Breaking Free from Student Loan Debt
My parents’ firm “no” to my dream college program was a blessing in disguise. It forced me to think outside the box and explore alternative options. Today, I’m nearly debt-free, and I’m grateful for that.
But I know I’m not alone. Many millennials are struggling under the weight of student loan debt. It’s a heavy burden that can dictate major life decisions. That’s why it’s essential to arm yourself with knowledge and expert advice to pay off your debt smartly.
What is Student Loan Refinancing?
Student loan refinancing allows you to take advantage of your improved circumstances and refinance your educational debt, typically at a lower interest rate. This can reduce your monthly payment or save you thousands of dollars in total repayment costs. You can simplify your life by making one monthly payment on all the loans you refinance.
Am I Eligible for Refinancing?
You don’t need a six-figure income or a super-prime credit score to refinance your student loan debt. Many lenders will refinance student loan debt, and this competition has been good for consumers. You can refinance student loan balances as small as $3,500, and some lenders have no official upper limit.
I Think I’m Paying Too Much – What Should I Do?
Don’t rely on your monthly payment alone to decide whether you’re paying too much. Look at the interest rate, repayment terms, and projected total repayment costs. You can refinance into a loan with a shorter repayment term, lower your monthly payment, or try for less dramatic reductions in both areas.
When Do I Need a Cosigner?
If you have steady earnings and a decent credit score, that’s often enough to get you approved for refinancing. But a cosigner with a better credit score can help you qualify for a better rate. Be aware of the potential risks, and know that many lenders will release cosigners from their obligations after two or three years of payments.
Will I Lose Federal Loan Protections if I Refinance?
When you refinance federal student loans with a private lender, you’ll lose borrower benefits like access to income-driven repayment plans and loan forgiveness. But be aware that income-driven repayment plans can also drive up your total costs. Private lenders are increasingly offering protections against unexpected setbacks like job loss or health emergencies.
Finding Your Current Loan Interest Rate
Your loan servicer can tell you your current interest rate and how much of your monthly payment is applied to your principal balance. You can retrieve information about all your federal student loans through the Department of Education website.
Finding the Rate You Could Qualify for if You Refinanced
You can see the actual rates you’ll qualify for with multiple, vetted lenders in about 2 minutes by answering a few questions about yourself at Credible.com. Remember that private lenders offer both fixed and variable rates, and the savings you can achieve from refinancing depend on how much you can lower your interest rate and how long you decide you’ll need to pay back your debt.
Take Control of Your Student Loans
You deserve to live well with your student loans and save the most money you can on them. By understanding your options and taking action, you can break free from the burden of student loan debt and build a brighter financial future.
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