If you want to reduce your debt more efficiently, student loan refinancing is a good option that might be available to you. You may already know what the benefits can be, but here is why you shouldn’t wait to take advantage of refinancing:
You could be leaving money on the table
Many professionals who completed graduate school in the last decade took out student loans of more than $100,000 at interest rates upwards of 6.95 percent. If this rings true for you, a lot of the money you send your lenders every month goes toward paying off the interest you’ve accrued.
But, if you refinance, you may be able to cut your existing interest rate by several percentage points and reduce what you owe in interest over the life of your loan — a change that could result in substantial savings. The sooner you refinance your loans, the more time you’ll have to benefit from a potentially lower rate, and the better position you’ll be in to maximize your savings.
For example, a borrower with a $100,000 balance could save more than $32,000* over the life of the loan simply by refinancing from a ten-year to a five-year term. But a borrower who waits until the balance is reduced to $80,000, for instance, would save much less by refinancing — assuming today's advantageous rates and programs were even available at that time.
You’re putting your other financial goals on hold
You have big financial goals (and personal ones too), but you’ve set many of them aside until your student loan debt is paid off. Why not speed up that process? By refinancing your student loans, you can get rid of your higher education debt more quickly if you choose a shorter loan term or pay more than your required payment each month. Once you are student-debt-free, you can funnel your former loan payments to a new goal — whether that’s increasing your retirement contributions, funding a home improvement project or saving for your child’s education. And the sooner you refinance your student loans, the sooner you’ll see the light at the end of the tunnel.
You want to make the right financial choices for your life
If you decide to refinance your student loans today, there are more lenders, interest rates, and loan terms to choose from than ever before. Each lender will offer a different application process, selection of interest rates, choice of loan terms, and additional benefits, so it’s a good idea to shop around before deciding what’s the right fit for you. Use an online student loan refinancing calculator to estimate your future monthly payments and potential savings.
When you first borrowed money to attend college or graduate school, you did so to fund your dreams of higher education. But now that you’ve achieved these goals and built a successful career, the same student loans that helped you get where you are today could start to feel more like a burden. As you pursue your new dreams of homeownership, growing your family or taking the next step in your career, expensive loan payments could be holding you back from making meaningful progress.
If you’re ready to take control of your finances, the time to refinance is now.
*Assumes an existing rate of 6.95% and a ten-year term refinancing into a rate of 2.35% on a five-year term. The terms of a refinance may differ from the terms of your current loan. For example, loans may not contain special features such as forbearance periods and income-based repayment plans available for student loans. Applicants should discuss loan terms and conditions with their banker and contact their legal and financial advisors for advice on deciding whether this is the right product for them.