Data shows the average 2015 graduate heads to work with more than $35,000 in student loan debt to pay back; that’s 70 percent of the average salary of those graduates.
Feeling the pressure, many borrowers do whatever they can to lessen monthly payments or reduce interest and for most, their first thought is student loan refinancing.
Unfortunately, this big news buzzword is not always the best route to financial wellness. Before employees and employers look to student loan refinance companies for help, here are five options debt holders should consider:
1. THE FEDERAL REPAYMENT SWAP
Most borrowers don’t know that changing repayment plans is a free option that could save hundreds each month or cut years off student loan repayment. Repayment plan structures vary based on income, time period, and even loan type.
For borrowers who don’t earn a lot today, but will in the future, a simple repayment plan switch can relieve tons of stress. For others concerned about the long haul, the wrong repayment plan can have serious risks, like extra years of paying interest or missing out on public student loan forgiveness.
THE REFINANCE DANGER
If refinanced, for many loans these helpful repayment options go away and could eliminate future savings down the road or options in tough financial times.
2. CONSOLIDATE YOUR LOANS
Like refinancing, federal student loan consolidation can turn multiple loans into one and offer a fixed interest. Unlike private student loan refinancing, borrowers don’t lose all all repayment plan options because their loans are still held and serviced by the federal government.
THE REFINANCE DANGER
Private student loan refinancing, eliminates this option from a borrower’s battle against student loans. In addition, consolidation can offer the ability to save monthly and maintain eligibility for public student loan forgiveness.
3. CHECK FOR PUBLIC STUDENT LOAN FORGIVENESS ELIGIBILITY
We’re mentioning this three times, because it’s the dream for most borrowers. For many educators and public servants, public student loan forgiveness offers a way out of student loans after meeting the required payment threshold, which is about 10 years for most. After the repayment requirements are met, the program will “forgive” the remaining balance on Direct Loans.
THE REFINANCE DANGER
Private student loan refinance companies don’t offer forgiveness programs and once you’ve moved on to private refinancing, you can’t go back. Consequently, any borrower looking to save with refinancing needs to make sure he and/or she should explore their loan forgiveness eligibility first.
4. PAY HIGH, PAY AHEAD
In cases of multiple loans and interest rates, knowing the interest rates can turn into real savings power. Borrowers who pay down the highest interest rate loans first can save tons of money later on. If you have extra money to pay toward a loan, with most un-refinanced loans you can pay extra toward the highest interest loan.
THE REFINANCE DANGER
Once loans are refinanced or consolidated, borrowers lose the advantage of benefiting from being able to target higher interest rate loans for payoff.
5. AVOID DELINQUENCY AT ALL COSTS
Student Loan delinquency, missing payments by 90 days or more, can result in serious disaster. Delinquency can cause interest, payment amount, and payment time to increase. Avoiding delinquency can be a critical way to save money over time.
TURN FIVE STEPS INTO ONE | STUDENT LOAN GENIUS ADVISOR
Student Loan Genius Advisor takes the work out of figuring out refinancing and your other options. Contact us to learn how our service, which includes 1:1 assistance, can help you #crushstudentloans.
by Vault Benefits | Aug 08, 2016
by Vault Benefits | Aug 08, 2016
by Vault Benefits | Aug 08, 2016