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Student loan debt is an exceedingly difficult burden to manage, particularly for law school graduates. A 2021 survey by the American Bar Association found that the average graduate borrowed about $108,000 in law school loans alone — and as much as $130,000 in combined undergraduate and graduate loans.
One way to save money on the cost of student loan repayment is through a law school loan refinance. Refinancing your student loans can help you reduce your interest rate, and secure more favorable terms during repayment.
There are multiple private lenders in the market that offer student loan refinance options for lawyers, and finding the right one for your situation can be tricky. Here is a list of six law school loan refinance lenders to explore, depending on your needs.
Earnest
Earnest is an online lender that offers fixed- and variable-rate refinancing rates for law graduates in repayment.
This lender might be an option for law professionals who have a fair credit score, as Earnest requires a minimum score of 650 to be eligible for its student loan refinance. If you’re refinancing a loan from an incomplete degree, you must have a minimum score of 700 or higher, in addition to meeting other criteria.
A unique benefit that Earnest offers is its Skip-A-Payment feature when you’re faced with unexpected expenses. After making your first six consecutive, on-time refinance loan payments, you can request to skip a payment every 12 months. Note that this feature extends the length of your term, but can be useful if you need to redirect funds toward an emergency.
Splash Financial
Splash Financial offers low variable and fixed interest rates and a 0.25% autopay discount.
A law school loan refinance with Splash Financial might be ideal for borrowers who are looking for a longer repayment term and lower monthly payments. Although the lender offers terms as short as five years for individuals who want to get out of student debt quickly, it offers up to a 25-year term, too.
Navy Federal Credit Union
CommonBond
CommonBond provides a unique option for borrowers looking to refinance their law school loans. In addition to offering a fixed or variable refinance loan, the lender provides a third “hybrid” option that lessens the risk of a completely variable-rate refinance loan.
Its hybrid option charges a fixed interest rate for the first five years of your student loan refinance term. This feature can help you save money on today’s relatively lower interest rates. After the five-year period, your loan is charged at a variable rate.
SoFi
SoFi is a household name in the online student loan industry. It provides law school graduates with a refinancing option at competitive interest rates.
A useful benefit that SoFi refinance borrowers receive is unemployment protection. You can apply for this feature if you’ve experienced a job loss that wasn’t your fault; for example, due to a layoff.
Once your request is approved, the lender automatically pauses your loan payments for a three-month period while helping you find new employment through job placement assistance. Borrowers can apply for up to 12 months of total unemployment protection throughout the loan term.
Laurel Road
Borrowers who refinance their law school loans with Laurel Road have the option to choose from a fixed or variable loan at various terms. According to the lender, 11 percent of its applicants qualify for its lowest advertised rate.
Laurel Road offers rate discounts of a combined 0.80% which includes a 0.25% reduction for auto pay and a 0.55% discount for opening a Laurel Road checking account. To be eligible for the latter rate discount, you must direct deposit a minimum of $7,500 into the checking account every statement period throughout the loan repayment.
You can also earn $400 per referral through Laurel Road’s referral program. Every year, you can receive this amount for up to 10 people who successfully obtain a student loan refinance, personal loan or sign up for a Laurel Road cashback credit card.
Considerations Before Refinancing Federal Student Loans
Although you can refinance federal and private law school loans, there are a few caveats to remember when it comes to refinancing federal loans. Carefully weigh the following factors before proceeding with refinancing:
- Federal loan payment pause. There’s a payment and interest charge freeze on federal student loans through May 1, 2022. Borrowers with federal student loans should carefully consider their financial situation and income stability since refinancing these loans with a private lender will forfeit your eligibility for this government relief program.
- Student loan forgiveness program. After a law school loan refinance, you’ll lose access to federal loan forgiveness programs, like Public Service Loan Forgiveness (PSLF). It forgives your remaining federal student debt balance after 120 qualifying payments, if you meet other program requirements.
- Income-driven repayment plans. The Department of Education also offers lower monthly payment plans, based on your adjusted gross income and family size. These plan options keep your loan payments within 10% to 20% of your discretionary income.
- Income stability. Some private refinance lenders offer some form of loan deferment or forbearance, but not all do. Those that provide this type of safety net typically have varying requirements and restrictions. Federal loans are generally eligible for generous deferment and forbearance protections that you’ll lose during a refinance. Make sure your income is reliable before refinancing your federal loans.
The Bottom Line
Whether you’re still tackling your undergraduate loans, law school debt, or paying off your bar exam loans, a student loan refinance can help you reduce your out-of-pocket cost over time. If you have private student loans, a law school loan refinance is a low-risk approach to managing six-figure debt.
However, if you have federal student loans, it’s wise to hold off on refinancing until you’re sure you won’t need access to federal protections and benefits discussed above. At the very least, avoid refinancing federal loans until after the federal loan payment freeze expires.
