This lawyer refinanced his student debt with a fintech start-up and deeply regrets it

Josh Garber, Law Offices of Joshua R Garber
Harriet Taylor | CNBC

After graduating from law school in 2009 with more than $250,000 in debt, Josh Garber refinanced $80,000 of his student loans with online personal finance startup SoFi, a decision he now sorely regrets.

The company, he said, offered a better interest rate than his other lender and a program that allowed him to defer payments if they were higher than a certain percentage of his income, similar to how federal loans work.

SoFi has since scrapped that loan program, and every three months its debt collectors come after him for repayments he cannot afford to make, he told CNBC.

"One of my worst regrets is refinancing with a company like SoFi because the federal government has a thing such as income-based repayment," he said at the Self-Employed Entrepreneurs conference hosted by the California Association for Micro Enterprise Opportunity in San Francisco.

Garber is a graduate of UPenn Law School who freelances on a legal marketplace called UpCounsel, and was part of a panel on the so-called "gig economy," where workers do piecemeal work for wages in lieu of a full-time job.

Though the interest rate for his federal government loans is higher than his SoFi loan, at least they would only make him pay a fixed percentage of his income, he said.

"Lenders are like sharks — I know if I am a day late because I get three emails," he said.

SoFi issued this statement in response to CNBC's request for comment.

"Student loan refinancing through SoFi puts money back in people's pockets. On average, our members save $22,359 by refinancing their student loans with us over the life of their loan. If a member loses their job, we can temporarily pause loan payments up to 12 months, and also provide help in a job search."

In further comment, SoFi disputed Garber's description of the terms and details of the program.

"We've never offered an income-based repayment plan, but we can offer members forbearance for up to 12 months if they can show us economic hardship. So incorrect to say we took away a program," a spokesman for SoFi told CNBC.

Garber, however, said he stands by his public comments.

Garber described the student debt problem as like "a bubble that is going to explode" and teared up as he described his debt as "a crushing rock."

When SoFi's debt collectors amp up the pressure, he pushes back and reminds them that he is a lawyer, he told CNBC.

"I'm an attorney, I know how to complain," he said. "I think if I wasn't I would just be toast at this point."

Josh Garber, Law Offices of Joshua R Garber
Harriet Taylor | CNBC

He cautioned others considering further education to think carefully about what sort of loan they are signing up for, and steer clear of lenders outside of the federal program.

"If there's anyone in a similar situation, I would just greatly advise you to please — even though the interest rate is ridiculous — keep...that federal debt, it's awful, it's a no-win situation," said Garber.

"You often hear politicians say go out, get an education to better yourself but it's really a six-figure 8.5 percent interest product that they're selling you, so you have to be very careful about that," he said.

How a teacher paid off $40,000 of student loans in 18 months

This story was updated with further comments.