When You Should & Shouldn’t Refinance Your Student Loans

When you should and shouldn't refinance your student loansDid you know there’s currently $1.44 trillion in student loan debt in America? That’s an astronomical amount of money. So if you have student loan debt, you aren’t alone.

Student loans were meant to help students, and they have, but they’ve also created a huge source of heartache and stress for millions of people.

For most borrowers, student loan debt lingers for years. It starts to affect future plans like buying a home and even starting a family.

What can you do about it?

Of course, you can add them to your debt snowball or debt avalanche.

But one way that borrowers have tackled their student loan debt is through student loan refinancing. We’re going to going into detail on that here.

If you’re up to your elbows in debt and want some relief, refinancing your student loans might save you money. But it’s not for everyone.

Here’s what you should know about student loan refinancing, reasons people choose to do it, and whether it might be right for you.
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Why You SHOULD Worry About Student Loan Interest

Think your student loan interest rate is so low that it's not even worth worrying about? Think againSometimes I hear people talking about how they’re not paying off their student loans because the interest rate is “so low that it’s not worth worrying about.” Even if they have the money on hand to repay it.

Something about that just seemed off to me. I spent some time with a few calculators (including my Pay Off Debt app) to puzzle it out.

What I found might surprise you.
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Stopping Student Loan Garnishment on Federal Loans with Quick Action

The US government can take up to 15% of your disposable pay if you're in default on your federal student loans. Here are some ways to go about stopping student loan garnishment.7 million federal student loans are in default, and garnishment is one of the many ways the government can get their money back from you.

Under federal regulations, the government can take up to 15% of your disposable pay if you’re in default on your federal student loans.

Though the Department of Education doesn’t need to go to court and get a judgment to start a garnishment, there are administrative procedures in place to protect your rights and give you a chance in stopping student loan garnishment.
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Income Based Student Loan Repayment Options: There’s a Catch

If you qualify, you won't pay more than 15% of what they deem your discretionary income. After 20-25 years of payments than the rest of your student loans are forgiven. On the surface, this sounds great, but there's a catch.Liz really impressed me with the need to wake folks up to the dangers of cruising along with an income-based student loan repayment plan, so I asked her to stop by here and explain. (Plus of course I’m all about waking folks up to the dangers of cruising along with ANY type of debt.)

What they are

Income based student loan repayment plans became available in the wake of the recession as legislators realized that many were struggling with the minimum payments the standard ten-year repayment plan offers.

With the cost of education soaring, the average college graduate graduates with $30k in student loan debt. Graduate students finish with even more. Due to the heavy financial burden, the government implemented Income Based Repayment plans for those who qualify.

If you qualify, you won’t pay more than 15% of what they deem your discretionary income. After 20-25 years of payments than the rest of your student loans are forgiven. On the surface, this sounds great, payments you can afford and anything you don’t pay back gets forgiven.
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