One of the most grown-up things I have ever done is refinance debt.
In a nutshell, it means you transfer debt to another lender or stick with the same lender to agree to new terms.
In 2020, I refinanced my mortgage and within the last day, my student loan. You guys, rates really are at ‘historic lows’!
I’m going to share the specifics down to the penny so you can understand the reason and decide if you should do the same.
My current student loan lender is Citizens One/ Firstmark. My balance is $37,835.27. My monthly payment is $299.81 and interest rate is 4.59%. I hate my student loan debt and I’m working to do everything possible to make it disappear.
So this week when I received a flyer from UW Credit Union with ‘rates as low as 1.78%’ I knew it was time to refinance.
In full disclosure, I get flyers from SoFi and Earnest almost monthly, but at the time their interest rate was the same or more than what I have now.
Since the UW flyer was new, I figured I’d “just see.” Welp. They offered me a 15-year-old loan with variable rate starting at 2.78%. My monthly payments will be $257.72—although I plan to tack another payment of around $60 each month. I really don’t want a 15-year loan, but with the additional payment I’ll be making, I believe I’ll be done with student loan debt in less than 10 years.
I’m not great at math, but you don’t have to be to see that this will likely (because the rate is variable) be significant savings over the life of the loan.
The process to begin refinancing is free, so I believe it is always worth it to find out your rates from a bank or lender.
You should also consider lowering your student debt by applying for the Results Broadcasting Education Grant. The application process is open now through Feb. 28. You can learn more and apply here.