The cost of higher education in the U.S. has been increasing steadily year after year. Every year, students take on more student loan debt than the previous year. For most families, the only solution is to borrow money by way of federal and private student loans. Student loan debt has been a topic of debate in the news. Here’s what you should know about the current landscape of student loan debt (and how refinancing can help you).

Average Student Loan Debt in 2021

According to educationdata.org, 43.2 million student borrowers have an average debt of $39,351 each. In 2020, the average loan debt increased 4.5% from the previous year.

Most student loan borrowers feel overwhelmed by the amount of loan they’ve taken on over their 4 or more years in college. If you’ve taken on student loans, you may feel like you’re never going to get out of debt. Fortunately, there is a solution in the form of student loan refinancing.

How Refinancing Can Help Make Student Loans More Manageable

Refinancing involves exchanging your current student loans for a new loan with completely different terms and interest rates. There are several benefits to refinancing your student loans:

• • Depending on your credit score, you may qualify for a lower interest rate. This would lead to major savings on the accrued interest over the loan term.

• • If your credit doesn’t qualify you for a lower interest rate, you can refinance with a cosigner to access a lower rate.

• • When you refinance, you can choose to increase your monthly repayments if your income allows you to. This is the best way to pay off your debt faster. As an added bonus you’ll also pay less on your loan because of the lower interest accrual over the shorter term.

• • You could also opt to reduce your monthly payments and extend the repayment period. This will free up much-needed cash and reduce the strain on your budget. Consider this as a short-term solution only as it will cost you more in interest over time. You will also take longer to repay your debt.

Two Things To Consider When Refinancing Student Loans

#1 – You can refinance student loans multiple times without having to pay any fees. It makes sense then to refinance for terms that are suitable to you at the moment and re-refinance when your financial circumstances change. Refinancing multiple times can save you even more money on your student debt. The only investment is the time you spend looking for a lender offering you the best deal.

#2 – You can refinance both federal and private student loans. There are really no downsides to refinancing private student loans. However, refinancing federal loans will cost you federal benefits and protections. You should only consider refinancing federal loans if you’re absolutely sure you won’t need the associated protections in the future.