Refinancing Student Loans – My $6,000 Mistake


Wondering if refinancing your student loans is the right thing to do…or a mistake?

I get it. The weight of student loan debt is outrageous.

Like there’s no end in sight.

But, if you use that hopeless place as motivation to get yourself out of debt as fast as possible, and do whatever it takes to move on from this chapter of your life, it does get better.

And that debt repayment plan might include refinancing…something I wish I had known was an option.


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Life After Paying Off Debt

After feeling like I would never be able to pay off my undergraduate and graduate school loans, I did it. In less than three years. To this day, it’s one of my proudest accomplishments.

That annoying debt is GONE.

I saved $30,000 in interest charges by paying off my debt early, which is something to celebrate.

But my strategy wasn’t perfect. I have one big regret.

The Debt Mistake That Cost Me Thousands Of Dollars

At the time, I didn’t know much about refinancing. I knew my interest rate was higher than I wanted (6.8%), but I didn’t know of any options to get a lower rate.

I was just starting to learn basics like:

  • why so much money is taken from paychecks
  • retirement is something you had to save for
  • how to buy a house with a mortgage loan

Local Bank Encounter

But one day at my local bank, I casually asked a teller about getting a lower interest rate for my student loans (which were over $42,000). She responded with a look and chuckle, then she told me they had no options for me. I felt embarrassed. I had no assets, and that look told me they were not willing to give me a personal loan that large with a better interest rate.

The bank teller’s response caught me off guard, and I felt foolish for even asking. I let that response get to me and I never spent another second looking into refinancing. I thought I was just stuck with my interest rate.

Turn Lemons Into Lemonade – Student Loan Book

Now that I am free from my student loans, I realize a lot of people are in the same struggling boat I was in. So I wrote a book about how I paid off debt without earning a huge income–and how you can too– (It’s called Pay Your Student Loans Fast.)

Pay Your Student Loans Fast Book

Did I Make a Huge Mistake?

While researching for the book, a friend with undergraduate and law school debt told me how he used and recommended SoFi to get a much lower interest rate.

I had never heard of it before. Was there an even smarter way to pay off your student loans fast that I didn’t know about?!

I did some research and seriously wished I had known about options to refinance student loans with companies like SoFi a few years ago.

Refinancing My Student Loans With SoFi Would Have Saved Me Thousands Of Dollars

I did the math, and it would have saved me thousands of dollars!

Now with refinancing, you have to be aware of fine print and fees. For federal loans, you may lose perks like income-based repayment plans, student loan forgiveness eligibility, and the current pause of student loan payment and interest put in place by the federal government.

So you’ll want to make sure the fees (if there are any) do not cost more than how much you’ll be saving with the lower interest rate.

Do Your Research

Refinancing is not for everyone, but with a little time researching or talking to a financial advisor, you might just realize like I did that refinancing with a new loan could save you thousands too.

SoFi reportedly has no fees. You get options for the length of repayment plan you want to be on. Plus, their advertised interest rate is less than half the interest rate I paid.

Check the interest rate you can get with SoFi.

I wish I had known about options to refinance student loans with a company like SoFi years ago!


Student Loan Repayment Lesson Learned

So, my biggest mistake when it comes to paying off my student loans is not refinancing.

I let the one quick “No” from my local bank teller deter me from looking any further. I paid the loans off, but I’m all about working smarter…not harder…and had I used SoFi, I would have saved thousands more.

And saving thousands fits in the working smarter, not harder category!

So, How Does Refinancing Work?

Refinancing means you finance your loans, typically with a new loan at a lower interest rate. You wouldn’t want to refinance your loans if it meant getting a higher interest rate. That will cost you more in fees and interest charges. Not smart.

With a lower interest rate, your monthly bills should be lower. If you pay the same amount you were paying before refinancing, more of your payment will go toward the principal. Thus, this would lower your balance of the amount you owe and allow you to pay off your loan faster.

Student Loan Refinancing Example

Here’s an example of the average student loan debt, which in the U.S. at the time of writing is around $30,000.*

Let’s say you borrowed $30,000 for your college education. Your loan is at 6.8% interest, and you’re on the standard repayment plan of 10 years.

*As of 2023, the average student loan debt is now around $40,780.

Standard Repayment Plan:

If you pay your minimum payments (no more, no less), you will pay about $345 per month for 120 months (10 years). The total amount you’d repay for your education would be $41,774. That number is calculated by $30,000 (loan) + $11,774 (interest) = $41,774 total.

Standard Repayment Plan + $100 Extra Per Month

Most people who want to get out of debt faster know they need to pay more than the minimum in order to pay it off faster. So, let’s say you decide you are going to pay an extra $100 per month toward your student debt, making your monthly payment $445. The numbers shake out like this:

Your loan would be paid off in 86 payments (versus 120). You’d repay your $30,000 (loan) + $7,897 (interest) = $37,897 total.

In other words, if you can scrape up an extra $100 per month to put toward your debt, you could save $3,876 in interest and 2.8 years of making payments. Not bad! That’s working smarter.

But it could get even better.

Standard Repayment Plan + $100 Extra Per Month + Refinancing

If you are already committed to making monthly payments of $445 and you refinance through a company like SoFi to get a reduced interest rate around 3%, you could pay off that original $30,000 loan even faster.

Let me demonstrate:

You borrowed $30,000. Your interest is now 3%. Your standard repayment amount would only be $290 (due to lower interest), but you’re too smart and you tightened your budget enough to pay $445 per month.

With this method, it’d only cost you $30,000 (loan) + $2,897 (interest) = $32,897 total. In other words, by refinancing your student loan and payment a little extra, you would save 3.8 years of payments AND save $8,877! Seriously, almost nine thousand dollars!

Now that’s working the smartest!

Work Smarter, Not Harder

So, while I’m still super pumped that I eliminated my student loans fast, and I’m not losing sleep over this missed opportunity, if I had to do it again I would definitely look into refinancing. Looking at the big picture and how much money I can save is motivating for me, and refinancing for a lower interest rate is one way you could pay less for your college debt.

I have not looked into any other refinancing companies even though I know there are others out there. I recommend SoFi as a starting point for refinancing companies to look into because it’s the only one I personally know someone who has refinanced and had a really good experience with them.

I’m sure there are other good companies out there, so if you’ve had a good experience refinancing your loans for a lower rate with someone else, send me a message and let me know! You know I love to hear about ways to be smarter with money.

Cheers to being smart with your time & money,

-Val Breit

Note: The prepayment calculator I use to figure out these numbers can be found here and if you’re interested in how refinancing could help you pay off your student loans faster, start by checking out SoFi.



Val Breit

Val Briet helps women create a life they love with money hacks, productivity tips, unique gift ideas, and honest reviews to find products that are worth it!

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