New Year’s resolutions come and go, but student loans? Not so much. When next year rolls around, wouldn’t it be nice to see you’ve made a significant dent in your student debt—or have even decimated it completely?
If you’re serious about paying off student loans, we’ve got 17 easy and effective ways to help you do it. Check out our list, and start committing to your financial resolutions today!
“My partner doesn’t really need to know I splurged on these shoes, so I’ll intercept the credit card bill from the mail before he sees it.”
“My bonus was a bit more than I anticipated, so it won’t hurt if I don’t tell my wife and have some fun with the extra money.”
A one-time money secret may seem like a minor relationship infraction, especially if the amount in question is a small one. But as I know from conversations with my clients, one fib can lead to another, snowballing into long-term deceits, such as secret credit cards or hidden bank accounts. Little flakes of dishonesty can severely ice over a relationship, especially when debt accumulates or credit scores fall.
Read moreIt can feel frustrating seeing your variable interest rate rise with SOFR. But even if interest rates rise, variable rates often still save money over the longer term. Consider this example:
Note that in the example, the loan is larger earlier in the term before the borrower has paid much of it off. In a rising rate environment, that is also when the interest rate is lowest. By the time the interest rate has risen, the total loan balance is much smaller. That means that even though the variable rate increased from 4% to 8% over the life of the loan, you’d still end up paying less in interest than you would if you had selected the 6% fixed rate from the beginning.
For context, in the last 20 years, interest rates have never increased more than five percentage points in a five-year period.
Many variable rate loans have a cap to protect borrowers so that no matter what happens to the 30 day average SOFR index, borrowers will never pay more than that cap. SoFi’s variable rate loans for student loan refinancing are capped at a maximum of 8.95% or 9.95%—depending on the loan term.
For most borrowers, the best course might be to do nothing. There’s no universal right or wrong answer for whether a fixed or variable rate is better. Your decision all depends upon your personal situation and flexibility.
You might prefer to keep your variable rate if you want to take advantage of the maximum possible savings (i.e., the lowest possible interest rate to start) but have the financial flexibility to make higher monthly payments if interest rates rise. You might also prefer a variable rate if you plan to pay off your loan in a short timeframe, such as seven years or less.
Alternatively, if you like the consistency of knowing exactly what your monthly payments will be over time, you can consider refinancing your variable rate loan into a new fixed rate loan. Also, if you plan to pay your loan back over a longer period of time (say 10 or 20 years), you might prefer to eliminate the risk of interest rate changes with a new fixed rate loan.
With SoFi, you’re always able to apply to refinance your loan again at no additional cost. There are no prepayment penalties for repaying your existing loan early, and there are no origination fees for taking out a new loan.
Ultimately the decision on the loan term, amount, and loan type depend on your personal situation.
Still have more questions? Click here to learn more about fixed and variable rates, or call our Customer Support team at 855-456-7634 (SOFI).
What’s the difference between fixed rate loans and variable rate loans and which options is better? Here’s a resource to help you understand and choose between fixed and variable rate loans. More
Got student loans? We’ve got you covered with our Student Loan Smarts blog series. Our expert tips and hacks… More
There are a lot of factors to take into account when choosing a student loan—differing interest rates, private vs. public, the pros and cons of working with various lenders. More
Questions? Call us 7 days a week at 855-456-7634
It’s that time of the season when we start to set the list of New Year’s resolutions for ourselves: eating better, exercising more often, and saving some extra money. But what about those selfless resolutions that impact those around us and who we care about most? Being more kind is a start, and so is minding your “P’s” and “Q’s”; however, these types of actions often fall flat as the year rolls along.
It might be time to consider some steps you can take that protect those you love. As troublesome as it sounds, buying life insurance is one of the most selfless decisions you can make for protecting your family. Unlike other resolutions, purchasing life insurance isn’t about you; it’s about the ones you love. And there are a few important tips and tricks that can help in the search for the right kind of coverage.
So what is life insurance anyway?
Read more
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For people focused on their careers, finances, and relationships, podcasts are the self-help books of the 21st century. They’re typically pretty short (most under an hour) and easily accessible, allowing listeners to take in episodes while driving, working out, or whipping up something for dinner.
Because we know how important career success, wealth, and personal connections are to our members, we’ve handpicked 16 podcasts that offer everything from advice on achieving business success to finance tips to lessons on how to enrich your life.