The Student Loan Secret that Could Save You Thousands of Dollars

by Melanie Lockert · 5 comments

Student loans are becoming the signature of our generation as droves of students are graduating with thousands of dollars in debt. At this point, the rising cost of tuition is making once affordable public schools hard to attend without taking on some form of assistance.

The numbers prove it, too. According to the Project on Student Debt, 69% of students who graduated in 2013, from public or non-profit schools, had an average of $28,400 in debt. That number is only increasing and is much larger for students who are attending private school, or going to school out-of-state.

As I can attest, when you graduate with student loan debt, you may be at the mercy of various lenders, various interest rates, and vastly different repayment terms.

So, what should you do if you have multiple lenders, multiple payments and various interest rates that cascade from high to low? Consider student loan refinancing.

Federal loans and private loans are very different in regards to fixed versus variable interest rates, as well as repayment plans. Typically private loans are less lenient and can have stricter terms.

Previously, borrowers had little-to-no options when it came to refinancing their loans. Now there are several companies that are working to help aid student loan borrowers manage their payments.

So, what is refinancing?

Loan refinancing is a way to make paying your student loans easier. As previously mentioned, many students may have a mix of loans from different lenders, such as having federal and private student loans. Instead of paying multiple lenders, through refinancing, borrowers pay one lender and make one payment.

In a way, you are paying loans with a loan, but it can help you manage your payments and potentially save thousands of dollars in interest through refinancing.

Through student loan refinancing, you are consolidating your loans, but also refinancing, with (hopefully) a better rate. This is different from the Direct Consolidation Loans that are offered by the federal government. Those loans are limited to federal student loans and typically don’t offer a better interest rate.

Student loan refinancing companies offer the benefit of consolidating and refinancing both federal and private student loans, and often can give you a competitive interest rate.

Is student loan refinancing right for you?

If you’re battling student loan debt, refinancing might be a good fit if:

  •    You are currently employed
  •    You have good credit
  •    You have multiple lenders
  •    You have a positive payment history

If you have bad credit or have a high debt-to-income ratio, you might not be an ideal candidate for student loan refinancing.

But if you have a positive payment history, good credit and a steady job, refinancing your loans can help streamline the process. Of course, each lender is different and some have stricter underwriting terms than others.

Who should I refinance with?

There are numerous student loan refinancing companies to consider. Each company is different, so if you are looking into refinancing, do your research.

Here is a list of highlights from 3 major players in the student loan refinancing industry.


  • Borrowers save an average of $11,000 through refinancing.
  • Offers unemployment protection to help put a hold on your payments if you lose your job. They also offer career support to help you find a job.
  • They have an entrepreneur program, which can help borrowers launch their business.
  • Refinances both federal and private student loans.

Common Bond

  • Rates start as low as 1.92% APR (with auto pay).
  • Has a social promise “For every degree fully funded on the company’s platform, CommonBond funds the education of a student in need abroad for a full year.”
  • Customer service available via phone or email.

Darien Rowayton Bank

  • Low rates.
  • Offers more repayment term, from 5-20 years.
  • No fees.

If you have student loan debt and are sick of paying high interest and multiple lenders, look into all your options. Student loan refinancing might be able to help you manage payments and save you money, so you can spend it where it really matters.

What’s your experience with student loan refinancing? Have you been able to use it to pay off debt and save money?

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{ read the comments below or add one }

  • Jim Lyons says:

    A parent with a sufficient nest egg that includes low yielding CD’s or money market funds could serve as the “bank” for funding a refinancing. My son has given me promissory notes (bearing lower interest) for paying off his high interest loans. He saves; I get a better return; it’s a win-win for our family. Not a gift.

  • Eve says:

    I am getting collection letters from T Guaranteed even though I’ve been paying Department of Education $62.37 a month year’s! How can 2 people want $ for 1 loan?

  • Cavakia Therlonge says:

    Thanks for educating me about student loan refinancing! I’ll definitely share this article with my student friends who are presently in debt.

  • Allyn Ross says:

    Another good option to consider for student loan refinancing is Citizens Bank, which will immediately turn around and make Firstmark Services (a Nelnet company) your servicer. But the rates were good (variable or fixed potions), and my wife has been a happy customer there for the past several months following an absolutely miserable 14 years with Sallie Mae/Navient. Good luck! Refi research is time well spent.

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