Debt comes in many forms nowadays, but student loan debt can be huge. And things could get serious if you don’t pay it off properly. Thousands of students face student loans. Whether you graduated or not, you’re going to have to pay back all the money you borrowed. Here’s a tip to help in that process: refinance.
As a standard, student loans borrowed from the federal government will have certain repayment options available to borrowers. Normally, a ten year repayment program is instituted. While in school, the loans do not have to be repaid, and interest should not be accruing. Furthermore, Federal Stafford loans will allow for a six month grace period after graduation. This means you don’t have to begin repaying those student loans for another six months after commencement (this is the time frame you will use to find a job in your field).
Now let’s say you’re like Doug and you’ve been through that whole process already. In fact, you might have been paying off those loan payments for months, maybe even years now. Those monthly payments can be daunting, and perhaps you’re struggling to make payments. If you’ve missed any payments, you’re only going to be paying more in the long run, mostly due to interest.
Doug saw an opportunity to get out of the hole he’d dug himself into. This way out is called refinance. Basically, refinance will allow the consolidation of multiple loans into one, allowing for only one monthly payment. Interest rates could be lowered, as well as monthly payments. However, it takes some shopping around to find the best refinance possibilities.
Doug refinanced only because he saw lower interest rates and smaller monthly bills. He was fortunate enough to recognize that he should take a fixed interest rate, rather than a variable one. That way, his interest wouldn’t increase as rates increased throughout the years. While Doug still has debt, it is slowly being paid off. Furthermore, he’s not struggling nearly as badly as he was before.
You could have the same bright future as Doug. There are some cautions to refinancing, though. Try not to choose loans with variable interest rates. You don’t want the interest rising and putting you even deeper into debt. Shopping around is definitely necessary. Some refinance options will actually raise monthly payments, rather than lower them. It is important to know all of the details on that refinanced loan, rather than just jump into something that could possibly save you money. Do your research and know what you’re getting into. It will definitely be worth it.