No. of Recommendations: 5
Well, I was thinking, if I can refinance a new loan somehow, with a better rate, and pay off this loan with that money, that would be a nice deal.

Please keep in mind - in looking at your loan from the perspective of getting credit in general, you already have a 'nice deal.' You have a long term unsecured loan at about 5%. Long term secured loans (like a mortgage) are running in the 3.5% - 4% range right now. Even short term secured loans (like a car loan) are running in the 1.5% - 2.5% range right now. In comparison, other than student loans, most lenders don't even offer long term unsecured loans, and short term unsecured loans are running in the 8% - 10% range. You seem to be looking for a long term unsecured loan at a short term secured rate. That's probably not going to happen.

Also note that I do already max out my 401k and we contribute as much to IRA as we can, so we are operating efficiently on that end.

Another thing to keep in mind - at a 5% rate, every $10k in principal is costing you $500/year. By dropping to a 4% rate, you will only save $100/year per $10k in principal; at a 3% rate, it would be $200/year. While I certainly wouldn't advise turning down an extra $100 - $200 per year, I'm not sure I would advise spending a lot of time chasing that amount, either, unless you have student loan debt that's several multiples of $10k. If you really do have several multiples of $10k in student debt principal, then I'm not sure why you are looking to invest beyond maxing out 401(k)s and IRAs, rather than paying down the debt.

If you really want to gamble that you can consistently get an annual after-tax investment gain in excess of the 5% rate you are being charged on your student loans, then go ahead and make that bet, realizing that that's what you are doing - betting. If you want the sure thing, then I would suggest focusing on paying off your debt more quickly so that you don't start investing with a built-in margin loan. That decision is completely up to you, and dependent on your risk tolerance and financial goals.

The private student loan refinancer is perhaps more along the lines of what I was looking for. So there are private student loan refinancers out there that can simply pay off your loan and issue you a new loan at a lower rate? Does it matter if the current loan is gov't or private?

If you are looking to hedge your bet by decreasing the after-tax hurdle rate that you would need to hit with your investments, there are lots of lenders offering to refinance student loans. However, I would note that many of these lenders have popped up since the 'student loan crisis' started hitting the front page, so you may find it difficult to get much information about how they are to deal with when they are actually servicing your loan for several years after they sell you the loan. Since you are looking to make a long term commitment with the lender, that's probably a important factor. I would suggest starting with a google search for 'student loan refinance' if you are interested in pursuing this hedge.

AJ
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