Should I Refinance My Student Loans

Student loans are a worry for around 43 million people, and it is estimated that there is about $1.7 trillion owed in student loan debt.

If you are worried about paying off your student loan once you have left college, you may have begun thinking about refinancing your student loan. Put simply, refinancing is when a private lender pays off your existing student loan and gives you a new loan with different terms.

Student loan debt

The USA has a student loan crisis. Over the last ten years, the cost of college has increased by over 25%. This means that the average student is in around $42,000 worth of debt. These numbers soar if you have done a degree in the medical field.

Moreover, with interest rates between 6 and15%, the total amount of student loan debt is increasing at a dramatic rate every year.

If you are feeling overwhelmed by the amount of student loan debt you have, you do have the option of refinancing.

Should I Refinance My Student Loans?

Refinancing your student finances can be an incredibly financially beneficial decision. This is because lenders will almost always offer a lower interest rate on your student loan than the federal government. For example, if you have a student loan of $40,000 and an interest rate of 8% from the government, you will be paying $485.31 every month for a decade. If you choose to refinance and pick a lender with a 5% interest rate, you will only be paying $424,46 per month. This means you could be saving up to $7,326 of interest, which is a large sum of money for someone just coming out of college.

There are many different types of lenders that will offer different types of refinancing services. However, you will need a high credit score to be eligible for this sort of loan.

If you choose to refinance your loans, it is best to refinance as soon as you become eligible, as this will maximize your potential savings.

Pay off your student debt faster with these money-saving tips

If you are still unsure about whether or not you should refinance your student loan, don’t worry. There are plenty of other ways you can pay off your student debt more quickly:

Make extra repayments if you can afford to do so: you will never get punished if you pay more than the minimum student loan. In fact, it is encouraged, as it could help you get out of debt a lot earlier than expected.

Create a budget, and save: it is important that you pay off your student loan debt each month. Otherwise, your credit score will be hugely affected and you may get bombarded by debt collectors if you miss enough payments. Therefore, you need to make sure you include your student loan in your monthly budget. Make sure you have enough money left over each month so that you can afford your repayments.

Check your bills: if you are worried that you won’t make the monthly repayments, you should consider checking the rest of your monthly bills to see if you could be saving money on them. For example, are you paying for a gym membership you never use? Cancel it, and you could be saving hundreds of dollars a year. Another easy way to lower your monthly bills is to check your utility bills and make an electricity switch to a more affordable company. This is another easy switch that could save you thousands of dollars in the long run.

Conclusion

The USA is in a debt crisis, and it can be incredibly stressful for anyone who has student loans to make repayments. If you are struggling with your student debt, refinancing may be the right option for you.