I am sure that everyone with student loans has probably heard about student loan refinancing at one point or another. Refinancing is one of the hottest trends in the student loan industry, and I am willing to bet that almost every recent graduate knows someone who has refinanced their student loans. Many people have emailed me over the past several months to ask for advice on whether they should refinance their student loans and which student loan refinancing company they should use. There is some contradictory information about student loan refinancing on the internet, so people have contacted me to see if I could provide some suggestions on the student loan refinancing process.
As previously mentioned on this website, I did not refinance my student loans during my student debt repayment saga. Rather, I worked a number of side-hustles and saved money in extreme ways so that I was able to pay off my student loans in a relatively short period of time. However, I have a number of friends who have refinanced their student loans (some of whom I hope will become guest writers for Student Debt Diaires!) and they have told me their experiences with refinancing student debt. In addition, after writing dozens of articles on student loans, and after being in the student debt space for a long period of time, I have come to learn a lot of information about student loan refinancing.
This website previously published a brief overview of student loan refinancing, and that article conveyed some of the main points one needs to know about refinancing student debt. However, there is a lot of additional information one needs to know when deciding whether to refinance student loans. As a result, the next series of articles on this website will go into greater detail, and discuss everything you need to know about student loan refinancing.
Student loan refinancing might sound like a complicated concept, but in reality, it is really simple. Basically, student loan refinancing is when a company agrees to buy up your student debt and allows you to pay back that company, usually at a lower interest rate. This is basically akin to mortgage refinancing, which was all the rage a few years ago when interest rates were insanely low, or any other type of refinancing with which you might have experience.
Most people with federal student loans understand that the interest rates for student debt are insanely high. Indeed, when I graduated from law school, I had around $90,000 of student debt with an interest rate of 7.8 percent, and I had a whole lot of additional debt with less-high, but still unreasonable, interest rates. The reason why federal student debt traditionally has such high interest rates is because the high interest rates help fund the debt-forgiveness that is available under income-driven repayment plans.
These high interest rates are why student loan refinancing is so attractive. Some people do not need the ability to take advantage of income-driven repayment plans, and would rather pay less in interest by refinancing their student loans. Indeed, many refinancing companies offer interest rates around four or five percent, and some companies offer even more favorable interest rates to qualified candidates. In any case, if you refinance student loans and lock in an interest rate several percentage points lower than normal, you could save thousands of dollars in interest over the life of the debt.
However, student loan refinancing is not for everyone. Indeed, some people might want to take advantage of an income-driven repayment plan, and this might preclude them from refinancing their student loans. Furthermore, some lucky individuals might not have too much student debt, so it might not be worth the hassle to refinance their student loans. There are also a number of considerations to keep in mind when choosing the right refinancing company.
Future articles will discuss all of these topics, but it is worth pointing out now that Student Debt Diaries has partnered with Splash Financial to offer great refinancing deals for our readers. If you use the link above to refinance your student loans through Splash, you may receive a generous welcome bonus, and we may receive an incentive that we can use to keep the lights on here at Student Debt Diaries. Of course, everyone refinancing their student loans should do their research when choosing a refinancing company, but we definitely recommend that everyone check out Splash.
In coming articles, we will unpack the topic of student loan refinancing, and convey all the information you need to know about refinancing student loans. Future articles will discuss which individuals would benefit the most from student loan refinancing and which individuals might not want to refinance their student loans. In addition, future posts will convey considerations that you should keep in mind when choosing which student loan refinancing company to work with. Furthermore, this website will also discuss terms that you should look out for when picking a student loan refinancing company.
Refinancing is one of the most important things you can do to improve your student debt situation. Indeed, refinancing can help you reduce your monthly student loan payments and help you repay your student loans as early as possible. However, there are a number of considerations you should evaluate before refinancing your student loans, and this website will provide all of the information you need to know in order to best refinance your student debt.