‘My main objective here is saving as much money as possible on interest.’: I want to refinance my Parent Plus Student Loans. Should I lock in savings now or wait for fed rates to decrease?

Hi Money Minder,

I’m thinking about refinancing $80,000 in Parent Plus Student Loans. Currently, I’m paying a hefty 7.5% interest rate and I still have 9 years left on a 10-year note. SoFi has prequalified me for a 5.25% rate on a 7-year note. Do you think I should hold off on refinancing until federal rates drop even more or should I jump on the savings now?

My ultimate goal is to save as much money as I can on interest. If I go for the savings now and refinance, will that affect my ability to refinance again in the future if rates drop significantly?

Thanks in advance for your advice!

Farewell,
Savvy Saver

Response from THE MONEY MINDER:

Hello There,

Congratulations on taking the step towards refinancing your Parent Plus Student Loans with SoFi! It’s great that you’re looking to save money on interest. In regards to whether you should wait for federal rates to decrease further or lock in the savings now, it’s always a bit of a gamble when it comes to interest rates. While it’s true that waiting may provide an opportunity to secure an even lower rate, there’s also the risk that rates might increase in the future. Since you’ve been prequalified with a lower rate, it might be wise to lock in those savings now, especially since you’ll be reducing your current interest rate significantly.

Regarding your concern about refinancing in the future if rates are slashed significantly, it’s important to note that refinancing doesn’t necessarily affect your ability to do it again in the future. If rates do decrease further down the line and you can secure an even better rate, refinancing again to save more money on interest is a possibility. Just keep in mind any potential fees or closing costs associated with refinancing.

Overall, it seems like you’re on the right track to save money on interest with the refinancing offer from SoFi. By locking in the lower rate now, you’ll start saving on interest payments sooner rather than later. Remember to weigh the potential savings against any costs associated with refinancing, and if the numbers make sense, go ahead and take advantage of the opportunity. Good luck with your refinancing journey!

Farewell from THE MONEY MINDER.