Many students go through similar experiences with their student loans.
When you’re in college, it all seems like some sort of distant reality. You know you’re accumulating student loan debt, but you haven’t considered how much you’ll ultimately owe, or what the payments will look like. Understandably so, because school is your main focus.
But, once you’ve graduated from college, it’s time to start to face the financial reality of student loan debt. Many students start to hear or think about student loan refinance, but don’t really know if it’s the right move for them or if it will help them in any way.
This article will help you to identify some circumstances in which you should definitely be investigating your options for refinancing your student loans.
1. You just graduated from college
I know, I know. You just graduated, you’re on the job hunt, you’re trying to mentally shield yourself from the thought of having to actually pay back all of those student loans. But, this really is an optimal time to refinance–before you even make a payment.
You’ve likely just sort of strung along whatever different types of loans you needed to keep your tuition paid, so now is a great time to do a bit of clean up with refinancing and consolidation.
2. You’re paying a whole bunch of different payments
Having a whole bunch of small loan payments is annoying and can get you into trouble if you happen to forget about one here or there.
So if you’re making a whole bunch of small payments on different loans to different lenders, consider how consolidating those could make your life easier and less stressful. In many cases, a consolidation and refinance could also save you some money.
3. You can’t afford your monthly payments
One of the worst places to find yourself is simply not being able to afford your student loan payments.
But there are likely options for you out there. If you can’t have your payments deferred any longer, then it’s time to look into a refinance option that might grant you some forbearance or allow you to reduce your monthly payment. In some cases, you may qualify for a lower interest rate, or be able to extend the terms of your student loans to reduce what you’re paying each month.
4. You’re going through a big life change (getting married, new job, etc)
In this situation, refinancing your student loans may seem like the absolute last thing you want to tack on top of your other life changes. Don’t let that scare you. This is often one of the best times to look into refinancing because it means that your financial situation is changing. Whether you’re becoming a dual-income household or increasing your salary, now is the time to see if you can get more favorable terms on your student loans.
5. Your credit has improved a lot
Have you been working hard to improve your credit? Put it to work on your student loans.
Especially if you have private student loans, your higher credit score might qualify you for much better interest and repayment terms which could save you big money–both on your monthly payment, plus over the life of your loan.
6. You want to pay off your loans faster
Many times people want to lower their monthly student loan payment. Other times, people are looking at the long-term cost of interest and realize that it’s actually in their best interest to pay more each month in order to pay them off sooner.
Don’t just shovel extra money at your loan without considering a refinance. Often times, if you refinance your existing loans over a shorter term with a higher monthly payment, you’ll get a lower interest rate. In this case you could save money by refinancing and then doing what you were planning to do anyway.
7. It’s been more than 3 years since you last refinanced
Believe it or not, 3 years is a long time. And for your student loans, a lot could have changed. The interest rates could have decreased, your credit could have improved, your income could have changed. Whatever the case may be, you should consider revisiting your student loan refinance options at least once very 3 years.