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by Vault Careers | July 27, 2015


When the average college grad is leaving school with more than $30,000 in debt, it’s enough to make anybody stop and think twice before signing on the dotted line. But when it comes to graduate or professional school, the price tag is even higher.

Graduate students make up about 16% of the overall student population, but they account for about 40% of recent federal loan disbursements.  And while the median debt load for the average grad student is $57,600, 25% of those students borrow nearly $100,000 to pay for their graduate education.

And yet, graduate programs are more popular than ever before, thanks in part to the 2008 recession. The prevalence of pink slips and an anemic job market sent many people back to school to either hone their skills and knowledge base or broaden them. Those who had to borrow money to get there may now they find themselves saddled with loan terms they don’t like, including high interest rates, high monthly payments and a long pay-off timeline.

The good news is that, just as homeowners can refinance their mortgage loans, you may be able to refinance your graduate student loans. Refinancing can be a great way to save money on total interest and either lower your monthly payment or shorten your loan term.

If you decide to refinance, there are a few things to watch out for so that the process goes smoothly and the end result benefits you--and your financial future:

1. Watch out for origination fees. Some lenders charge an up-front fee to process loan applications. If you want to avoid that cost, look for a lender that charges a low origination fee or none at all.

2. Pay on time, every month.This might seem obvious, but it’s a really important one. Missing even one payment (no matter how legitimate the reason may be) can have a negative impact on your credit score, which affects your ability to qualify for a lower rate with a refinance lender.      

3. Automate your payments. This is the ultimate in efficiency--the bill gets paid on time, and the money’s out of your account before you can miss it. Some lenders will even give you a small break in the interest rate for enrolling in automatic payments.

4. Prepay when you can. If you can make extra payments or include more than the monthly minimum, you’ll contend with less interest over the life of the loan. Just make sure you ask your lender or servicer to apply extra payments to your principal versus earmarking it for future payments.

5. Understand fixed versus variable interest rates. With a fixed rate student loan, the interest rate never changes and neither do the monthly payments, until the loan is paid off. A variable rate student loan, on the other hand, typically comes with a lower rate, but the rate will typically change based on an index that measures prevailing interest rates. So if interest rates rise during your loan term, your payments--and your interest cost--will increase.

Refinancing isn’t necessarily for everyone, but it is fast becoming a popular option for many borrowers with graduate student loans. If you do choose to go that route, you could end up with lower payments or a shorter loan term, and--most importantly--more money in your pocket.

To learn more about refinancing, and to receive a $150 cash bonus for Vault readers check out

As a leading peer-to-peer lender focused on transforming financial services, SoFi’s affinity-based marketplace connects high-quality alumni borrowers and investors directly – benefiting them both by bypassing the banks.  Since its launch in 2011, SoFi has funded over $650 million in loans including more than $125 million to lawyers around the country. Click here to learn more about SoFi’s student loan refinancing services. 


Raising the Bar: How SoFi Takes the Hassle out of Student Loan Repayment
Student Loan Refinance: The Smart Borrower’s Guide
Evaluating a Variable Rate Student Loan
Why Interest Rate Matters for Graduate Student Loans
Student Loan Smarts: How Student Loans Affect Your Credit Score
Congratulations, Class of 2015. You’re the Most Indebted Ever (For Now)
The Graduate Student Debt Review