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How to Take Down Your Student Loans… Even if You’re Not Eligible for Forgiveness
“I’m overwhelmed with student loans and these interest rates are killing me!”
Sound familiar?
You're Not Alone!
If you’re like most pharmacists, student loans will be one of your biggest expenses and can be a major barrier to achieving financial freedom. And with the average student loan debt now over $170,000, it can be really overwhelming.
Other than some of the forgiveness and tuition repayment/reimbursement programs available, dying, becoming permanently disabled, or escaping the country, you’re pretty much stuck paying them off.
But beyond just the debt load itself, average interest rates for federal graduate loans are anywhere from 6-8%. That means a huge chunk of your payments initially goes toward the interest and it can feel like you're not making much progress.
So what can you do?
You can minimize your expenses. You can earn extra income. Both can help you make bigger or extra payments to make the process go faster. But there’s another strategy that can help you save and cut down your timeline if that’s your goal: refinancing.
When you refinance student loans, you reorganize or change the terms of an existing loan(s). These changes include the timeline, the interest rate, type of interest rate, or a combination of those.
Your total savings will vary based on the loan balance, how fast it’s paid off, and the change in interest rate.
Consider a pharmacist with $200,000 in student loans with a 6.8% overall interest rate. Under the standard 10 year plan, the total amount paid would be $276,192.
But look what happens when the rate is changed
Total Savings Based on Change in Interest Rate for $200,000 Loan at 6.8% Paid Over 10 Years
Refinance to 5% Rate
$21,635 in Savings
Refinance to 4% Rate
$33,204 in Savings
Refinance to 3% Rate
$44,447 in Savings
Reduction in Monthly Payment Based on Change in Interest Rate
Refinance to 3% Rate
$370 Lower Payment
Refinance to 4% Rate
$276 Lower Payment
Refinance to 5% Rate
$180 Lower Payment
What's the Catch?
You may be thinking “Wow, I could be saving a ton if I refinance student loans. But what’s the catch?” Refinancing is not without some drawbacks and it’s very important to know what you’re giving up if you make the move.
First, once you refinance, you’re automatically ineligible for any of the federal forgiveness programs.
In addition, most private lenders don’t offer income-driven plans, so you will lose the flexibility to change your monthly payments and could face a problem if you experience a sudden change in your income. Furthermore, the option to put your loans in deferment or forbearance may not be available (see table below).
Also, not all lenders will forgive your loans if you die or become permanently disabled. So if you do decide to go this route you will want to know what their policy is on this. Regardless, having adequate life and disability insurance policies in place is something most pharmacists should have in place anyway.
So if you’re good with that, refinancing can be an awesome move.
When you refinance, your main goal should be to get a lower interest rate so that you save more money over time. If you have multiple loans, you can pick and choose which loans you want to refinance and if you have some already have a low interest rate, you would obviously want to leave those alone.
Who Should Refinance?
Don't Refinance if...
❌ You're pursuing a forgiveness program
❌ You need income-driven payments
❌ Your income isn't stable or in transition between jobs
❌ You can't get a better rate
Pull the trigger and refinance if...
✅ You're not pursuing a forgiveness program
✅ You can confidently make the payments for the terms
✅ You're trying to accelerate your payoff
✅ You want a bonus of up to $850
“Seriously I can also get paid?”
While these savings are great, why not also get paid. In a single year, Tim C (on the YFP team) made $2,700 by refinancing student loans multiple times. Each time he was able to get a lower interest rate through a different company and each time was able to get a cash bonus.
Refinance companies make money from you by the interest you pay each month. Because pharmacists typically carry high debt loads in the six figures, refinance companies will make more money over the course of the loan versus those with much lower student loan balances.
Therefore, as an incentive for you to use a particular company, they will offer a cash bonus or welcome bonus. There is no cost to you. As mentioned above, you’re not limited to doing this one time. With interest rates always changing, it’s not uncommon for another company to provide a better rate than what you refinanced to the first time.
Now, some big student loan review sites offer nothing to very little to their audience when they refinance in order to take larger commissions.
But that’s not our style.
We have partnered with several reputable refinance companies which offer bonuses of $500-$850 to you and sometimes higher when they are running promotions. Make sure to check multiple rates to make sure you're getting the best deal.
Check out what one of our audience members said:
Our Refinance Partners with Bonuses up to $800
Most rates advertised assume autopay discount.
The "Kayak" of student loan refinancing, Credible displays personalized prequalified rates from multiple lenders. Instead of going to multiple sites to check rates, you can put in your info once and compare options.
Once the loan is closed, it takes approximately 1-2 weeks for borrowers to receive the bonus. All bonus payments are by gift card. See terms. Bonuses are awarded via TangoCard and can be turned into a cash or debit card.
