Loan Refinancing

Find out in 2 minutes if student loan refinancing would save you money

Most recent veterinary school graduates have considerable student loan debt — the average for 2016 graduates who borrowed to get their degree is $167,500, and one in five had $200,000 or more.

That’s a pretty heavy burden, considering that even though they take on about the same level of educational debt as doctors, veterinarians are often paid more modestly. Median pay for veterinarians is $88,770, and veterinarians just out of school often earn less.

Government Repayment Plans

To help borrowers manage monthly payments on federal student loans, the government offers several income-driven repayment plans. These IDR plans reduce monthly payments by limiting them to a percentage of the borrower’s disposable income — typically 10 or 15 percent — and stretching payments out over a longer period of time (up to 25 years).

The drawback of these plans is that because you don’t get a lower interest rate, the extra time you take to repay your loans can increase total repayment costs by thousands of dollars — particularly if you don’t expect to qualify for loan forgiveness.

Refinancing Strategies

Refinancing loans with a private lender at a lower interest rate can reduce or eliminate the additional cost associated with extending your loan term. Some borrowers are able to reduce both their monthly payment and their total repayment costs.

Another strategy is to refinance into a loan with a shorter repayment term. Although that may increase your monthly payment, the shorter the loan term, the lower the interest rate. Borrowers who have used the Credible marketplace to refinance into loans with shorter repayment terms can expect to save $18,668 over the life of their loans. Because those borrowers refinanced an average of $56,202 in educational debt, veterinarians who qualify to refinance larger balances may realize even greater savings.

The Credible Marketplace

Because a growing number of lenders offer student loan refinancing, it’s important to consider your options with more than one lender. Borrowers can use the Credible marketplace as a research tool to get personalized rate quotes from multiple, vetted lenders in about 2 minutes.

The advantage of using Credible is that you get broad exposure to a range of lenders, from traditional banks and credit unions to online lenders and state student loan authorities. Credible employs a soft credit inquiry that doesn’t affect your credit score, and your personal information isn’t shared with lenders unless you see an option you like.

Do Your Research

Refinancing is not for everyone. When you refinance federal student loans with a private lender, you lose access to benefits like access to IDR programs and the potential to qualify for loan forgiveness.

But thousands of borrowers have decided that the potential savings they can achieve through refinancing are worth more to them. Given that an era of historic low interest rates may now be coming to an end, it’s worth it to at least explore your options.

 

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