November 2018 Volume LIII Number 6

 
 
 
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Member Benefit Spotlight

November 2016 Volume LI Number 6

Five Tips for AAPD Members When Refinancing Their Student Loans

Refinancing student loans can feel like serious financial spring-cleaning. But it doesn’t have to. Just consider it life simplification—the kind that can save you money.

At SoFi, we’re all about helping AAPD members manage their money in ways that work best for them. To date, SoFi has refinanced $11 billion in student loans for over 170,000 borrowers across the United States. More specifically, SoFi has refinanced over $10 million in student loans for AAPD members alone! Through our partnership, AAPD members can apply via SoFi.com/AAPD and qualify for a welcome bonus upon refinancing.

Consolidating multiple student loan balances into one new loan with a low-interest rate and monthly payments designed around your life isn’t a big ask in our world. In fact, it’s an everyday occurrence. And it’s not hard. The key is to strategize. Here’s how to begin.

CHECK YOUR CREDIT

Although some companies consider your credit score as refinancing criteria, SoFi doesn’t. But we do take a look at your credit report. "A bankruptcy or medical bills that have gone to collections will harm your chances of securing the best student loan interest rate, or even getting approved at all," says Amanda Wood, Director of Busi- ness Development at SoFi, who refinanced through the company. "But you can improve your credit score by paying off overdue bills, decreasing debt in general, and always pay- ing bills as they’re due." It will take time for changes to register with credit bureaus, so don’t apply for refinancing until that happens.

If you have a good history of paying off debt, on the other hand, that will work in your favor. Use annualcreditreport.com to grab a free copy of your report from each of the three major credit bureaus—Equifax, Experian, and TransUnion—to make sure there are no errors. If everything looks good, you’re all set to apply. But if you see inaccu- rate information on your report, contact each bureau individually and ask them correct it.

As an extra precaution, if you tend to rely a lot on plastic, consider cooling your credit spending for a few months before applying for a new loan. "Alternatively, you can stick with credit cards but make two or three payments each cycle to keep your balances low," says Wood. "Even if you pay off your cards in full every month, a credit snapshot may catch your balances at their highest points, making you look maxed out. So timing is everything."

TAKE A HARD LOOK AT YOUR COST OF LIVING


It’s a fact—some cities are more expen- sive to live in than others. Plus, some people can’t afford to live alone. Someone renting an apartment in a small Midwestern town, for example, has lower expenses than someone who owns a row home in San Francisco. And cost of living matters a lot to refinancing companies.

To some extent, this is out of your hands; your zip code helps lenders determine your cost of living. But anything you can do to pay down debt and make choices that free up more cash—such as renting a smaller apartment, taking on a roommate, or leasing a cheaper car—can help your case. (In a city like Manhattan, you probably don’t even need a car.) If you’re planning on relocating to an inexpensive city, for example, consider submitting an application a couple of months after you move in.

How you budget also plays a huge role in loan application acceptance. "If you’ve got ample wiggle room in your cash flow every month, you’re a more appealing candidate than a person who’s scraping his savings to make student loan payments," says Marcos Fernandez, a Project Marketing Manager at SoFi, who refinanced his loans with the company.

GIVE LENDERS A COMPLETE HISTORY


Unlike other lenders, SoFi considers things like where you went to school and how you’re doing professionally when we weigh your application. So provide as much information as you can when it comes to your undergrad and grad degrees. "If you’ve stud- ied math, science, business, or engineering at a good school, that may give you an advan- tage, particularly if you earned an advanced degree," says Wood.

Additionally, be sure to include all rel- evant work experience. "The longer you’ve been in the working world, the more knowl- edge and skills you’ve likely gained," adds Wood. "This makes you very attractive as an applicant, because you look like someone who will continue to pay the bills."

If there’s a job offer on the horizon, be sure to submit your offer letter with your ap- plication. And if you get a promotion while your application is under review, notify the lender immediately. But if you’re in line for a promotion that will positively affect your paycheck, wait until that’s materialized before you apply.

SHOW ALL YOUR INCOME

When lenders ask for income information, they mean all of your income, not just job earnings. So remember to list dividends, in- terest earned, bonuses, and the extra money you make from your side hustle or Airbnb rental property. "The higher your income, the more cash you have to throw at the refinanc- ing equation," says Fernandez. "It all counts as long as you can prove it."

So keep those pay stubs, interest state- ments and tax returns. Also, make sure your driver’s license is current and that your stu- dent loan statements are all correct. If you’re self-employed, wait until you’ve filed your taxes to apply for refinancing—it’s the easiest way to prove the previous year’s income.

BE FLEXIBLE


If you have a number of student loans and you’re not offered the best rate when you apply for refinancing, consider refinancing only a couple of them. You may snag a lower interest rate with a smaller refinance balance. You can always apply for the full balance down the road after you’ve received a raise or moved to a less expensive location.

Being flexible also means you might want to think about asking a friend or relative for help if your application isn’t as strong as you’d like. "Consider adding a co-signer," suggests Wood. "If you’ve been declined, a co-signer might help you get approved. If you’ve quali- fied for a loan on your own but the rate isn’t where you want it to be, a co-signer might help you qualify for a better rate."

The stronger you are as a student loan re- financing candidate, the better your chances of getting the best rate possible. And with a great rate, you might even find yourself with a little extra cash each month—money you can put toward a well-deserved vacation or, even better, becoming a homeowner in the not so distant future.

See if you qualify for student loan refi- nancing by applying through SoFi.com/AAPD.

This article originally appeared on SoFi’s Blog on Aug 11, 2016 (Link: https://www.sofi.com/blog/get-lowest-rate- refinance-student-loans/)

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