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Could You Save Thousands with a Student Loan Refinance?

If you’re looking for other options and resources to deal with your debt, consider a student loan refinance, but weigh all the costs and benefits of doing so.

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The following is a post from Melanie Lockert of DearDebt.com and the author of the bestselling book Dear Debt.

Student loan debt is nearly at epidemic levels right now.

It seems like everyone has a story about how student loans are affecting their life. According to the Project on Student Debt, as of 2018, 65% of students graduated with student loans, with an average $29,200 balance. That’s a huge percentage of students that are taking on debt to attend school.

I’m no different.

In total, I’ve gotten myself into $81,000 in student loan debt — $23k for my undergraduate degree, and $58k for my graduate degree from NYU.

One of the main things that I struggled with as I repay my massive student loans (currently paid off!) was the absurd interest rates on my graduate loans.

My undergraduate loans were manageable at 2.3% interest, but my graduate loans were more than double at rates of 6.8% and 7.9%.

Why the huge difference? Because as a graduate student, my loan options were Direct PLUS loans, which have a fixed interest rate or a private loan, which can have strict repayment terms and high-interest rates. So I opted for the federal loans.

Over the years, I struggled with these interest rates, at times paying $10 per day to interest. Interest is what makes you feel like you are taking two steps forward and one step back — it feels tough to get ahead.

While students of all kinds are struggling with high-interest private loans, graduate loans, and more, companies have been born to help remedy the situation.

For so long I thought that my loans and interest rates were what they were and I need to suck it up and pay.

But recently, there has been a whole slew of student loan refinance companies that are looking to change the industry. To be honest, I had no idea that this was even possible.

The goal with refinancing is to get a better interest rate than the one you were given and to consolidate your loan as well. So instead of paying mixed interest rates and many different lenders, you’d pay one loan at a lower interest rate.

While this sounds like a magic solution to dump debt, student loan refinancing isn’t for everyone. However, if it’s a good fit you could stand to save several thousand dollars.

So, is a student loan refinance right for you?

It might be right for you if you have:

  • good credit
  • a stable job
  • make on-time payments
  • debt to income ratio is good
  • have many different lenders and would like to consolidate to one and have lower interest

Whether you decide to refinance your student loans is a personal decision.

You’ll want to fully understand the terms and conditions and do the extra step of calculating how much you will pay for the life of the loan. Your payments may be lower, but you may be extending the life of the loan. In some cases, refinancing can be a true blessing and help you battle high-interest debt with one easy payment.

If you’re looking for other options and resources to deal with your debt, consider a student loan refinance, but weigh all the costs and benefits of doing so.

You can check out the financial marketplace to do more research and check your rates without impacting your credit score.

Considerations for Student Loan Refinance

**Checking your rate with these companies does not hurt your credit score.

LendKey – a marketplace for student loan refinancing with credit unions and community banks. Read my recent LendKey Review.

Credible – a marketplace that gets you multiple refinance loan options from multiple lenders in a few minutes. Read my recent Credible Review.

Splash Financial – a marketplace that helps you find the best student loan refinance options with one application. Read my recent Splash Review.

Don’t know which company to go with? You can apply and check your rate with no impact to your credit score. Review your offers and then make a decision to finalize your preferred refinance offer.

Jason Vitug

Jason is the founder of phroogal, creator of the award winning project Road to Financial Wellness, and author of the bestseller and New York Times reviewed book, You Only Live Once: The Roadmap to Financial Wellness and a Purposeful Life.

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