You faithfully completed your degree and have dedicated yourself to building your future. Way to go! However, with the exemplary feat of going to school and obtaining a formal education, also comes the responsibility of paying for it.
And if you are like most Americans, you took out student loans in order to pay for school and make it through. While you are not alone, being in student loan debt is not necessarily the boat you want to be in, regardless of the company. Not having student loan debt would make you different- in a good way. So how do you go about paying off your student loan debt in the shortest amount of time? Obtaining a lower interest rate could be a great place to start.
When looking into lower interest options for your student loans, there are several factors to be aware of. If you have federal loans, you may want to think twice before jumping on the refinance train. When refinancing a federal student loan, the loan will be held with a private lender. By refinancing with a private lender, you give up the ability to take advantage of any federal programs such as income-driven repayment or loan forgiveness programs. If you are unable to pay back your loans, they will not just go away. Consequences can be severe.
If you are refinancing your student loans, whether private or federal, you will want to be keenly aware of the interest rate as well as the repayment terms that will come with your loan. When deciding which refinance company or program you will use, take the following into consideration:
Do You Qualify For The Best Interest Rate?
Some companies will advertise their best
interest rate but it won’t necessarily be the rate that YOU qualify for. The best rates will have very specific payback and qualification terms that you may not qualify for or opt to receive. Be sure to check the rate ranges they offer as well as what your specific number would be before going through great lengths to be qualified, paying any fees, and having your credit checked with a hard inquiry.
Do The Math
Use calculators and comparisons to make sure you are going to be at an advantage by refinancing. If you are adopting new terms, make sure that they will benefit you over the long term. Just because your payment goes down, it doesn’t automatically mean you are saving money. If the payment just gets spread out over a longer amount of time with a higher rate, this could cost you quite a bit more in the end.
Keep Your Credit In Tip Top Shape
The better your credit and the more appealing you are
as a borrow, the better rate you may be able to snag. By being in the top credit tier and making enough to cover your new loan, you will be able to qualify for some of the best repayment terms. Make all other payments on time, keep your debt to available credit ratio low, and keep up on your credit profile to check for fraud and other incorrect information that may need to be disputed. Keep that credit rating high.
Do Your Research
Research different companies and find the best match for your particular situation and profile. Not all lenders are created equal and they will have different products to offer from one another. Refinancing your student loans can be a great way to lower your interest rate and get on track to paying off your debt faster. Take your time in finding the best option for you. After all, the faster you pay off your student loans, the faster you move on to saving for other (more interesting) things!