Graduates with an advanced degree such as a Master of Science or Master of Arts could save thousands of dollars by refinancing their student loans, according to a new report from NerdWallet, a personal finance website.
Refinancing companies typically target graduates of medical school or law school since they have the highest debt of all degree holders. However, NerdWallet examined nine types of graduates and found that other advanced degree holders should also consider refinancing.
For example, Master of Science graduates, who owe a median of $51,433 in undergraduate and graduate debt, could refinance and save an average of $3,600. Master of Arts graduates, who owe a median of $58,702 in student loans, could save an average of $5,003. These savings assume the graduate is refinancing 10-year student loans after two years of regular payments.
Graduates with master's degrees in fine arts, education, business administration or social work also stand to save thousands of dollars.
"Advanced degree holders outside law or medicine who have private loans -- or who don't plan to take advantage of federal loan benefits -- have plenty to gain by refinancing," says Brianna McGurran, NerdWallet's student loans expert. "That's especially true when their average incomes are lower than doctors' or lawyers' and saving money is a priority."
Student loan refinancing means replacing your existing loans with a single loan through a financial institution or private refinancing company. This option will typically lower your interest rate, so you'll pay less in interest over the new 120-month loan term. Or, you could refinance to extend the loan term, which lowers your monthly payments but increases the amount you pay in interest through the life of the loan.
Refinancing isn't for everyone. It may not be a good option if you want to take advantage of federal loan benefits, such as deferment, income-driven repayment or loan forgiveness, McGurran advises.
Consider refinancing if you have a steady job, solid income, a good credit score and if you've repaid your loans for at least two years. You also need to have at least $7,500 in loans to qualify for refinancing.
For the complete breakdown of the savings for each degree and to learn more about refinancing, check out NerdWallet's full report.