It’s no secret that student loans have grown exponentially over the past 30+ years, as tuition has risen at a much faster clip than inflation. Because of this, many students are left with loans for years after graduation. Most of these loans were either subsidized or unsubsidized by the federal government and so most banks were kept out.
After graduation, this all changes. Many banks approach students offering refinancing terms that appear better than their federal loans. For some, it may in fact be a good deal. For others, it may not. Below is a simple pro/con list. This is not all encompassing but does list the most of the common tradeoffs I’ve seen.
-Often lower interest rates
-Simplify by having one loan (however this can be done through Federal Loans too)
-No payments based on income, often leading to unaffordable payments
-No public student loan forgiveness
Disclaimer: Reston Wealth Management has provided this information as a service and does not provide legal, accounting or tax advice. The appropriate professionals should be consulted on all legal, accounting and tax matters. Every individual situation is unique and a proper plan should be put in place before making a decision regarding refinancing your student loans.