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Should You Refinance Your Student Loans?

Updated: Apr 24

An approachable guide to reviewing your student loan debt, and what next steps to take

An approachable guide to reviewing your student loan debt, and what next steps to take

Student debt is both a hot topic and a confusing one. Most college grads have some sort of debt, so it's understandably top of mind for many people. But, just because it's top of mind, doesn't mean we're attacking it the way we should!

It's emotionally exhausting for many of us to determine the best course of action when it comes to our student loans—Do nothing? Refinance some? Refinance all? Remove a co-signer? Pay off aggressively or save those dollars for retirement, for other debt, or for building an emergency cash reserve?

It's tempting to take the route of "ignorance is bliss," but when it comes to student debt, not addressing it will only create more (costly) trouble. And listen: there are some great tools out there to make your decision a straightforward one. Really.

The current student debt landscape

When we say most college grads have some sort of debt, we truly mean it! According to the Federal Reserve, U.S. News & World Report, Bankrate, and TD Ameritrade:

  • $1.75 trillion in total outstanding student loan debt

  • 61 percent of college graduates have student debt

  • $28,950 average debt per borrower

  • 40 percent of borrowers have delayed saving for retirement because of their debt

  • 50 percent student loan borrowers move back in with their parents after graduation​

Explore your alternatives

Student loans are an incredibly common sore subject for many, partly because they don't understand their choices. It makes perfect sense, too, considering we're facing a whopping $1.41 trillion in student debt. Who wouldn't be a bit flustered by that?!

It's important to take a step back and realize that you have options. If you have student loans, your main alternatives are:

  1. Do nothing. WAIT! If you did your homework and concluded that this is the right decision, then okay, move forward. But! If you are doing nothing because you are ignoring your student debt, not okay! Explore your other two options.

  2. Refinance some. Refinance only your private loans.

  3. Refinance everything. Yep! The whole kit and caboodle!

Need help with your student loans? Take our Student Loan Calculator for a spin!

The pros and cons of refinancing your student loans

Refinancing your student loan debt can be the right option for your financial situation. However, it's not the go-to answer for all. Review the below key points to determine if refinancing your student loans is right for you.

Pros of refinancing your student loans

Pay less interest

Pay less over the lifetime of your loan.

Lower your monthly payments

This may sound like gravy, but be forewarned! By reducing your rate or extending the life of your loan, you may actually increase your total interest. That means you'll end up paying more in the long run, which is definitely not ideal.

Simplify your bills

Aggregate your bills under fewer loans. It's nice to only have one bill payment, rather than several. This can help you stay on top of your payments better, and help keep you from missing a deadline.

Remove a co-signer

Transfer from a parent PLUS loan.

Get a new service provider

You could get different perks.

Cons of refinancing your student loan

You could lose some repayment options

You could lose options such as loan forgiveness, deferment, or forbearance for some federal loans

The action is irreversible

You can't "un-refinance" your loans. This is a decision that, once you make, you're in it for the long haul. Now, that doesn't mean it's wrong! That just means it requires careful thought and consideration.

Not everyone is eligible

Unfortunately, you have to qualify for a student loan refinance.

You might pay more interest over time

If you extend your repayment term, you may end up paying more interest over the long haul. Like we mentioned above, while refinancing your student loans may lower your monthly payments, you might end up paying more in the long run.

Wondering if refinancing your student loans is right for you? Give our Student Loan Repayment Plan a whirl.

Next Steps

First, make sure your finances are in check. You'll want to ensure you have a budget (and, yes, your student loan debt is part of your larger budget!) and get an idea of your net worth snapshot (so you know how much you have, how much you owe, and how much you have left over). You can always take a step back and give yourself a financial wellness check-up.

Watch the webinar

Have more questions about your student debt? Watch our student debt webinar with Pocketnest CEO and founder, Jessica Willis.


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