The student loan crisis is worse than ever, with a rising number of college grads falling behind on repaying their loans. More than 1 million Americans a year are defaulting on their federal student loans, according to the Consumer Federation of America.
Students who left college with student loan debt in 2016 owed an average of $37,000, according to The Wall Street Journal.
Yes, $37,000 in debt.
But it might be getting worse. Americans are facing a “looming” student loan crisis more serious than previously understood, an analysis of new federal data suggests. Almost 40% of borrowers who entered college in 2004 are likely to default on their loans by 2023, the report predicts.
There’s hope, though. Studies show that 8 million Americans could get a lower interest rate on their student loans by refinancing, and many might not even know it.
If you’re in this boat, it might be time to think about refinancing. That could help you pay off your student loans faster and save money in the long run.
By combining multiple loans into one, you’ll replace your federal and/or private loans with a single private loan. Then you have just one lender, interest rate and monthly payment to worry about. By refinancing, you can:
- Get a lower monthly payment, in case you’re struggling to keep up.
- Find a lower interest rate, so you’ll pay less on top of the principal of your loan.
- Consolidate your debt, so it’s less complicated.
How to Refinance Student Loans
One easy way to do this is with LendKey, a service that allows you to quickly browse low-interest loans from credit unions and community banks.
That’s LendKey’s secret sauce: It works with nearly 300 community banks, credit unions and non-profit lenders, instead of huge, national bank chains like some other services.
In contrast with the huge national bank chains, smaller community banks often offer more borrower-friendly loan terms — namely, lower interest rates and more flexibility.
Simple, Straightforward and Not Intimidating
Refinancing your student loans can be confusing, overwhelming and intimidating. After you hit a roadblock or two, it’s easy to give up and walk away.
However, LendKey’s simple, straightforward online platform can help you find and apply for the right loan without visiting a dozen bank branches. If you have questions, you can just reach out to customer service via email.
If you’ve been turned down by other lenders, don’t fret. LendKey has more lenient credit score minimums and income requirements for applicants, so you have a better shot at getting a loan there.
But wait! Won’t applying for a bunch of loans hurt your credit score?
Nope. That’s not how this works.
There are two types of credit inquiries: hard and soft. The former will affect your credit score; the latter will not.
LendKey does a soft credit check on you, so you can compare loans from several different lenders before you actually apply for one.
Ideally, refinancing your student loans will be a win-win-win: You’ll get a reduced interest rate, lower monthly payment and pay less over the life of your loan.
Plus, when you’re approved for a loan you applied for through LendKey, you’ll get a $100 bonus after the loan is disbursed.
Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. His student loans are paid off, thank God.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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