When she started college, Sarah Ann Stanley didn’t know much about student loans. She was the first person in her family to get one.
“You need the money,” she recalls, “so you take the loan.”
It wasn’t until later that she got a real education about student loans: “When you’re done with school, then the reality hits.”
Stanley was one of the nearly 15 million Americans per year who attend public universities, according to enrollment figures. Tuition there tends to be a lot cheaper than at private colleges.
Still, by the time she graduated from Western Kentucky University a decade ago, she had $60,000 in student loan debt. She owed most of it to Wells Fargo.
After graduation, she mistakenly thought she’d be allowed two interest-free years to get her post-college career established before she’d have to start making monthly payments on her student loans. She thought the agreement guaranteed that.
“Wrong,” she says. Stanley was informed she had only a six-month grace period.
Before she knew it, she was expected to pony up $500 a month.
“It’s hard to find a job right off the bat,” says Stanley, now 32. “I struggled for the next couple of years. Unfortunately, it ruined my credit.”
Whenever her payment was late, her credit rating took a hit.
She hated struggling this way. She decided to refinance her loans — to replace them with a new loan that had better terms.
One easy way to do that is the online loan marketplace Credible, where you can compare rates from multiple lenders side-by-side and find one that could help you reduce interest or lower your monthly payments.
‘I Just Want to Be Done With It’
Stanley first refinanced her student loans two years ago.
Most of her student loans were charging her at least 8% interest. She consolidated them into a new loan with 6.47% interest. With another quarter-percent discount for using an autopay function, she got that down to 6.22%.
Suddenly, she was saving $350 per month.
But she wasn’t done! Just recently, she refinanced for a second time. She did it through a hard-to-get-into credit union that she was only able to join because her mother is a retired Target employee.
This time, Stanley switched from a 10-year loan at 6.47% to a five-year loan that’s charging only 4.7% interest. Again, by signing up for autopay, she got that down to about 4.5%.
She’s paying a bit more per month now, but she shaved five years off her repayment schedule, saving herself thousands of dollars in interest over time.
Cutting years of payments is worth the short-term cost of higher payments for her. “Now that I’m more set financially, I just want to be done with it,” she says.
‘It’s Worth Fighting for Yourself’
Today, Stanley works as a product manager for a Minneapolis company that manufactures and sells holiday home decor.
Overall, refinancing is saving her thousands, although it’s hard to calculate exactly how much. She used to pay about $3,000 in interest on her student loans every year. Last year, it was only $1,700. This year, it’ll be even lower. And she won’t be paying for as long.
“Because so much of our money goes to this,” she says, “it’s worth pushing the envelope and fighting for yourself and finding a better deal.”
So Many Options
It may seem out of the ordinary to refinance twice. But the fact is, refinancing your student loans has become easier than ever.
“Nowadays, there are so many options, because everyone wants your business,” Stanley says.
Credible can help you find the best loan option for your situation. It’s a one-stop shop where you can compare rates side-by-side from multiple lenders who are competing against each other for your business.
Other companies offer similar services, but we like that the average Credible user saves about two interest points on their current federal loans.
It might seem like a small difference, but, as Stanley shows, a lower interest rate can add up to significant savings — and relief — over time.
“I didn’t want to be 45 and still paying student loans,” Stanley says. “Now that won’t happen.”
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. His student loans are paid off, thank God.
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