Key Facts
- Bonus = $800 for loans ⩾ $150K, $450 for loans $100K-149K, $350 for loans < $100K
- Terms of 5, 7, 8, 10, 12, 15, 20 years
- Variable rates starting at 5.28% APR (with autopay)*
- Fixed rates starting at 5.28% APR (with autopay)*
- Forbearance and discharge on death/disability are dependent on individual lenders
- Credible Advertising Disclosure
- *All bonus payments are by gift card. See terms.
A marketplace that compares multiple lenders that are credit unions and local banks.
Once the loan is closed, it takes approximately 6 weeks for borrowers to receive the cash bonus. Borrowers will receive instructions on how to claim their bonus and will be required to set up an account through Ambassador, where they will add their PayPal username. A detailed email with instructions outlining the process will be sent. Funds are distributed via PayPal.
Key Facts
- Cash Bonus = $750 for loans ≥150k, $300 for loans ≥$50k
- Terms between 5-20 years
- Fixed rates starting at 5.49% APR (with autopay)
- Forbearance and discharge on death/disability are dependent on individual lenders
Splash is a marketplace with loans available from an exclusive network of credit unions and banks as well as U-Fi, Laurel Road, and PenFed.
Cash bonuses will be received 90-120 days after the new loan is funded and will be sent as a check to the mailing address on the application.
Key Facts
- Cash Bonus = $500 for loans ≥ $50,000
- Terms of 5-20 years**
- Variable rates starting at 4.99%*
- Fixed rates starting at 4.96%*
- Forbearance and discharge on death/disability is dependent on individual lenders
- Splash Disclosure
- * These rates contain an autopay discount
**Splash disclosure: Fixed loans feature repayment terms of 5 to 20 years. For example, the monthly payment for a sample $10,000 with an APR of 5.47% for a 12-year term would be $94.86. Variable loans feature repayment terms of 5 to 25 years. For example, the monthly payment for a sample $10,000 with an APR of 5.90% for a 15-year term would be $83.85.
Frequently Asked Questions
Does YFP make money if I use one of their partners to refinance?
Your Financial Pharmacist LLC does not receive affiliate referral fees from refinance partners. However, YFP Gives, an affiliated non-profit corporation, is paid a referral fee for each loan refinanced through one of the links on this website.
Are there any hidden fees?
In general no. Most companies actually will pay you a cash bonus to refinance with them. If you come across any company or organization requesting an upfront fee, this could be a scam or an unreputable company. None of our partners charge an origination fee. The one exception is for those who refinance with First Republic Bank and live in Florida. In Florida, there is something called Stamp Documentary Tax. This tax applies to a lot of different documents such as mortgages, bonds, and liens, but also counts student loan refinancing. Currently, it is $0.35 for every $100 paid.
Are income-based repayments available if I refinance?
In general no. However, some companies may make accommodations on a case-by-case basis. If you require income-based payments or anticipate a need in the near future, you should not refinance your federal loans.
What's the difference between refinancing and consolidation?
Refinancing your student loans changes the existing terms with regards to interest rate and time to repay. Consolidation such as through the federal Direct Consolidation program, converts multiple loans into one resulting in an average weighted interest rate.
Will checking my rate affect my credit score?
Checking your interest rate with not have any impact on your credit score since companies do what’s called a “soft check.” However, if you accept an offer and fully complete an application, your credit score could be affected minimally.
Can I refinance more than once?
Yes. There is no limit to how often you refinance your loans. However, you should only so if it makes sense. Typical reasons to refinance your student loans again would be to get an even lower interest rate, change the term or monthly payment, and to remove a co-signer.
Will my loans be discharged if I die or become disabled?
Maybe. This depends on the specific refinance company. Earnest will forgive your loans if you die or become disabled. For Splash, LendKey, and Credible it depends on the specific lender.
Can I pay extra toward my refinanced loan?
Yes. Most companies do not have any prepayment penalty. Usually, you can set up auto payments to be higher than the minimum and you can also make manual payments each month or in a lump sum. This can save you a lot in interest over the course of the loan.
Should I choose a fixed or variable interest rate?
This depends on current rates and your comfort with risk. Fixed interest rates stay the same for the entire term of the loan. Your minimum monthly payment will always be the same so you're never going to have any surprises.
Variable interest rates tend to be lower than fixed interest rates at least initially. They typically change based on federal or LIBOR rates. Therefore, your monthly payment could change over the course of the loan.
About Your Financial Pharmacist
Your Financial Pharmacist is on a mission to help pharmacists achieve financial freedom through virtual comprehensive financial planning services via YFP Planning, as well as three weekly podcasts, books, webinars, and numerous online resources.