Student Loan Refinance 101

After writing up my first peer-to-peer presentation on personal finance for PGY’s, I decided to divide the presentation up into 2-3 posts as these slides illustrate important points.

Since high interest rate student loan is one of the MAJOR way (aside from high interest consumer/credit card debt) that time values works AGAINST us, this first post is focused on how to turn this adversity around by refinancing student loans. 

* Assuming no payments since payment styles vary by individuals. Given any particular payment style, lower interest rate still translates into savings and becoming debt free sooner.

In summary, refinancing your student loan means

1. lower interest rate– effortless savings
2. increased cash flow–$100/mo payment in training is much less than IBR payment
3. for many pgy’s, this may be the ONLY way to fund retirement/ get company match or simply to make ends meet (without dipping into more consumer debt/higher interest debt)
4. the only thing you forgo is the opportunity to your loans forgiven. (except for those who are willing to limit their job options and to take a smaller paycheck working for 503c, you are not missing much.)
5. For those currently deferring (not paying a dime), it sure is a deal hard to reject, when you get 40k in return for 7k investment towards your student loan (detailed in the last slide above.) i’d say yes to spending $100 less per month in a heartbeat if it meant I get nearly $500 in return for the $100 I pay towards a refinanced student loan.

• Have you refinanced your student loan(s)?
• What was your experience doing so?
• Why have you NOT refinanced your student loan(s)? How is that working out for you?