This website has already discussed how you can save a ton of money by refinancing your student debt. And it is true that refinancing can decrease the interest you pay over the life of your debt and might lower the amount you need to devote to student loans each month. In fact, many people can realize thousands of dollars of benefits from refinancing their student loans.
However, it is not simply advantageous to refinance student loans for financial reasons. Indeed, refinancing your student debt also allows you to streamline the process of paying off your student loans. This is due to the fact that after refinancing, you usually only have one place where you have to make your student loan payments each month.
Most student debt borrowers have a number of different student loans, and many must make monthly payments to multiple student loan servicers in order to remain in good standing with their student debt. It can be very difficult to make payments to three, four, or more student debt servicers each month, since we all have busy lives, and only have so much bandwidth to keep track of things. Having multiple places where you need to submit payments can increase your risk of accidentally missing a payment.
This happened to me once during my student debt repayment saga. While I was paying off my student loans, I had three different websites I had to log onto each month in order to submit my student loan payments. Some people need to make payments through even more websites, and I heard of one individual who had to submit payments to six student loan companies each month! I usually just submitted all of my payments on the Monday before the end of the month so that I gave myself a little time to make my monthly payments before the due date.
However, one time, I forgot to make a payment on a student loan of mine. I am not exactly sure what happened, I think I was just having a busy week, and the payment slipped my mind. I only realized that I forgot to make the payment after I received an email from my bank warning me that if I did not make the payment soon, they would report this delinquency to the credit agencies. Thankfully, I did not delete this email like the dozens of other messages I receive from financial institutions each week, and I made the payment as soon as possible. Fortunately for me, my credit was not affected by this oversight, but I could have easily done damage to my credit score by not paying this student loan.
I know what you’re thinking, you’re probably wondering why I did not just set up auto-pay for my student loans so that the amount due was automatically deducted from my bank account each month. It is true that such a convenience could have saved me the trouble of keeping track of all of my student loan payments. However, I got burned with auto-pay once after I set this up with my rent payments, since my landlord accidentally deducted more than they should have one month. From that point on, I resolved that I would not use auto-pay so that I could be more in control of my student loans. And after refinancing your student debt, it will be much easier to keep track of your payments, such that you will not need to use auto-pay to manage your student debt.
There are a number of other benefits to dealing with only one student loan company by refinancing your student debt. For instance, it is much easier to apply for a forbarence or deferment when you only have one student loan company to deal with. Things happen in all of our lives that might make it difficult to pay off student loans for a period of time. For example, people can lose their jobs, suffer a health crisis, or experience other life difficulties. Of course, everyone should be prepared with enough savings in case one experiences such an emergency, but savings alone might not cover all of your costs.
If you need to obtain a forbearance or deferment with multiple student loan companies, you will have to spend additional time to submit the necessary information and forms. You could also be held to different standards by each student loan servicer. However, if you refinance your student loans, you will likely only need to communicate with one company to make your request. Of course, dealing with one company versus multiple student loan servicers is easier when completing the deferment or forbearance process.
There are many things to consider when choosing the right student loan refinancing company, and this website has already discussed some of the things you should look for in a refinancing partner. However, Student Debt Diaries recommends that our readers refinance their student loans with Splash Financial. In addition, if you use the link above to refinance your student loans, you will likely receive a generous welcome bonus, and we will receive an incentive that we use to make improvements to Student Debt Diaries! Of course, you should research multiple companies, but Splash should definitely be part of your search.
In the end, it is important to note that refinancing your student debt can benefit you in ways that are unrelated to finances. This makes it even more advantageous to complete the steps necessary to refinance your student debt.