Raise your hand if your student loans stress you out!

Updated: Dec 19, 2019

Student debt... it's a hot topic and a confusing one.  It's emotionally exhausting for many of us to determine the best course of action -- Do nothing? Refinance some? Refinance all? Remove a co-signer? Pay off aggressively or save for retirement with those dollars? And what about building an emergency cash reserve?. It's tempting to take the route of "ignorance is bliss," but when it comes to student debt, it needs to be addressed. And listen... there are some great tools out there to make your decision a straightforward one. Really.

First, we have to repeat the stats...

- 60 percent of college graduates have some sort of debt

- 70 percent of borrowers have delayed saving for retirement because of their debt

- 30 percent student loan borrowers move back in with their parents after graduation​

- Total outstanding student loan debt: $1.41 trillion - Average debt per borrower: $27,975

- ​Total amount of student loan borrowers: 44 million

- $620 billion more than the total U.S. credit card debt

Alternatives: If you have student loans, the main alternatives are 1) Do nothing (if you did your homework and concluded this is the right decision, then okay.  But if you are doing nothing because you are ignoring your debt, not okay!) 2) Refinance some (the private loans) 3) Refinance everything.

Refinancing, Pros and Cons:

The Pros:

  1. Pay less interest over the lifetime of your loan.

  2. Lower your monthly payments. Be warned! By reducing your rate or extending the life of your loan, you may actually increase your total interest.

  3. Simplify your bills by aggregating them under fewer loans.

  4. Removing a co-signer or transfer from a parent PLUS loan.

  5. Getting a new service provider that may offer different perks.

The Cons:

  1. You could lose the ability for loan forgiveness, deferment, or forbearancefor some federal loans

  2. The action is irreversible. You can't "un-refinance" your loans.

  3. Not everyone is eligible

  4. If you extend your repayment term you may pay more interest over time

We Recommend: Set aside 30 minutes for an evaluation. There are a couple of online tools we love that will help you determine which course of action is right for your student loan repayment plan. We find the following two info-graphics in particular pretty straightforward to determine 1) should you refinance your loans and 2) whats the best repayment option on federal loans.  

#1: Should you refinance

Source: Student Loan Hero

FYI Federal Title IV: Title IV is a term that refers to federal financial aid funds. You can search by school here).

#2 What is the best repayment option on federal loans

Source: NerdWallet

Your To-Do's:

  1. After you've looked at the above evaluation, you should have a good sense of if you'd be eligible for a refinance, consolidation etc.

  2. We highly recommend you use an online student debt platform like Student Loan Hero or Earnest for a more complete evaluation and the application process.  

  3. Stick to your plan.

Great news! The Pocketnest app is now available for iOS! Download Pocketnest and get your finances in order—in just 10 minutes a month! No jargony finance-speak, pricey fees or in-person meetings required. Download now!

Have questions? We love your questions... email us at hello@pocketnest.com

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