Refinancing Student Loans

[nodnarb]

Hey there, long time lurker, first time poster.
Just wanted to make sure that my likely decision to refinance is financially sound and that I'm not missing info.

I'm a current PGY-2 pursuing a career in hospital medicine after internal medicine residency. No plans on pursuing PSLF.
Current federal loans $235k with an interest rate 6.34%. No other loans.

Looked into refinancing with certain companies, best rate I received was from SoFi pre-qualification.
7 year term at 2.84, 10 year term at 3.04%, and 16 year term at 3.26%

It seems as though with SoFi, the minimum payment is $100 while during residency and until 6 months after finishing residency (supposedly, states online but SoFi people aren't very informed). I think with aggressive payment, I would be able to do the 7 year term but unsure if choosing the 10 year term for more safety would be better.

Reason for this post I guess is to have 1. reassurance that this is a financially savvy decision and 2. am I missing anything in all of this. Also--how long would it take for SoFi to take over all my loans after I submit all my paperwork.
Just a little nervous because I don't want to miss anything and this seems like a pretty big decision (but also a lot of the support staff over the phone are not very informed about the nuances)

[FrugalPhysician]

In my opinion you should NOT take the 7 year approach. I am actually looking into very similar timeframes for my wife. In today's historically low interest rates it's reasonable to rethink debt. "Paying it off as fast as possible" may not be prudent.

Back of the napkin math you're looking at
7 years @ 2800 / month
10 years @ 2000 / month
16 years @ 1200 /month

At a cost of basically $400 / year "fee" for tier of cheaper monthly payments. Freeing up your budget for the possibility of investments, opportunities, life expericenes, other higher debt (automobiles, houses) at a cost of $400 a year is an absolute bargain. And once you're making attending money if you want to tackle it faster - you can on your own time.

One could argue the 16 year program, but thats a long time to hang over your head. But 10 years v 7 years, in the end you're looking at <4k total added to interest for a long more flexibility in your month to month budget. I'd go 10.

[FrugalPhysician]

Also in the process for my wife. It's high depending on loan company you currently have and loan company you're switching too.

But we have already had an awful experience. These are wage employees just following an algorithm - I would anticipate ~20-30 days to have everything done. That has been our experience and I'm sure January will be a mad house.

[NumberWhizMD]

Refinancing is a no-brainer if you aren't going for PSLF. Hard to make more recommendations on term without more details (overall budget and expenses). I would caution the approach of "use the difference to spend on other things" unless those things will help improve net worth. It's easy to find reasons to spend money on other things, and then you have the student loans a lot longer. Unfortunately, not a lot of us are disciplined enough to do something meaningful with the excess money.

This is coming from someone who had a much higher student loan burden than you with a likely similar income level, 2 kids at the time, and 2 years living in a VHCOL area. We still managed to pay mine off in less than 5 years and now have a lot of expendable income to invest. We didn't skimp on retirement at that time, and our networth is increasing at a rapid rate, as we got used to spending less. We can splurge a lot more now and still have a lot of wiggle room.

[nodnarb]

Thanks for the responses! I meant to type 15** years--woops!
7 year would be 3.1k/month
10 year would be 2.3k/month
15 year would be 1.7k/month

granted would be paying more per month given during residency i won't be able to make these types of payments

[nodnarb]

I guess now that federal loan 0% interest has been extended...I guess I'll revisit this issue in a few months? haha

[Andrew StudentLoanAdvice]

For sure. Get quotes in April and refinance if it actually resumes in May.

Don't wait too long though as the federal reserve is planning on raising rates this year.

[Nameless1106]

Thanks in Advance for the consider and help.

I have about 83K in Federal student loans. Currently on government deferment like everyone else. My interest rates for my 5 total loans range from 5.4 to 6.9 and I have been following WCI recommendations for the last year+. I looked through Sofi, Laurel Road which I can get a 2.4 interest FIXED for 7 years, but in the fine print and documents, they charge a "Finance Fee" of over 8k so I would end up paying around 93-94K for the life of the laon. I am anticipating receiving 50k after taxes in November from a Trust and my goal is to have my loan paid off in the next 24 months. In this scenario would i be better off not refinancing? My current household income is approx 250k