Student loan payments can destroy someone’s dreams. Student loan balances have increased dramatically in the last ten years, and the percentage of borrowers who owe more than $50,000 has tripled during that time. Many graduates feel that their student debt is holding them back from goals like home ownership, entrepreneurship, or saving for retirement. Those who don’t qualify for federal programs like deferment or forbearance may feel trapped in their current payment structure. But there may be a way out by privately refinancing a student loan debt.
Refinancing at a lower interest rate and keeping the payments the same, for instance, could allow someone to end their payments and become debt-free much sooner. It’s also an option to keep the debt term the same and take advantage of a lower rate by reducing monthly payments. Either way, refinancing student loans could bring about a sense of financial peace and power that is elusive when someone is drowning in debt.
Understanding the facts about refinancing can help people make a good decision about their student loan debt. For instance, people with high credit ratings are most likely to be helped by refinancing because lenders are able to give much lower rates to borrowers with a good credit history. The HealthIQ.com website can help. They’ve put together this quiz that can help assess how well people understand the potential impact of refinancing their student loan debt. Taking the quiz now could help someone see if this strategy would work for them.