How Much Not Refinancing Your Student Loans Could Be Costing You
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Will Ignoring Your Student Loans Cost You $23,000+?
More than $23,000? Is that a realistic assessment of how much a nurse could lose over the lifetime of his or her college debt by not refinancing student loans?
Well, yes -- for some. There’s an example scenario below that proves it. And some could save even more.
True, most are likely to save somewhat less. But we’re still looking at massive savings for many -- several thousand dollars, even for some with quite modest balances.
How much you personally could save will depend on how big your debt is, the interest rate you’re currently paying and the rate you qualify for now.
If you’ve been putting off refinancing because you feared it would be too much hassle (or you didn’t even realize it was an option), now would be a great time to take the idea seriously. There’s a lot of money at stake.
Read on to discover how much you personally could stand to save.
How Big is Your Student Debt?
Using official figures, the American Association of Colleges of Nursing estimates, “The RN workforce is expected to grow from 2.9 million in 2016 to 3.4 million in 2026.” And about 70% of those who graduate nursing school do so with student debts of over $37,000, according to Debt.org.
In order to progress in their careers, many nurses also go on to get a master’s or doctorate degree (nurse anesthetists, nurse midwives, nurse practitioners, etc.). These nurses end up adding more loans on top of their original undergraduate debt.
When NerdWallet ran the U.S. Department of Education’s College Scorecard figures, it found that nurses with master’s degrees are paying, on average, $544 in monthly student loan payments. Meanwhile, those with bachelor’s forked out $234.
The bottom line is that many nurses are heavily burdened by student loan debt. If you are reading this, chances are, that you are in the same boat. The good news is that more debt may mean you qualify for more savings.
How Much Not Refinancing Your Student Loans is Costing You
Many who refinance student loans of $50,000 find themselves saving $110-$170 each month. Multiply that by the number of payments left on your loans to work out how much not refinancing is going to cost you.
Here are some real-world examples of 10-year loans:
- You owe $50,000
- Your current interest rate is 8%
- You refinance to a 5% loan with a $50,000 balance
- You save $76 every month -- or $9,160 over the life of the loan
- You owe $75,000
- Your current interest rate is 10%
- You refinance to a 5% loan with a $75,000 balance
- You save almost $200 every month -- or $23,000 over the life of the loan
- You owe $40,000
- Your current interest rate is 10%
- You refinance to a 5% loan with a $40,000 balance
- You save just over $100 every month -- or $14,500 over the life of the loan
Why Refinancing Student Loans is More Attractive Than Ever
You may have been too busy recently (!) to spend much time reading the financial pages. So you may have missed what’s been happening to interest rates.
But they’ve been going down sharply. In fact, right now they’re at record lows, and that’s why creditworthy people can pay less for their borrowing than at any time in history.
It’s also why refinancing student loans has recently become an exceptionally attractive prospect.
Reasons Nurses Put Off Refinancing Their Student Loans -- and Why They’re Wrong
Myth 1: It’s a big hassle that requires a ton of paperwork
No! It really isn’t. Obviously, you’re borrowing a lot of money and a lender’s going to want to know about your financial position. But it’s much easier than other types of refinances, say, for a mortgage.
And you can save time by using a comparison-shopping website, such as Credible. It takes two minutes to complete its online application. And it will then send you offers from up to 10 lenders. You compare those and pick the one with the best deal. We've reviewed Credible and found them to be, well, credible.
Myth 2: It’s expensive
Again, no. You can contact a bunch of lenders yourself or use a comparison site to find out if it makes sense financially. Yes, the lender you choose may charge an origination fee to cover its expenses in setting up the loan. But it may be worth it compared with your savings.
Not Everyone Should Refinance Student Loans
Not all nurses will benefit from refinancing student loans. For example, you probably won’t if:
- Your credit score is low so you don’t qualify for today’s super-low rates. Work on your score and apply when you’ve rebuilt it. Or get a co-signer on board.
- You’re in a loan forgiveness program -- These are private loans that won’t be forgiven.
- You think you’re going to need other benefits that are exclusively available through federal loans -- such as an income-driven repayment plan or something similar.
But if none of those applies to you, now’s the time to explore your refinancing options.
Seize the Opportunity!
After all, why should you pay thousands when you don’t have to?
The sooner you refinance, the more you stand to save. So don’t put it off a moment longer.
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