|Me, six years ago...and now too, actually.|
Private Student Loan Debt is a monster. Unlike government student loan debt, there's no getting around it. It'll haunt you all your days. When you are 18 and desperate to get out of your parents house, it is very easy to snatch up the money that is effectively being freely given. Unless you are a savant, interest rates mean absolutely nothing and repayment is so far off (four years, five in my case) that it's very, very easy to ignore the fact that taking out a loan with a 9.75% interest rate means you'll be making interest only payments when you are working a minimum wage job because the economy sucks and you got a worthless English degree because you had it beaten into you that you had to go to college or somehow you were lesser.
You don't have to go to college. No one ever tells you that. But if you do, and you took out private loans and they're giving you that heavy feeling of hopelessness, all hope is not lost.
I tried refinancing my loans a year ago with Sofi. After hours of hoop-jumping and paperwork and faxing documents and a month of waiting to see whether I was approved or not, I got an email telling me that my application was denied due to my debt-to-income ratio. It's a Catch-22. I'm buried in private student loan debt, I don't get paid enough, and the only way out is to get a better interest rate so I can make some headway on paying off this loan but I can't get a better interest rate because I don't make enough money and all my money goes to paying off loans with a too-high interest rate that seems to spin its wheels. It was a nightmare.
I had five loans with Sallie Mae/Navient. The highest was a $6000 one with a 9.75% interest rate. I refinanced that one with Wells Fargo for a 7.5% which brought it in line with my other private loans (two with a 7.25% rate, two with a 6.5% rate). It wasn't optimal, but it gave me the sweet sweet taste of the prospect of casting off Sallie Mae for good. At this point I hated them so much I didn't care that I had so much debt, I just didn't want them to get my money. Surely, someone out there wanted to take my money. And then I stumbled across Earnest.
Having been burnt by a loan refinancing company prior, I was not hopeful. The application was much easier than Sofi's and it took less than an hour to get all the financials and documents lined up and sent off for approval. A couple days later I was approved and instructed to select how much I wanted to pay! Holy shit! You mean I can pay as much or as little (down to like $200) as I want? Get out of town! They have a nifty little widget that adjusts the rate you will get compared to the monthly payment you want to make. I spent hours agonizing over this. Do I continue paying $420 a month towards private loans like I have been doing since 2009 or does it now make financial sense to lower my payment a little and still pay off my loans faster than I would with Sallie Mae?
|A snapshot of our monthly finances. Yellow - Groceries. Orange - Student Loans. Light Blue - Car Payment & Gas. Dark Blue - Medical Bills (thanks cancer). Pink/Red/Green - Shopping/Misc Expenses/Chaff|
It feels awesome, and while it's definitely weird to shill, I can't recommend Earnest enough. It also helps that they give a referral bonus and that nothing in the world would make me happier than everyone with Sallie Mae/Navient loans jumping ship to better rates and watching that company crumble to a pile of dust and ashes (my resentment is obviously, still very strong). Financial independence or bust.