Student Loans Perkins Article
Go Ahead, Refinance Your Student Loan Debt
If you have amassed a lot of student loan debt, then now is the time to consider refinancing. Refinancing can cut your monthly payments in half in most cases, giving you some breathing room in your monthly budget, and that is a good thing for everyone.
The most common type of student loan is the Stafford loan, and it can either be subsidized, where the government covers the interest, or unsubsidized, where you are responsible for the interest. By the time you graduate, you may have eight or more student loans, all with different balances, payments, and due dates. Your credit report will show each separate loan, and with so many open lined of credit, your credit score may be impacted, especially if you mess up and miss a payment. By refinancing, you would only show one loan, and would only have you worry about making one payment each month, making it less likely that you will miss a due date in error, saving yourself a credit hit.
When you refinance, try to get a fixed interest rate, so that you dont have to worry about your monthly payment amount fluctuating as the interest rate rises. Another benefit of refinancing is that you will get a much longer time to payoff your debt, in some cases up to 20 years. By stretching it out for the maximum length of time, you will get the lowest possible monthly payments, allowing you to have a more flexible budget. Chances are, when you get out of school, you will have to pay your own rent or mortgage, car insurance, car payments, etc., and having lower student loan payments can give you the extra money you need to cover necessary living expenses. You dont want to find yourself in a situation where you have to pick and choose what to pay, as you will see your credit score fall lower and lower.
You can refinance your student loans whenever you are ready to do so, however, there are certain times of the year that are better than others to ensure you get the best deal. If you are getting ready to graduate, you should refinance within the first six months of graduation, the sooner the better. By doing it during the first six months, you will still be in your repayment grace period, and are likely to be able to secure yourself a much better fixed interest rate.
It can take up to a few months to get all of your student loan debt refinanced in one lump sum, so if you are trying to do it during your six month grace period, you should start as soon as possible after graduation. To still keep your repayment grace period, have the loan scheduled to begin on the date that your grace period ends, so that you are not required to make any extra payments, and can use that first six months to find yourself a job and get settled.
Refinancing your student loan debt can give you more disposable income to use in other places, and can help you get your finances better organized, making bill paying a simpler process. If you have credit cards, the smart move would be to take the extra income you have from refinancing your student loan debt and put it towards paying off those high interest cards as soon as possible. Most people are able to cut their student loan payments in half, so if you start with the smallest credit card balance, you should be able to start getting them paid off, freeing up even more income, and saving yourself all that money in interest later on down the line.
When you graduate, you should try to pay off all of your debt as soon as possible. If you are not already married with a family to support, it would be ideal to have everything paid off first, so that you arent faced with financial strain as soon as you are married.
So, go ahead and make a smart decision, refinance all that student loan debt! You will get lower payments, lower interest rates, and be able to payoff all of your other debt much sooner.
