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How to Protect Your Credit and Online Data From Fraud—A Year After The Equifax Breach

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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

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.

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Here's what you need to know about refinancing student loans

Should I Refinance My Fed Loans? Here’s What You Need to Know

If you’ve thought about refinancing student loans, chances are your next question is whether you can refinance federal student loans. After all, most of the $1.4 trillion in outstanding student loan debt is made up of fed loans.

The short answer is yes— you can refinance federal student loans with a select few private lenders, including SoFi. This is great news for borrowers with high-interest rate federal unsubsidized or PLUS loans.

However, there are a few things to be aware of before you refinance fed loans. We’ve gathered the most frequently asked questions from our blog and social media channels about federal student loan refinancing to help you decide whether it’s right for you.

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How to avoid predatory student loan scams

5 Ways to Avoid Predatory Student Loan Scams

Got student loans? We’ve got you covered with our Student Loan Smarts blog series. Our expert tips and hacks will help you save money, pay off loans sooner, and stress less about student loan debt. Read the other posts in the series here to get all the info you need to make intelligent decisions about your student loans.

Unfortunately, spotting a student loan scam today is more challenging than you might think. It can come in the form of a Facebook ad, an email, or a cheerful voicemail:

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3 People on Crushing Student Debt And Creating the Lives They Want

In our next 3 People story, we meet three professionals from diverse backgrounds, cities and careers, who open up about their finances, careers and overcoming student loan debt. Each person’s financial picture, student loans, and repayment strategy differs; however, each refinanced their student loans through SoFi to take control of student debt and pay off their loans faster.

Americans currently owe over $1.3 trillion in student loan debt, according to the Federal Reserve. And when the amount is broken down, its significance becomes even clearer.

CBS News reported in May that the average 2016 undergrad student loan debt is $37,172. But that’s nowhere near what grads of top tier b-schools and law schools face: six-figure student loan debt. Grads of Cornell University’s Samuel Curtis Johnson Graduate School of Management leave campus saddled with average student loan debt of $115,048. Head west to the University of San Francisco Law School, and the average climbs to $162,434.

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How to Choose Between Variable And Fixed Rate Student Loans

Got student loans? We’ve got you covered with our Student Loan Smarts blog series. Our expert tips and hacks may help you save money, pay off loans sooner, and reduce stress over student loan debt. Read the other posts in the series here—and get all the info you need to make intelligent student loan decisions.

So, you’ve settled on student loan refinancing. You’ve filled out the application, have gotten approved (congrats!), and now you’re faced with a couple of loan options—including the choice between a fixed vs. variable rate student loan. Even if you’re already familiar with both, factors like changing interest rates and your own financial situation have bearing on which type of loan is right for you.

What do you need to know before making a decision? Here’s the scoop on how these two options differ.

Fixed-rate student loans:
Generally have a higher interest rate than variable rate student loans
Are not affected by interest rate changes
Charge the same interest rate over the life of the loan

Variable-rate (or floating-rate) student loans:
Generally have a lower initial rate than fixed rate loans
Are affected by interest rate changes, so your loan’s rate can go up or down on a monthly, quarterly, or annual basis

How to Choose
Your final decision depends on your situation.

If you plan to pay off your loan relatively quickly (lucky you), a variable rate student loan may help you save you money. However, be aware that the longer it takes you to pay off the loan, the more opportunity there is for interest rates to rise. You can mitigate your risk by choosing a lender that caps its variable rates.

Related: How To Evaluate a Variable Rate Loan

If you don’t plan to pay off your student loan quickly, if your future income level is uncertain, or if you’re simply uncomfortable taking on extra risk, consider a fixed rate student loan. In today’s low interest rate environment, fixed rates can be competitive. If you have a high interest rate grad school loan, for example, you could get a lower fixed rate by refinancing.

Whether you choose a fixed rate or variable rate student loan, the main thing to remember is that the rate you got when you first took out your loan doesn’t have to be the rate you’re stuck with for life. Knowing your refinancing options can help put your mind at ease—and hopefully save you some money, to boot.

Editor’s Note: This is an updated version of a post we originally published in September 2013. We welcome new comments and questions below.

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