There is $1.2 trillion of outstanding student loan debt in the US; the average balance is $29,000. Interest rates vary widely for student loans, but if you have a loan with an interest rate of 6-8%, that is too damn high! Are you one of the 40 million Americans struggling with student loan debt? Let’s talk about how you can start paying off student loan debt, faster.

Drowning in Debt

There is $1.2 trillion of outstanding student loan debt in the US; the average balance is $29,000. Interest rates vary widely for student loans, but if you have a loan with an interest rate of 6-8%, that is too damn high! We want to help you start paying off student loan debt, faster.

You also may have several different loans that you have to keep track of. If you are in either or both of these situations, you should consider refinancing those loans.

Refinancing loans means you save money by lowering your interest rate, and we have learned that the two most expensive things in life and interest and taxes. The less we can pay in both, the more money we have and the more money we have, the faster we can achieve financial freedom.

SoFi

SoFi specializes in refinancing and consolidating student loans. They offer two choices; fixed rate and variable rates. Fixed rate loans have, well, fixed rates. The interest rate doesn’t change during the fixed rate period of the loan. This makes it easy to budget in your loan payment because you know the amount you owe each month will remain constant. SoFi offers fixed rates starting at 3.50%.

Variable rate loans have an interest rate that changes with the prevailing interest rate. Variable rates are usually based on changes to a well-known index. SoFi uses the one month LIBOR. This means your rate can change monthly which makes it harder to plan into your budget.

The upside to this type of loan is that the rates can be very low, starting as low as 2.14%. There is a cap on how high that rate can go, though. SoFi caps the rate for student loans at 8.95 or 9.95%, depending on the term.

Which option should you choose? That 2.14% is pretty tempting. If you’re a high earner who has a lot of extra cash to throw at the loan, the variable rate might be your choice. You can pay down a big chunk of the loan while the interest rate is low so even if it rises, you will still have saved money because you shortened the length of the loan and paid a lot of it off while the rate was low.

If you don’t like uncertainty or are going to need several years to pay off your loans, then stick with fixed rate.

Loan consolidation means combining multiple loans into one loan from a single lender. Consolidating just makes life easier. You have one lender and one loan to deal with and keep track of. The more your finances are spread around, the easier it is to let something slip through the cracks which can cost you money and damage your credit.

Better Rates and Better Service

Typically when you refinance your student loans, you get approved, and the lender doesn’t expect to hear from you again unless it’s via check (or auto pay). But that’s not the case at SoFi. If you lose your job through no fault of your own, you can apply for SoFi’s Unemployment Protection Program. SoFi will put your loans into forbearance for up to one year over the life of the loan in increments of three months at a time.

SoFi also provides one-on-one career counseling, interviewing and negotiation strategies, and help with resumes and managing your online presence.

Proceed with Caution

While SoFi offers some great perks, there is a possible downside to refinancing student loans, and not just with SoFi, but with any lender.

If you have a federal student loan, there are several programs that you can take ad...