🇺🇸 A federal student loan just isn’t what it used to be.
So here’s the deal with federal student loans. You pay the same interest rate as everybody else — even though you probably deserve a lower rate based on your financial responsibility — but as a tradeoff, you get certain benefits, such as:
- Deferment. You can postpone or lower your payments due to economic hardship for up to three years.
- Income-based repayment plans. You can limit your monthly student loan payments to a maximum of 10% of your income. This typically means paying more interest in the long run, but if you are struggling to make your monthly student loan payments, it can be a good option.
- Public Service Loan Forgiveness Program. If you work in a public service job, your loans can be forgiven after 10 years.
In the good old days (read: before January 20, 2017), you could be sure that these benefits of having federal student loans wouldn’t be taken away from you. Sure, you’re probably paying more in interest than you need to, but if times got tough, you could always apply for an income-based repayment plan. There was that buffer there.
But since Betsy DeVos has gotten comfortable in her position as Secretary of Education, we’ve seen these benefits systematically threatened.
📰 Read: “Student Loan Forgiveness Program Approval Letters May be Invalid, Education Dept. Says.” New York Times. March 30, 2017.
📰 Read: “DeVos Halts Obama-Era Plan to Revamp Student Loan Management.” New York Times. April 14, 2017.
No one has a crystal ball, but it’s quite possible that some or all of the protections afforded by having federal student loans may be significantly diminished.
So what’s a federal student loan borrower to do? Well, it just might be time to consolidate and refinance your federal student loans with a private lender at a lower interest rate.
💸 You Might Want to Take Your Federal Loans Private.
I did just that and saved over $10,000.
And given the fact that the benefits traditionally offered by federal student loans are in peril thanks to DeVos and Co., that higher interest rate may not be worth it anymore.
At least it wasn’t for me. It’s no exaggeration when I say that consolidating and refinancing my federal student loans into a single private loan is hands down one of the best financial decisions I’ve ever made. I had a bunch of federal loans with a weighted average rate of 6.5%. I consolidated them all into one private loan and refinanced at 2.14% variable, which has gone up to 2.99% since then. (For the record, I could’ve chosen a 3.56% fixed at the time).
I reduced my payments by over $200/month and, yes, saved over $10,000 in interest payments over the life of my loan. It’s been such a relief since I refinanced my student loans. That extra $200 a month really helps with the bills, and knowing that I saved over $10,000 in interest makes me feel good about my financial future.
🤔 Which Lender Did I Use?
I used an online student loan refinancing company to refinance my loans with a private lender (not the federal government).
Because online lenders don’t have as much overhead as traditional brick-and-mortar banks, they are typically able give the lowest rates. But I’m not going to tell you which lender I used.
Why not? Because the lender that gave me the lowest rate won’t necessarily be the one that gives you the lowest rate, and rather than rushing you to the lender I used, I want you to go with the lender who will give you the lowest rate. Some lenders give better rates on grad school, others on undergrad, some care a lot about credit score, some don’t, etc.
💵 Here’s What You Need To Do.
You need to shop around at different student loan refinancing companies to see which one will give you the best rate.
I recommend LendEDU to do this because they have partnered with the top student loan refinancing companies — including SoFi, Earnest, College Ave, Citizens Bank, LendKey, CommonBond, and more — to make sure that you are going with the lender who will give you the lowest interest rate.
LendEDU’s service only takes about 2 minutes, it does not impact your credit score, and it is 100% free if you click here.
See, I shopped around like crazy for the best interest rate on my student loan refinance. I think I submitted five different refinancing applications to five different companies! And while I was able to select the one that gave me the best rate, this process 1) took a lot of time and 2) hurt my credit score since so many companies were running a credit check on me in such a short period of time.
But you don’t have to do that anymore. LendEDU will “shop around” for you, for free, so that you don’t have to submit multiple applications. And it won’t affect your credit score. All you have to do is answer a few questions that should take you all of 2 minutes to get quotes from several different lenders, including the most respected names in the student loan refinancing industry such as SoFi, Earnest, Lendkey, and more.
You can either click on the blue button below or right here to be taken to their site so you can get started. Again, this process is 100% free and does not impact your credit score.
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