Do you know if the rate on your student loan is exceptionally high? How does your rate compare to others? Millennial financial expert David Weliver of MoneyUnder 30 can provide some great insight on current rates, if your loan rates are fair, and if not, how to lower them. Heoutlines the parameters for current rate ranges and can offer up tips to refinance or consolidate student loans. I had a chance to interview him to learn more.
Why is it helpful to re-evaluate student loans after college?
There are a couple reasons it’s important to take a close look at your student loans after you’ve graduated. For one, most of us take out student loans over the course of several years and end up with multiple loans that all have different servicers, interest rates and due dates. You want to be especially sure you’re paying all of your loans on time and — if some have much higher rates than others — that you’re making it a priority to pay extra on those high-rate loans.
In addition, once you have a stable job, you may become eligible to refinance your student loans. This could consolidate your loans into one payment AND reduce your interest rate, saving you thousands in interest. Refinancing may also reduce your monthly payments, making it easier to set aside money for emergencies and other goals.
How can people know that they have the best rates available?
For Federal Student loans, the Department of Education publishes student loan rates here:
Federal student loan rates are standardized, but they will still vary by the kind of loan you have an when you took out the loan. Private student loans are a different matter. The rates on private student loans will be different for every borrower depending on the bank that issued them, what they were used for and the creditworthiness of the borrower.
If people find out that their rates are too high, what can they do?
Creditworthy borrowers with documentable income can refinance student loans with variable rates of around 2 percent or fixed rates of between 3 and 4 percent right now. SoFi (Social Finance) is one refinancing lender to consider. Some other Websites that can help you find refinancing options are Credible.com and StudentLoanHero.com.
What are some tips for people who are just looking at student loan options?
The first thing to do is ensure your credit is in the best possible shape. Use a free tool like Credit Karma or Credit Sesame to check your credit score. If you don’t have an established credit history, you may need to use a credit card responsibly for a year or two — or find a cosigner — before applying to refinance your student loans.
If you’re employed and have good credit, take a close look at your refinancing options and weigh the pros and cons. Refinancing can save you money and reduce your payment, but when you refinance you may lose certain benefits of Federal Student Loans, such as the option to defer payments in times of financial hardship.