I Saved Over $12,000 on my Student Loans

I saved over $12,000 on my student loans.

No, it didn’t take me less than 15 minutes.

Yes, I am a real person.

I’m making the SAME monthly payments.

And yes, 12,000 dollars! Really! OMG.

And now I’m going to tell you all about what I did so that you can save some money too!

Yes, I’m a real person. See, this is me, in the Philippines, celebrating my loan savings!

How did I save money on my student loans?

I refinanced them. Not all of them but a huge chunk of them.

What’s refinancing?

In short, refinancing is (most often) switching banks to one that gives you a deal. In long, It’s asking another bank to repay your loan and give you a new loan with a better interest rate than the previous one. Why in the world would a bank do this? Well, banks earn a lot of money off the interest of a loan. By paying off your old bank the new bank now gets any interest accrued on the loan. While this interest is less than the old bank would get, it’s still money in the pocket for the new bank. It’s a win-win, you pay less money and your new bank gets some of the money you would have paid anyway. You leave behind the old bank and the higher interest rate. Yuck!

Sounds awesome! How do I sign up?

I chose to refinance with SoFi but there are tons of banks that will refinance your loan and you can shop around for the best rate.

Why did I use SoFi?

1) SoFi didn’t charge me to make extra payments – I’m trying to make extra payments on my loans. I found out that some banks will actually charge you for paying more than your loan amount because they are losing out on interest! What? No way am I getting charged for paying MORE than I have to.

2) I could apply and enroll online – I don’t live in the states so I loved that I didn’t need to go in or see anyone. I could complete everything I needed online.

3) There’s no minimum income – Since I live in Malaysia and get paid in local currency my annual salary is low compared to what I’d make in the U.S. I knew that having a lower salary would stop some banks from approving my loan. Most banks don’t want your monthly payment to be more than 10-15% of your monthly salary while mine is around 50% right now.

4) SoFi offered me a good rate – The rate they offered me was MUCH loaner than the one I have been paying.

5) There was no cost to me – No hidden fees while applying or refinancing my loans.

6) SoFi’s communication was good while I was applying – Since I’m applying from Malaysia, I had to do some weird salary conversions and such and I had some questions. They answered the phone promptly and had very good customer service.

7) SoFi did a soft credit check when applying – A soft credit check does not negatively affect your credit!

Student Loan Hero has a great breakdown of a few different banks that you can look at if you’re thinking about applying!

You could travel to Paris with all the money you save.

What exactly did I do?

I have over $100,000 in loans. Yes, I know crazy. Actually, I think I might be just slightly under the 6 digit mark now but not by much. Yay! In total, I refinanced $28,000 in loans, less than a third of my total.

I didn’t refinance ALL of them, because some of them actually have pretty good interest rates but my loans from graduate school are insane with some with 7.65% interest rates. Whatttt? Now that rate is down to 5.62% Yessss! Now you might think, what’s a measly 2%? Well, let’s see what a difference it made.

Save on your student loans

Above is a side-by-side of my old and SoFi loan. My loans before had an average rate of 7.2%.  I would have paid over $28,000 in interest by the time I was finished paying it off. With the same monthly payment, I will now pay $15,937. Saving me over $12,000 and shortening my loan term by 5 years! I really can’t even believe it myself which is why I’m so EXCITED to share this!

If you want to compare you loan with different rates, this is the calculator I use!

$12,000? That’s like 14 trips to the Maldives! Or like, 17 pairs of Louboutins.

Things You Should Know BEFORE You Refinance:

You don’t have to refinance ALL of your loans – You can just refinance those with higher rates and leave ones with decent rates where they are.

Public Service Loan Forgiveness – If you are thinking about applying for loan forgiveness and you move your loan to a new bank, you will most likely no longer be eligible. As a teacher, I can apply for forgiveness after teaching five years in specific schools. I didn’t want to take this option completely off the table so I only refinanced some of my loans. I left a good portion, with lower rates, with my old bank so that I could apply for this later if I was eligible.

Fixed vs Variable Interest Rates – When you refinance the bank will offer you a fixed rate (one that will stay the same forever) and a variable rate (one that will change).  Variable interest rates tend to start lower but end up much higher as time goes on. They change with prevailing interest rates. This meant if something like a crash in the economy would highly impact the loan. With Donald Trump in office, I went for the fixed rate. There are caps on how high your rate could go as well as how much your rate could move up (or down) in a year. If you plan on paying your loans out over an extended amount of time, fixed rates are usually the way to go.

Annual Percentage Rate – Make sure your bank isn’t charging you additional yearly fees on top of your interest rate. Your annual percentage rate will include any extra fees they might be changing. You’re APR and your interest rate should be the same if the bank isn’t charging you extra fees.

Cosigner – Most likely you will need a cosigner for your loan. Find a responsible adult who trusts you (and has good credit) and ask them  if they would cosign your loan. This is essentially saying that they would pay the loan if you don’t.  Then buy them a dinner with the all the money you save as a thank you for taking a whole lot of risk on you.

This can’t be real! What’s the risk?

There is NO risk in at least finding out how much money you can save. None. It doesn’t hurt to ask! It took me a few hours to apply, mainly because I’m in this weird not living in the US situation and I had to get my paper work together. $12,000 for a few hours worth of work is TOTALLY worth it.

Go. Now. No excuses. Take this step now. Not tomorrow. I promise you will not regret it.

*If you end up refinancing your loans with SoFi with any of the links above, I will receive a small commission. However, I really believe in this company and everything I’ve said above is true to my situation. I would not recommend them if I did not believe they could help you.

Want more money saving tips? Check these out!

How I Live Abroad with $100,000 in Student Loans

My New Side Hustle

One Week in the Maldives for Less Than $850

  1. Hi,

    I have recently applied for a loan with Sofi and was rejected due to living abroad. I was surprised to find out that you qualified as you said you lived in Malaysia? Do you work for a US company in Malaysia and pay taxes in the US? I know this is a very personal question but any help would be appreciated. When I started the application process in March they told me it was no problem that I lived overseas, but all of the sudden there seems to be an issue?

    1. Hi Samantha! What that’s crazy?!? I would definitely hassle them about this. I did list my US address as my home address however I sent my Malaysian pay stub with it in the local currency. I wrote in pen under it how much that was in USD. They did make me turn in some U.S. tax forms from 2016 since I live aboard. I don’t work for a US company however I do file taxes in the US because by law you are still required to file regardless of where you are living. I don’t end up paying any taxes but I have to file. I’m so sorry about this. I would honestly try to apply again or find a different company. There’s a few options here. Let me know how it turns out.

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Megan is from sunny California and is currently living in Kuala Lumpur, Malaysia. She funds her travels by teaching students with learning challenges and students applying to U.S. universities. She loves traveling like a local, eating amazing food and is always up for an adventure. Check out her about me section to learn more!

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