It’s important for student loan borrowers to understand all the options available to them; for some borrowers, it could mean cutting up to $20,000 off the lifetime cost of their debt.
New York, NY (PRWEB) July 14, 2016
Student loan refinancing – the process of restructuring student loan debt with a lender in order to reduce interest rates and/or secure more favorable terms – has become an increasingly popular solution to manage expensive college debt. Yet a large portion of U.S. student loan borrowers are still unaware that refinancing is available to them. In a new survey conducted by financial education site Student Loan Hero, 38% of respondents said “no” when asked, “Are you familiar with student loan refinancing?”
Further, when asked if respondents had ever refinanced student loans, more than 30% responded that they had refinanced either federal loans, private loans, or a combination of both. This conflicts with a 2015 report from Goldman Sachs that suggests only 17.5% of borrowers qualify to refinance their loans (1) – which speaks to the widespread confusion among student loan borrowers as to what refinancing is, what the process entails, and who is eligible
“Refinancing student loans isn’t the right solution for everyone, especially borrowers who are struggling to keep up with monthly payments and need to take advantage of federal student loan benefits such as deferment or loan forgiveness,” said Andrew Josuweit, CEO of Student Loan Hero. “However, it’s important for student loan borrowers to understand all the options available to them; for some borrowers, it could mean cutting up to $20,000 (2) off the lifetime cost of their debt.”
-Twenty-three percent of borrowers who have not refinanced haven't done so because they were not aware of the option.
-Of respondents who have refinanced, 14% refinanced federal loans only, 4% refinanced private loans only, and 14% refinanced a combination of federal and private loans.
-The most popular reason for refinancing among those who have was to achieve a lower interest rate (33%), followed by lower monthly payments (26%).
-Only 25% of borrowers are certain they’d be willing to give up access to federal student loan repayment options such as income-driven repayment and forgiveness in exchange for a lower interest rate.
Survey was conducted via Google Consumer Surveys on behalf of Student Loan Hero from June 30 – July 3, 2016, with a nationally representative sample of 1,001 individuals living in the US with student loans in repayment. “Do you have student loans that are currently in repayment?” was used as a screening question (with a target answer of “yes”).
About Student Loan Hero
Student Loan Hero combines easy-to-use tools with financial education to help over 43 million student loan borrowers manage and pay off their loans. Student Loan Hero has helped more than 80,000 borrowers manage and eliminate over $1.5 billion in student loan debt since 2012 and assists over three million people a year in becoming financially healthy.
Student Loan Hero offers free student loan calculators, as well as unbiased, personalized advice and repayment plans through an easy-to-use online dashboard.
Founded in 2012 by CEO Andrew Josuweit, who himself had over $100,000 in student loans, Student Loan Hero operates on the belief that all loan help and recommendations should come with honesty and no hidden agenda.
Student Loan Hero has offices in New York, Austin and Portland. For more information, visit https://studentloanhero.com/.
(1) ”The Future of Finance, Part 3: The Socialization of Finance,” Goldman Sachs, March 13, 2015, p. 36.
(2) Average client savings reported by Darien Rowayton Bank (a Student Loan Hero partner), https://student.drbank.com/.