Is It Worth Refinancing Student Loans?

This question comes up over and over again. And for good reason. Student loan debt is at an all time high, and many people are wondering if refinancing student loans is worth the cost.

If you have been paying off your student loans for a long period of time, then the answer may seem obvious. But if you’re just now beginning to pay off your student loans, the decision to refinance might not be as clear-cut. Here’s what you need to know about whether or not refinancing student loans makes sense.

You Can Refinance Your Student Loan Anytime

You can refinance your student loans anytime! There is no limit on how often you can refi back into your current loan. In fact, some lenders actually allow you to refi your student loans once every two years! So if you want to make sure you don’t miss out on any money-saving opportunities, you should definitely consider refinancing your student loans.

You May Want To Consider Choosing A Fixed Rate Loan Over An Adjustable One

Adjustable rate loans have higher starting interest rates than fixed rate loans. As a result, they tend to have lower monthly payments right away. However, after a few years, their interest rates adjust upward and they become more expensive than fixed rate loans.

On the other hand, fixed rate loans have low initial interest rates and will always remain at that same rate. Therefore, you won’t have to worry about them increasing in price after a few years. If you think you’ll probably be able to stick to a budget and pay down your student loans (and credit card debts) in 5 years, then choosing a fixed rate loan would likely be best for you.

Think About What You Need Your Loan For First Before Refinancing

Before you decide to refinance your student loans, you first need to figure out what you need your loan for. Do you need it to finance college? Or do you need it to cover something else? If you’re borrowing money to pay for school, you probably shouldn’t refi since you already have a steady income. However, if you’re using your student loan to pay off other things, you can use your newly gained savings to help you pay it off faster.

Consider Balancing Your Interest Rates With Other Debt

The last thing you want to do is to spend money you didn’t plan on spending on your student loans. Luckily, there are ways to manage your interest rates without doing anything major. Just remember that different types of loans carry varying interest rates. For example, if you have a car loan, you’ll typically pay much less in interest than if you borrowed money from the bank. Similarly, if you have home equity loans, you’ll pay less in interest than if your loans were secured by a mortgage.

Before you start looking into refinancing your student loans, take a look at your other debts and borrowings. If you find yourself having trouble balancing your interest rates, it could be time to reevaluate your entire financial situation.

Is It Worth Refinancing Student Loans?

I’ve been trying to decide whether refinancing student loans is worth it.

As a college graduate who’s been working for almost 15 years, I’m making about $52k per year. So, I figured I could probably pay off my entire loan balance (~$65k) after 10-15 years.

However, I was wondering if refinancing would give me any financial benefit? Does anyone have experience with it?

Also, is it possible to refinance student loans? Or do they only offer private loans? (I know I should get a job first before getting a private loan, but I want to look into options before having to take out more debt.)

Thanks!

A:

It depends on what type of loan you have and how much money you have coming in.

The interest rate on a federal loan is set by the government, and the repayment period doesn’t change. If you’re paying less than 8% (the maximum), then refinancing makes sense. However, if you’re paying significantly higher rates (say over 11%), it may not make sense.

In general, you’ll have to pay some fees when you refinance.

Is It Worth Refinancing Student Loans?

Student loans have become increasingly popular over the last few years, with many students taking out millions before graduation and finding themselves stuck in a cycle of debt. But if you’re considering refinancing your student loan, you may want to do some research first – not just about your current interest rate, but also about what happens after you refinance. Here are some things to keep in mind:

Is It Worth Refinancing Student Loans?

This video shows how to calculate if refinancing student loans could save you money. Student loan forgiveness programs were put into place for those who have proven their commitment to higher education. In order to qualify for some student loan forgiveness, you need to demonstrate consistent enrollment at a school that meets certain criteria. Additionally, your federal student loans cannot exceed your maximum eligibility limits. You cannot have both subsidized and unsubsidized loans. Finally, your annual income cannot exceed a specific amount of money that varies based on household size. First we go over the basics… then compare them to determine what you should do.

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Is It Worth Refinancing Student Loans?

The Answer Is Yes!

You may have heard the term refinancing student loans, but don’t think about doing it until you understand what it exactly means, since it could help you save hundreds, if not thousands, of dollars a month off of payments.

What Are You Paying?

When you first take out a loan, you are charged interest on the money borrowed. That’s the amount of money lenders charge you for having the use of their money. It’s much like how people who borrow cars pay a monthly fee to drive their car. When you refinance, you are essentially repaying the same principal balance plus any interest that accrued while you were paying the old loan (which would normally carry over). Since the new lender was only lending you money that had already been paid back, he or she doesn’t have to add in the interest to the total cost of borrowing. Which means you just saved yourself some money!

Who Can Help?

Refinancing isn’t something you should do without getting advice from someone who knows what they’re talking about. There are two types of companies that lend money, banks and private lenders. Banks aren’t likely to be able to offer you lower rates than lenders who specialize in students, so make sure to choose wisely.

How Do I Get Started?

There are three steps involved in getting a student loan refinance done. First, gather information—that includes things like your current payment schedule and your credit score—so you’ll know where you stand before calling the company you want to work with. Second, contact your present lender; let them know that you’d like to refinance, and ask whether they’d be willing to consider a lower rate. Third, shop around for a new lender that will offer you a lower rate. Once you’ve got everything lined up, get ready to negotiate…you might even need help from a lawyer or financial advisor.

Why Shouldn’t You Refinance?

If you feel like you’re spending a lot of money in school, you probably shouldn’t refinance right now. After all, you have no idea what your final bill will look like at graduation. However, if you’re worried about making those monthly payments down the road, then refinancing may make sense.

Final Thoughts

While many people dream of being debt-free, few of us actually make it happen. If you plan on continuing to live paycheck to paycheck after graduating, refinancing your student loans early could mean you won’t have to worry about debt in the future.

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