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 2016, 69% of students graduated with student loans, with an average $28,400 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 struggle with as I repay my massive student loans (currently $34k to go!) is the absurd interest rates on my graduate loans.
My undergraduate loans are manageable at 2.3% interest, but my graduate loans are 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 have 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 are what they are and I need to suck it up and pay.
But recently, there has been a whole slew of student loan refinancing companies that are looking to change the industry. To be honest, I had no idea that this was even possible until recently. 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 is a fairly recent phenomenon and 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 student loan refinancing 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 student loan debt, consider refinancing, but weigh all the costs and benefits of doing so.