This Is a Tried-And-True Student Loan Refinancing Strategy for Teachers

Andrew Zoeller

According to recent student loan refinancing data gathered by Purefy, teachers are successfully refinancing their student debt quite often — and in large numbers.

Throughout 2019, teachers were consistently one of the most popular professions to refinance student loans, even compared to traditionally better paid professions like physicians, attorneys, and engineers.

So how are so many teachers able to qualify for a refinance?

Here’s a tried-and-true method many teachers are using to get a student loan refinance.

First, why are so many teachers refinancing their student loans?

Teachers are particularly well-suited for a refinance for a couple key reasons:

  • They have a master’s degree — which means they may have a lot of student loan debt from continuing their education. Plus, with some lenders, people with an advanced degree are more likely to get approved and be offered lower rates.
  • They generally don’t work in a high paying field — so they may be looking for more ways to save money and cut costs. And saving on student loans is often a top priority for people stuck with a big balance.

For those who qualify, there’s a lot to like about student loan refinancing — making it a very popular solution to better manage student loan debt. With a refinance, teachers can:

  • Consolidate all their student loans into one new loan with just one simple monthly payment. This can include both private and federal student loans — unless the federal loans are already being repaid through another valuable program like Public Service Loan Forgiveness or Teacher Loan Forgiveness. (If that’s the case, it would probably only be beneficial to refinance the private loans.)
  • Get a lower rate to save money on interest both month-to-month and over the life of the refinanced loan.
  • Extend their repayment term — some lenders offer terms up to 20 years — to lower their monthly student loan bills substantially. (Alternatively, terms can always be shortened too to pay off loans much earlier while saving big on interest.)

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Here’s how many teachers are refinancing student loans

Based on refinancing data, here are some comsteps teachers are taking to be approved for a student loan refinance.

1. Get teaching experience

A significant number of teachers are refinancing at an average age of 35 to 36, with average job experience totaling six to seven years.

By gaining experience in their careers before pursing a refinance, teachers can increase their income over time. Total income is a major factor in qualifying for a refinance and getting better rates, and lenders tend to be pretty strict when it comes to income requirements.

That’s because lenders want to be sure you have sufficient, steady income to be able to pay back your loan. With low or inconsistent income, lenders will view you as a riskier candidate — and either decline your application or offer higher rates to balance the risk.

In addition to income, gaining more years of experience helps demonstrate the stability of your career — which some lenders may consider when reviewing your application.

2. Improve credit history

While you are getting more work experience, it’s also essential to use that time to improve your credit score. Refinancing data from 2019 shows the average FICO for teachers is 765.

Having a strong credit history is one of the most crucial aspects of being approved for a refinance. It also plays a large role in which rates you’ll qualify for.

By taking the necessary steps to increase your credit score, you can get the best interest rates and the most lenders to choose from. Here are five comcredit factors that you can address to get a better score and lower rates:

  • Payment history
  • Credit usage
  • Length of credit history
  • Types of credit
  • Recent credit inquiries

3. Pay down debt

Paying down your debt goes hand in hand with improving your credit. Paying all your bills and other obligations — on time — helps your payment history which is often considered the most important credit-scoring factor.

At the same time, paying your debt improves your credit usage and lowers your debt-to-income ratio (DTI). DTI is another aspect of your personal information that lenders use to decide whether to approve your refinance application. For reference, Purefy’s data shows the average DTI is 39% for teachers who refinance.

4. Consider a cosigner or spouse loan consolidation

If you can’t qualify for a refinance on your own, or you’re not happy with the refinancing options you’re offered, you can try applying with a cosigner. A cosigner is someone close to you — typically a spouse, parent, or other loved one — who agrees to sign your loan application with you.

By adding a cosigner, a lender views your application as less risky because there is someone attached to the loan who would take over the payments if you can’t make them.

A creditworthy cosigner can help improve your odds of getting approved with lower rates — especially if your credit, income, or DTI aren’t in the best shape.

If you’re married, another option is a spousal loan consolidation — a unique loan type only offered by PenFed Credit Union. Like adding a cosigner, refinancing with a spouse can greatly help your chances of qualification.

That’s because a spousal loan consolidation looks at your combined household income and debt — rather than just yours alone.

This feature can be especially useful for teachers who may not have the highest income by themselves.

5. Compare rates and refinancing options

Shopping around for the best refinancing offers is essential to get the right option for your needs.

By using Purefy’s Compare Rates tool, you can see which rates and terms you qualify for from multiple well-known lenders — all with one easy form. Plus, checking your rates has no impact on your credit score whatsoever.

If you’re a teacher with significant student loans, refinancing could be an excellent way to pay off your debt more easily, more quickly, or both.

By following the steps above, you can increase your chances of being an ideal refinancing candidate to the most lenders — giving you the best odds of scoring the lowest rates and best offers.

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ELFI Rate Disclosure

4 ELFI Rate Disclosure:

Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 01/01/2023. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

SoFi Rate Disclosure

3 SoFi Rate Disclosure:

Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 5.09% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

Earnest Rate Disclosure

2 Earnest Rate Disclosure:

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.64% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 4.64% APR to 9.19% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

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ISL Rate Disclosure

5 Iowa Student Loan Rate Disclosure:

Fixed Rate Loan Terms: 5 years/60 monthly payments, 7 years/84 monthly payments, 10 years/120 monthly payments, 15 years/180 monthly payments, or 20 years/240 monthly payments. Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. This rate is expressed as an APR. Fixed APRs range from 6.94% to 11.58% APR [low to high range with 0.25% auto-debit rate reduction]. Rates are subject to change without notice. Fixed rates will not change during the term. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan including a 0.25% auto-debit rate reduction. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. All estimates are based on information provided by you and are for informational purposes only, accuracy is not guaranteed and may not reflect actual rates or savings and do not constitute an offer of credit. Your actual rate, payment and savings may be different based on credit history, actual interest rate, loan amount, and term, including your cosigner [if applicable]. If applying with a cosigner, we use the higher credit score between the borrower and the cosigner for approval purposes. All loans are subject to credit approval.

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