The average college graduate today accepts their diploma only to find themselves more than $35,000 in debt from their student loans. That comes to a grand total of roughly $56 billion in student loan debt for a single year’s graduating class. To put that into perspective, just ten years ago the total debt for the class of 1995 was less than $10 billion. Clearly, students today are juggling more debt than ever before – with many of them repaying their loans with unnecessarily high interest rates, paying thousands more over the life of the loan than is necessary. With that said, here are three signs it’s time to refinance your student loans to potentially achieve both a lower interest rate and a lower monthly rate:
1. You have a good credit score.
If you’ve been timely with all of your loan payments, have met all of your additional financial obligations for several years or longer, and have not accumulated substantial credit card or other debts, there is a great likelihood that you have built strong credit. If you know that you have good credit, that’s the first sign it may be time for you to refinance your student loans. If you’re unsure of your credit, you can find out easily. By law, you are entitled to a free credit report each year.
2. You have a stable income.
Having a stable income is the second sign that it may be time to refinance your student loans. If you’ve been at your job for several years and know how much money you’ll earn each month, it’s time to look into refinancing your student loans, especially the ones with the highest interest rates. Because lenders look favorably on applicants who have a stable income and are consistently employed, you’ll likely qualify for a low interest rate.
3. You’re ready to simplify your finances and save money.
Juggling payments from multiple lenders can be exhausting – especially when you’re paying a small fortune each month but the balances never seem to go down. Refinancing opens doors to all kinds of savings and allows you to simplify your finances. For example, you may be able to refinance federal, private, and graduate loans into one loan, reducing the number of payments that you’ll need to make each month. You may also be eligible for programs that provide interest rate reductions if you choose to sign up for automatic payments.
The variety of student loan refinancing options that are available are countless. From fixed rate loans to rate reductions that will save you thousands of dollars over the long-term, refinancing can be hugely beneficial to most graduates. This is particularly true if you have built strong credit, have stable employment, and are ready to simplify your finances and save money.