The best education is the one thing every parent wants to give their children. However, when it comes to college, it is not a simple matter anymore. The cost of education is gradually increasing, and many students now leave college with an average debt of $37,000. These debts can weigh heavily when someone is just starting their career. Let us take a look at the reasons for such high debt and what you can do to make them manageable with student loan refinancing.
The cost of college
Unless you are lucky to get a scholarship, you will have to pay for every part of a college education. These include tuition fees, supplies like books and other equipment, clothing, accommodation, food and other costs that arise from time to time. Parents will, of course, help their children a much as possible but not every family has the capability to handle the full financial burden of college.
Over the course of their studies, students can take loans for various requirements. It can be to pay tuition fees, accommodation and living expenses. These loans will, of course, be taken at different times during the years. The interest rates for these loans can be anything from 4% to 10%. Starting to pay them ass soon as you start working can put a lot of strain on you, and this can be the story for the term of that repayment.
Student loan refinancing
Since many loans were given out at high interest rates in the past, the government has realized there is more debt a person carries when they leave college. Due to this, student loan refinancing or consolidation has become a relief to many.
How does it work?
A student will take several loans during their college years, and these will have various due dates. They will also attract different interest rates depending on the institution that gave the loan. When you have to pay them, ou can sometimes fall behind because you cannot remember when the due date is for a particular repayment. It is far better to take one big loan and pay all the small loans in total. You will then be left with one loan payment only.
The benefits of refinancing your student loan are simple; you will have only one date to worry about so you will never miss a payment and the interest rate you will have to pay can be as low as 2.13%. Some people can save up to $14,000 on their student loans by refinancing them.