Published On: Thu, Dec 7th, 2017

Change Your Student Loan and Save Money

A change to your student loan arrangement could help you to save cash.

If you’ve recently graduated then you most likely have a pretty significant volume of student debt. And it might seem like that debt is never going to go away. However, there are many ways in which you can help to reduce the debt burden that you have once you’ve finished university. If you are lucky enough to have wealthy parents then you might be able to opt for guarantor loans where parents guarantee repayments. Another way is to simply refinance your student loans.

photo 401(K) 2012 via Flickr

What does refinancing mean?

Essentially, you’re looking to pay off the old loans with a payment from a new lender that offers you a better deal. A comparative example would be moving a large credit card balance to a 0% credit card to reduce the amount of interest that you’re paying on it. There are a number of options for refinancing your student debt and, depending on what’s available to you, they could help you to reduce what you pay overall and to clear your debt faster.

How can you save money by refinancing student loans?

Find a lender offering a lower interest rate than the one you already have. If you’re paying less interest then you will save cash on what you end up paying to the lender overall.

Make sure that you’re not going to get caught by early repayment fees. Read the terms and conditions of your original loan and identify whether you will be required to make a payment to that first lender in order to pay off the loan now, rather than waiting until the end of the term you originally agreed. If there is an early repayment fee then work out whether you’ll save more in interest payments than the fee will cost you. If you will then it’s a good deal.

Consider consolidating debts. If you’ve got a wide range of student debts then you could save your money by consolidating them in one place. There are a number of ways in which this could be beneficial. For example you’ll only have to make one monthly payment so there is much less chance of missing any of the repayments. You’ll have just one interest rate to deal with and hopefully when you refinance the loans this will be at a much lower rate than you had with your existing lenders.

Shop around for a good deal. There are many different options now when it comes to loans for graduates and you don’t have to take the first deal that you’re offered. You can use price comparison sites to see which loans will help you save the most, from interest rates to fees. Plus, these comparisons may be useful to try to negotiate the deal you want with the lender you’re most interested in.

Refinance your loans as soon as you can. If you do find a good deal with a new lender then don’t wait to make the switch as you’ll be losing money every day that you stay with the old provider. It’s worth taking action as soon as you can to refinance student loans and start paying less.

Author: Anna Preston

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