The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Jaketucson on February 14, 2012, 05:55:46 PM
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We've committed to paying the remaining $38k of my wife's student loan as quickly as possible, by doing what has been discussed in numerous posts--throwing every available dollar at it. My question is it possible to refinance student loans for a better interest rate? I've done a little research and it seems the answer is no, but thought someone may have knowledge here. It's currently a US Dept of Ed consolidation loan (done to consolidate each of the three separate loans for each year she was in grad school). The rate is currently 5.125% which isn't bad but of course I'd like to lower it as much as possible. This rate includes the discout we get for having automatic payment every month. Taking out a HELOC isn't possible due to being upside down on our house. Are there any other options out there to lower the rate and pay it off even faster? Thanks!
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I'd be curious in this info as well. But I was under the impression that the answer is NO.
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In general, the answer is no. It's almost impossible to "consolidate" student loans anymore to reduce interest rates. And if HELOC is out...
The one thing I can think of is 0% credit card offers (that also have 0% balance transfer fee, and no annual fee, of course). Big back in the boom years, they petered off for a few years, but have come back within the last six months to a year or so. I've got about 20K interest free right now (sitting in a money market to earn a few percent, then I'll pay it off).
That could be a good way to reduce the interest a bit, though you likely won't get your whole balance done that way, and you have to make sure you pay off the CC as soon as it is going to earn interest.
Depends on you having great credit, of course.
Something to look in to.
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My understanding is that if you have already consolidated into one loan you cannot further refinance your students loans. Arebelspy has an interesting idea, but it would be a little risky for my taste, what if something should happen in the 0% time frame?
The one thing you can do to minimize interest without changing anything is paying more than once a month. The interest on student loans compounds daily, so by putting in extra payments (which my two loan holders allow without penalty) more often you minimize the compounding. This won't help a huge amount, but it is something. You could try every pay period, or even set up a once a week payment.
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I didn't realize student loan interest compounded daily. I get paid twice a month, so I'll look into splitting up my payments. Thanks for the tip.
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You can try to qualify for a deferment or a $0/mo IBR, but the IBR is difficult since I'm assuming most of those loans would be unsubsidized? I mean, if you could qualify, you could probably make it work, but the number crunching would be more intense.