Now more than ever, a college education is expensive. Whether you opted for an in-state institution or chose to go to a school out of state, your tuition, books, fees, and living expenses undoubtedly added up quickly.
If you are like most people, you used federal and/or private student loans to help fill in the funding gaps for your education. A loan here, a loan there and by graduation you had an impressive portfolio of monthly payments to various lenders.
You’re not alone. Today, over 44 million Americans are faced with the same problem — how to pay off student loan debt.
Limitations Created by Student Loan Debt
With an average of $29,650 in college loan debt, many recent graduates are faced with postponing important life events. Excessive debt can mean putting off marriage and/or children, buying a home, or saving for retirement.
Unless you have had a recent windfall that covers your debt load, you may want to consider refinancing your loans to position yourself for a better future.
Financing vs. Refinancing
First, it’s important to understand the difference between financing an original loan versus refinancing one or more existing loans. Consider these two general definitions as they relate to debt or mortgages:
- Financing — When a bank or lender provides funds in exchange of a debt instrument that the debtor agrees to repay on an agreed-upon schedule.
- Refinancing — When a bank or lender consolidates, repackages, or refinances an existing loan or loans into one comprehensive package often with better interest rates and more desirable terms. Refinancing allows restructuring of debt to more agreeable conditions.
What is Student Loan Refinancing?
Private student loan refinancing is a sub-category of the refinance industry that deals primarily in refinancing federal and private student loans. Lenders that specialize in student loan refinancing are able to offer more flexible options, but require increased creditworthiness usually demonstrated by a solid credit history and strong income.
If you are newly graduated with little to no credit history, or have a limited record of strong income, private student loan lenders will allow a credit worthy parent or friend as a cosigner. This allows you to build your credit report while paying your loan in a timely manner.
When Should You Refinance Student Loans?
Once you have graduated and are starting your career, you may feel overwhelmed by your existing federal and private student loans. Most people graduate with multiple loans, each with a different lender, terms, and interest rate, but don’t know how to lower their student loan payment. Here are some reasons to consider a possible student loan restructure through refinancing:
- You’re looking to save money on high-interest student debt and get a lower rate. By refinancing to a lower rate, you save money over the life of your loan. On a $20,000 loan with 4% interest over 20 years, a one percent reduction can save $2,400 over the life of the loan.
- You want to pay off your student loans faster. By restructuring your loan terms, you can opt for a shorter term with higher payments. This allows you to retire the debt earlier. By making extra payments or paying more on the principal when possible, even more time (and money) can be saved over the loan period.
- You want to lower your monthly payment. You can restructure your student loan debt to a longer term. This will reduce your monthly payment allowing you to develop a more manageable budget.
- You want one easy student loan payment. For ease and convenience, you can refinance several federal and private student loans into one loan package. This is also called loan consolidation. With one single loan, repayment is much more streamlined, and you no longer have to manage multiple due dates and lenders.
Compare Student Loan Refinance Rates and Find Your Best Option
Refinancing is a great option for student loan debt if you’re looking to save on high interest, lower your monthly bill, or pay off your debt faster. And now is a great time to consider refinancing your student loans — rates are at historic lows.
At Purefy, we have assembled a group of well-vetted lenders who offer low interest rates, flexible terms and no origination or prepayment fees. Our lenders offer the best student loan refinance rates in the industry and are eager to compete for your business.
Compare and Save
Try Purefy’s rate comparison tool. It’s designed to provide you with pre-qualifying rates and terms and will support you in making a decision. By submitting a few simple pieces of your personal information, you’ll receive a side-by-side comparison of top, national lenders with real rates and terms.
At Purefy, we believe that understanding your options for refinancing your student loan debt is crucial to making a smart financial decision. With our pre-qualified rate comparison, there is no impact to your credit score until you choose a lender and pursue a final offer — and there are no fees or strings attached.
The Bottom Line
Due to historically low interest rates, now is the perfect time to pursue refinancing your student loan debt. Whether you want lower payments or a quicker pay off, consider this opportunity to get the best student loan refinance rates through Purefy’s simple, fast tool.
In addition to our unique rate comparison tool, Purefy also offers a Free Refinance Consultation. We have knowledgeable Student Loan Advisors that are only a scheduled appointment away from answering all of your questions or assisting you with the application process.
It’s your future — manage your student loan debt in a way that allows you to budget comfortably and make plans for what lies ahead. Compare what our best lenders have to offer at Purefy.