Timothy O'Shea, MS, PharmD
Timothy O'Shea, MS, PharmD, is a Clinical Pharmacist working at a regional health insurance plan on the east coast. Additionally he works per diem at a nationwide retail pharmacy chain. He graduated from MCPHS University - Boston in 2015 and subsequently completed a PGY-1 Managed Care Pharmacy Residency. He completed his M.S. in Health Services Administration, with a focus on Health Economics and Outcomes, in 2018. His professional interests include pharmacy legislation and managed care pharmacy. He can be followed on Twitter at @toshea125.
This article will detail my personal experience refinancing my loans after graduating pharmacy school and important considerations to think about during the process. As a disclaimer, if you’re still on the fence about whether you should refinance your loans then check out my previous article, or consider doing more research before committing to refinance.
In 2015, I graduated with over $150,000 in student loans from pharmacy school. At the time, it felt like an insurmountable amount of money to pay back, especially considering I took a substantial pay cut to complete a 1-year residency after graduating. The monthly payments were extremely high and to make matters more confusing, I had multiple loan providers between my private and federal loans, with some in my name and some in my parent’s name. The interest rates on these loans varied from 6.5% to 8%.
After finishing my residency, I knew I had to take a close look at my financial situation and make a plan to aggressively start paying off these loans. After extensive research, I decided to refinance my student loans through Social Finance, Inc (SoFI), an institution that offers a number of different loan types through a “nontraditional” approach.
While there are a number of vendors to refinance student loans, I found SoFI to offer the best resources, repayment plans, and interest rates. In particular, SoFI charges no fees to refinance, no penalties to make additional payments, and a variety of loan terms and rates. Refinancing through SoFI will save me over $15,000 in cumulative payments over a 10-year term by lowering my interest rate to 5%. It also provided the additional benefit of removing my parents from my loans. I personally did not need a co-signer on my loan due to my pharmacist salary and credit score, although this may vary based on your situation.
When to Refinance
Most financial advisors recommend that all new graduates with student loan debt at least consider whether refinancing is right for them. Refinancing has the benefit of providing lower interest rates and consolidating all loans into 1 loan, adding convenience to make 1 monthly payment.
Reasons to consider deferring refinancing includes having a poor credit score, low salary from residency or fellowship, or those who want to keep the provisions in federal loans. If those don’t apply and you have a steady salary, then it’s time to apply!
How to Refinance
Although refinancing student loans may sound intimidating, in reality it is very simple and only takes a few minutes to apply. I want to note that while there are many vendors that can refinance loans, my personal experience was with SoFI, so the rest of the article will detail instructions for this particular vendor.
To start, visit SoFI (by using this link, you will be eligible for a $100 cash bonus for refinancing your student loans). Next, click on “Student Loan Refinancing.” From here, click on “Find my Rate” and enter your personal information. Then click on “Apply Now” next to the “Student Loan Refi” line. You will be asked to enter some additional information including the school you graduated from, degree you obtained, employment status, and current loan information. To note, don’t worry if you don’t have the exact amount of your student loans to the dollar; a rough estimate is fine at this point. Then click “check my rate” and you will be presented with a number of options. From here, you can play with the repayment options to see how it would affect your monthly payment.
I’ve discussed fixed versus variable rates previously, however keep in mind with fixed rate loans, the interest rate doesn’t change over the life of the loan. The benefit with this is that you’ll be making the same payments every month, but the downside is that the interest rate is generally higher than with variable rate loans. Variable rate loans have an interest rate that will fluctuate in line with a base rate set by various institutions.
If you’re refinancing with a longer repayment period (10 to 20 years) and prefer stability, a fixed rate may be the better option. Personally, I chose a variable rate loan because the interest rate was significantly lower than the fixed rate loan, and I plan to pay off my student loans long before the end of my 10-year term.
Once you finish this screen you can now submit your information. It may take a few days for the application to officially process. During this time, a SoFI representative will likely call to see if you have any questions about the process or any of their services. Once approved, SoFI will require you enter loan vendor information to officially transfer the loans.
Once your loan has been funded, SoFI works with a third-party loan servicer called MOHELA. You will receive further information to create an account via MOHELA and set up monthly payments. Don’t forget to enroll in the AutoPay program through MOHELA to take advantage of a 0.25% interest rate reduction. Then you’re done, it was really that simple!
Refinancing your student loans from pharmacy school can potentially save you a significant amount of money. It can also provide added convenience from only having to make one payment a month. SoFI is one vendor that offers great services and rates to make paying off your loans easier than ever.