Lawyers who work in the private sector are excellent candidates for student loan refinancing. Here’s why:
- They generally have high incomes. Lenders want customers with solid earnings who will likely make payments on time.
- They won’t qualify for programs that forgive loans or reduce payments for nonprofit or government employees.
Your best strategy may be to refinance multiple times as your income and credit profile improve.
How much could lawyers save from student loan refinancing?
The average lawyer would save $19,525 after refinancing.
Here’s how: Median student loan debt for lawyers, including debt from undergrad, was $133,500 in 2016, according to the National Center for Education Statistics.
Refinancing to a 3.5% interest rate would save the average lawyer $163 per month and $19,525 over 10 years.
Assuming they attended four years of college and three years of law school, took out federal unsubsidized and graduate PLUS loans, and graduated in 2018, these lawyers’ average interest rate would be 6.01%.
They would owe $1,483 per month on the 10-year standard repayment plan. Refinancing to a 3.5% interest rate after graduation would save them $163 per month and $19,525 over 10 years.
» CALCULATE: How much you can save by refinancing
How to create a refinancing strategy
Borrowers with high incomes, excellent credit and a history of on-time debt payments will get the lowest interest rates when they refinance. Use these tips to get in the best position to refinance — or to recognize when to avoid refinancing certain loans.
Tie your strategy to your career plans
Avoid refinancing federal student loans if you work in public service, or if you might want to in the future. Public interest lawyers have potentially better repayment options, including Public Service Loan Forgiveness and Loan Repayment Assistance Programs. The nonprofit Equal Justice Works offers guidance on these options.
If you’re in the public sector and have a mix of federal and private student loans, you can refinance just the private ones — they don’t qualify for federal repayment programs.
Prepare your credit
Lenders look for credit scores at least in the high 600s. In advance of refinancing, aim to make no late bill payments and use as little of your credit cards’ limits as possible.
You can use a co-signer to qualify or get a lower rate when refinancing. Make sure there’s a co-signer release option that can later free the co-signer from the obligation to repay.
Account for other types of debt
Bar loans generally can’t be refinanced. If you have them, prioritize paying them off fast, since their interest rates are high.
Decide when, and how often, to refinance
Some lenders, including Earnest and SunTrust, allow borrowers to refinance before they graduate. If you have a job offer in hand and you’re sure you want to refinance, this option could save you money on accrued interest while in school and during the grace period.
You can refinance student loans as often as you like.
When deciding how often to refinance student loans, know that it’s possible to do as frequently as you like. You may get a lower rate as you earn more money or raise your credit score. Refinancing again can also let you switch from a variable to a fixed interest rate.
Use these resources to feel sure you’re making the best law school financing decisions possible:
NerdWallet writer Elizabeth Renter contributed reporting to this article.