which is natural, but the quarterly review keeps me on track.

Melonia Bennett

Age: 31

Current Town: Columbus, OH

Relationship Status: Single

Alma Mater(s): Miami University, B.A. Political Science and B.S. Business, Economics (2008); The Ohio State University (OSU), J.D. Law (2011)

Total Student Debt: $117,000

Number of loans consolidated: 14

Career: Attorney with an AmLaw 100 firm

Annual Income: $120,000

Rent or Own: Own

Monthly Mortgage: $1,300

SoFi: What made you decide to refinance your student loans?

MB: I heard about SoFi on NPR. At the time, they specialized in student loan refinancing, but only for certain schools. I signed up because OSU was on the wait list. After crunching the numbers, I realized SoFi would save me a lot of money. They also offer excellent guidance on how to refinance. I was able to refinance two years ago.

SoFi: What was your student loan interest rate and term length before and after refinancing?

MB: I had government-subsidized loans—14 of them, in fact! The Graduate PLUS loans each had a term of 20 years and an absurd interest rate of 7.9%. The first $12,500 for each loan, each semester, was at a lower interest rate of 6.8%, and then everything above that was at the higher rate. When I graduated and got my first statement, I panicked.

Right now, I have one five-year loan with a 4.75% interest rate. Having one loan is so much easier. Before, my minimum payment was spread across the 14 loans. I tried to push extra payments to the high-interest loans, but my previous lender didn’t make it easy. I couldn’t do it online and had to call, which was a pain.

SoFi: When do you expect to pay off your student loan?

MB: I intend to have the loan paid off this year. It’s a lofty goal, but I am looking forward to it.

SoFi: How has refinancing enhanced your life?

MB: It’s been a smart step for me, especially emotionally. Most of my friends also have graduate degrees, and we spend a ridiculous amount of time talking about student loan debt. I look forward to the day when we have other things to talk about.

SoFi: In one phrase, how do you expect to feel when you finally make that last loan payment?

MB: Let’s party! I’ve joked for years that I am going to take an amount equal to one student loan payment and use it to pay for a party. But then I realized that’s actually a thing! I really want to celebrate with my family and close friends who have stuck with me.

SoFi: What is the first “pleasure” purchase you’ll make? Do you have your eye on something?

MB: My party!

SoFi: How do you expect to reallocate the money that’s now going to student loans?

MB: I plan to devote a good chunk to paying off my mortgage loan. Now that I’ve seen the big dent I can make when I put a little extra down on a loan every month, I am excited to apply that technique to my mortgage. Of course, I also look forward to some frivolous purchases, like travel.

SoFi: What first drew you to SoFi? How did it differ from your previous loan provider?

MB: SoFi is very customer-oriented. Plus, I like to do everything electronically, and their online setup is very user friendly. Also, their reputation and brand identity resonate with me. I feel that the student loan crisis is different for our generation than previous ones, and SoFi is a modern company that speaks to us.

SoFi: What do you think your life will look like five years from now?

MB: I intend to continue my successful path as an attorney. But I also want to take a more active role in the Columbus community, and devote time and money to local causes, including social justice and legal aid. If you had asked me that question five years ago, my outlook would have been pretty negative. Now, I feel like I have so many possibilities! I look at the people around me and know my friends have put off major life decisions, like getting married, buying houses, or starting a family because of their student loan debt. I will be more willing to make those choices now that I feel like I can afford them.

SoFi: What advice do you have for recent grads struggling with student loan debt, and how should they approach getting out of debt while meeting other financial goals?

MB: Don’t be discouraged, even if it seems overwhelming. One key is to prioritize—you can’t pay down loans and buy a nice car and travel. A car isn’t something I want to spurge on, so I’ve been really happy with the used Honda Civic I’ve been driving. There’s lots of conflicting advice out there, so find what works for you.

Josh Grant

Age: 34

Current Town: Seattle, WA

Relationship Status: Married, one daughter

Alma Mater(s): Azusa Pacific University (2006), B.S. Athletic Training/Trainer, Exercise and Sports Science; University of Washington School of Medicine (2012), M.S. Physician Assistant Studies, Clinical Health Services

Total Student Debt: $200,000

Number of Loans Consolidated: 10

Career: Orthopedic surgery physician assistant at Proliance Orthopedic Associates

Annual Income: $160,000

Rent or Own: Own

Monthly Mortgage: $2,450

SoFi: What made you decide to refinance your student loans?

JG: The interest rate was killing me because the payments were so high—the money went mostly to interest. I felt like the process was stacked against me, and I was never going to get ahead.

SoFi: What was your student loan interest rate and term length before and after refinancing?

JG: The terms for my loans were between 15 and 30 years; most of the 15-year loans were at an interest rate of 6.5%, and the others were at 8.5% to 10%. In August 2014, I bundled them through SoFi into one 15-year variable loan with a 4.375% interest rate.

SoFi: When do you expect to pay off your student loan?

JG: I want to pay it all off by the end of 2018.

SoFi: How has refinancing enhanced your life?

JG: It’s given me breathing room to finally feel as though I’m making progress. I no longer have that chunk of money racking up huge interest.

SoFi: In one phrase, how do you expect to feel when you finally make that last loan payment?

JG: Free!

SoFi: What is the first “pleasure” purchase you’ll make? Do you have your eye on something?

JG: I’m going to get a hot tub and take a nice, long vacation with my wife.

SoFi: How do you expect to reallocate the money that’s now going to student loans?

JG: I plan to put the extra toward my mortgage, and then build up substantial savings, including starting a college fund for my daughter.

SoFi: What first drew you to SoFi? How did it differ from your previous loan provider?

JG: SoFi understands what millennials with staggering loans are facing, and it was refreshing to get a manageable interest rate that allows me to get ahead on my payments and make actual progress. SoFi has been a breath of fresh air in the suffocating world of student loans. I can’t believe everyone isn’t doing this.

SoFi: What do you think your life will look like five years from now?

JG: Assuming we are able to pay off our loan as planned, in five years we will be debt-free and enjoying life with our kids. We want to travel to see family not living nearby, do less work, and have more fun. I also want to give more back to my community once I have the resources to help others.

Want more advice on how to navigate your student loans? SoFi’s student loan help center can answer all of your student loan questions!

JG: Create a deliberate and educated plan for paying back your loans. You have to make decisions every day about whether you are more interested in a temporary purchase or your long-term goals. Stick to the course, and if you should get off it, recalibrate, and get back on.

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