How to Save on Student Debt

Students in the United States have accumulated $1.3 Trillion in student loan debt, much of which is leant to them at unbelievably high interest rates. If someone tried to sell you a 30-year mortgage on your house right now, and offered you a "competitive rate" of 8%, you would likely tell them to **** off. We should do that on our student loans too.

Due to the fact that students generally have little leverage, are desperate for these loans, have no guaranteed future income and little to no credit built up, 8% has become the norm. For those that have nothing to compare this to, I can personally tell you that an 8% interest rate on any loan is astronomical.

My advice to people with outstanding student debt is to do everything in your power to gain leverage. Build your credit and build your resume throughout college, and then immediately refinance these loans based on your new position. Since most loans are built in a way that students do not need to start paying them off until after they finish school, I would do this as soon as possible, so that you never have to pay an incredibly high interest rate.

Up until 24 months ago, student loans were one of the only types of debt that borrowers were not able to restructure as rates changed and as they became more credit-worthy. As the debt problem has gotten increasingly worse in recent years, demand for student loan refinancing has finally created a consumer driven change, and student loan refinancing has finally become accessible.

Brendan Coughlin, President of Consumer Lending for Citizens Bank, explains that
"Students were stuck with a profile where they deserved a much better deal, but couldn't get one."

Some firms and banks have been on the cutting edge of refinancing student loans. Citizens Bank is one bank that is putting a lot of focus on helping students to refinance their loans. Coughlin says that when they refinance student loans, it saves borrowers an average of $147 per month, or 1.5% on their interest rate. $147 over a 20 year period, exceeds $35,000 in savings. The higher your rate and the higher your outstanding value, the more you can potentially save.

The process of refinancing student debt is similar to the process of financing or refinancing a home. Lenders look at an applicants credit score, income, employment, debt, type of degree, and how much they are looking to borrow. Outside factors that determine a borrowers interest rate are the current interest rates, and whether or not a borrower is taking a fixed (same interest rate for the entirety of the loan) or variable (rate fluctuates as interest rates fluctuate) interest rate.

Some resources for student loan refinancing are;

Citizens Bank



If you have graduated from college, built up good credit, and have a job lined up, make it a priority to refinance these loans before you even spend a dime on high interest rates.

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