Student Payment Article
Student Loan Refinancing, What’s In It for You?
There are many benefits you can gain from refinancing, or consolidating, your student loan debt. You will no longer have to worry about keeping track of several different due dates and payment amounts, you will be able to lower your monthly payment amount, meaning that you have more money in your budget after paying your student loan payment, and you will save a lot of money long-term due to the lower interest rates that you can get from refinancing. If nothing else, refinancing all of those loans, you may have eight or more by the time you graduate, into one loan will make your debt much easier for you to keep up with and manage.
Right now, interest rate are pretty good, but considering that you may have a repayment term of up to twenty years, chances are that they will rise during that time. If you refinance your student loan debt, then you will probably have the option of choosing a fixed interest rate, which will not only save you money in the event the rates rise before your debt is paid, but will also ensure that your monthly payments don’t rise due to increased interest, which could be devastating to a tight budget.
If you have done a decent job of making your student loan payments, or if you are still in your six month grace period after graduation, then you shouldn’t have any problem refinancing your student loan debt. Even if you have had a few late payments, you may still be able to refinance, just not at the interest rate you could get had you had a perfect repayment history. In most cases, if you look at the current rate on all of your student loans, you can expect to get a rate that is at least one point lower when you refinance. That one point can still result in a significant savings over a twenty year time frame. Lenders have to entice you to refinance your student loans with them, because they want your business. If you are smart, you won’t give it to them unless they can offer you a significantly better deal than you currently have. So, they have to work hard to be competitive with interest rates, payments amounts, and repayment terms.
Extending your repayment period as far as it can go will free up some extra money for you on a monthly basis, but in the long run, will cost you more in total repayment due to interest. The best option is to extend your repayment time, so that you get a lower monthly payment, but then pay back as much per month as you can, so that you can save money in interest. By doing it this way, you won’t have to stress about having the money to make a large required minimum payment every month, but can pay all of your bills, and then send in the extra to your student loan payment to pay the balance off faster.
Many students end up in financial trouble after graduation, due to the unexpected amount of their student loan payments While in college, it is easy to just worry about getting the money you need to get you through the next semester, and not really look at the big picture, the fact that you will at one point have to pay back all of this student loan debt with interest. If you default in your payments, your wages and tax refunds will be garnished to pay your debt. No matter how they get their money back, they will get it. So, do yourself a favor and consolidate all those student loans, so that you can at least make the minimum payments, then hopefully as you advance in your career, can make larger payments to get out from under the shadow of your college debts. Arm yourself with as much knowledge as you can about your loans, interest rates, repayment terms etc., and then go in and try to negotiate the best deal for yourself!
