Refinancing student loans while back in school
September 13, 2018 7:06 PM   Subscribe

Help. My husband has a crazy-high variable interest rate (14.5%!) on approx. $25K private student loan from his first attempt, which ended in 2010 without graduating. We're being told that since he's back in school now (different university) he can't refinance. We're racking up over $300/mo on this loan, alone. Are we really trapped?

I'm embarrassed that we didn't notice it before but we're finally getting ALL of our finances in order. I've done a ton of research and I keep hitting this wall. We briefly considered taking the semester off to become eligible to refinance, but we know that's not a wise choice. Breaking his momentum risks him not getting his degree at all (long story, but it's real) and that's not something we're willing to risk. I also considered taking out a personal loan, but the lowest rates seem to be around 8-9%, while it sounds like we could expect 3-5% for refinancing student loans. It seems wiser to wait for those lower rates.

Which seems to leave us stuck and eating $300/mo in interest. Are there any creative options we're overlooking?

Details that may matter:

- The loan is currently deferred
- Current credit scores are just above 750 (him) and just above 800 (me).
- His credit score used to be terrible due to missed payments in his first few years after leaving his first school. They're starting to roll off his credit history but it will be a few years before they're gone.
- If all goes as planned he'll graduate in May.

I'm new-is to dealing with student loans so may very well be missing something big here and I feel really stuck. Thanks in advance.
posted by inatizzy to Work & Money (7 answers total)
The issue is less that he's in school, per se, and more that he's not working. It's not like there's a regulation or something--the private loan refinancers are generally skimming the cream off the student loan borrowers' pool by extending credit to those who have now demonstrated that they're at lower risk for default by actually getting full-time, decently-paid employment. Your husband isn't there yet.

That said, there really isn't a rule, so I would check through every reputable student-loan refinancer to make sure that nothing is available.

(I hope to God the reason he only has private loans is that he paid off his government loans already.)
posted by praemunire at 7:19 PM on September 13, 2018

I've heard great things about Green Path credit counseling and debt negotiation service. They have people specializing in student debt and most of their services are free. Here is an in-depth review including what you get and what you do/do not pay for. Good luck!
posted by rada at 7:24 PM on September 13, 2018

I promise not to threadsit but praemunire's comment made me realize I should clarify: this is his only private loan. He also has quite a lot in federal loans. The private loan has the worst interest rate by far. The others come in between 4-6.9%. All together we're going to have around $90-100K to pay off when all is said and done, between the first school and his current school. Overwhelming, but doable. So we're trying to do as much as we can to navigate it efficiently.

We're getting by while he's in school (I have a steady income) and we plan to aggressively pay these down once he is earning income again.

posted by inatizzy at 7:42 PM on September 13, 2018

I recently helped someone apply for private student loans and most of them offered to roll in existing loans they had, and had interest rates between 6% and 9% for him. If you aren’t using any private loans right now, it seems worth applying to some to see if you can at least get a better rate and probably have interest deferred until he finishes (and then pay the interest immediately so it doesn’t capitalise!)
posted by the agents of KAOS at 7:54 PM on September 13, 2018

The subreddit for student loans is quite helpful and is suggest posting there too.
posted by k8t at 9:57 PM on September 13, 2018

it seems worth applying to some to see if you can at least get a better rate and probably have interest deferred until he finishes (and then pay the interest immediately so it doesn’t capitalise!)

Watch out for origination fees, though, which over such a short period of time might eat up any savings from reduced interest.
posted by praemunire at 10:36 AM on September 14, 2018

Thanks all. I've started looking into these options. Keeping fingers crossed!
posted by inatizzy at 6:21 AM on September 15, 2018

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