American's owe a staggering $1.5 trillion dollars’ worth of federal government student loans with around 7 to 8 percent being private student loans.
The statistics behind all of this debt:
- Around 8.3 million students owe $5,000 or less. Around 7.5 percent owe $5,000 to $10,000.
- Just over 9 million owe $10,000 to $20,000, While a staggering 9.5 billion owe $20,000 to $40,000. Meanwhile, another 6.7 percent owe between $40,000 and $80,000.
- The average student loan payment is $393.00 per month, of which 1 out of every 10 students default on their student loans.
Many of those who defaulted, particularly older students, may have avoided defaulting on their student loans, which places a terrible burden on their credit, which can lower their credit scores by as much as 90 or 100 points, had they done a refinance on their student loans.
And this is particularly true with students in the 2000s and later when interest rates were high. The Student loan interest rate in the year 2000-2001 was a brutal 8.19 percent during the repayment periods. This website https://topminisite.com/blog/best-student-loan-companies might help you to find the best student loan companies and their rating.
Meanwhile, students a decade or so later were able to refinance and take advantage of a low interest rates as low as half that for older loans.
How do you go about education loan refinancing?
The first step is to determine if refinancing makes sense. Perhaps your old student loan debt has fallen off your credit reports, and if you are in a position with a good job, you can refinance, and get back on track.
However, if your job position is risky, particularly during the COVID-19 pandemic, you'll want to wait.
Next, the hardest part is researching lenders
Some lenders for example, only take on medical school debt. Some lenders specialize in parent plus programs. There is no point in applying if they will automatically turn you down.
Next, contact several lenders and get actual rate quotes. You will find that different lenders have a lot of variety in their rates, so once you get several quotes, read everything carefully to find out exactly how it might work.
One lender might offer you a 7-year repayment program for example and another might offer you 10.
Once you decide which lender works best for you, complete the application, and if it's approved, have them pay off your own loan and be careful to make every new loan payment on time.
If you have private student loans, and you have a good track record at paying them off, you might be able to get a consolidation loan that leaves you with a couple of hundred dollars per month to do other things like save money for retirement or put down a bigger down payment on a home.
Consolidation isn't always easy but it can be very fruitful.