The average student loan debt in 2017 is $37,172. This kind of debt is not something that many people can pay off quickly. Instead, they make monthly payments and pay them down over the course of multiple years. Depending on the financial situation, these payments may not be an issue.
In other cases, the burden is too much, or the interest is too high. In these cases, refinancing the loan could be a solution to the issue. This doesn’t take the loan away, but it does offer more ways to control it. Let’s find out how you can decide if this is the right approach for you in your financial journey.
Given the current costs of tuition, it’s not uncommon for students to take out loans to fund their college education. In many cases, these students don’t need to start paying off their loans until after they’ve graduated.
This is great for convenience, but once they have their degree, the monthly bills start rolling in. Constrained budgets and searching for jobs can take a toll on new graduates. Student loans add further stress to this equation.
For many people with student loans, refinancing offers a solution that significantly changes their situation and gives them more control over their student loans. As you set out to explore your options for refinancing with private lenders, you’ll begin to see many of the benefits that refinancing offers:
There are some downsides to refinancing. If you have federal loans, you will lose out on benefits offered by them such as loan forgiveness or income-based repayment plans. Your current credit score will also influence the options you have while refinancing. If you’ve struggled with making payments, a lower credit score may affect your options.
The infographic below from Credible.com illustrates the thought processes and decisions people often make when they are considering a refinancing option.
