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Thursday, October 1, 2020

Want to change how much you pay on student loans?

Consolidating or refinancing may be the solution

By Kiana Doyle

Student loans — the daunting subject that can strike fear in the heart of any college student — may seem at times intimidating and hard to understand. There are ways, however, for students to save money on these loans by doing things like consolidating or refinancing their student loans.

The Financial Aid Services Center website is one resource that can answer questions students may have about their student loans. Students can learn about federal versus private student loans or get in contact with a financial aid counselor through the center, but there is a lack of information about the possibility of consolidating or refinancing loans on the site.

Information about consolidating loans can be found on the Federal Student Aid website. According to the site, consolidating your federal education loans into what is called a “direct consolidation loan” can make payments simpler by only requiring one payment, thus helping you avoid late fees, but can have some negative aspects, such as a loss of benefits from the loans. It is important to consider the pros and cons of consolidating loans.

For those borrowing a Federal Perkins Loan from Western, Karen Yackley, manager from the Student Business Office, said in an email, “The Student Business Office has a Federal Perkins Loan Specialist on staff to assist these borrowers.” 

Paul Cocke, director of communications at Western, specified in an email, “the specialist does not tell the student what to do; that is the decision of the student.”

Yackley and Cocke explained students are not advised whether or not to consolidate their Perkins Loan. The Student Business Office staff is there to help students understand the pros and cons of consolidating loans, and receive assistance on their loan consolidation application from the Perkins Loan specialist if need be. 

There is also the option of refinancing student loans through various private finance companies for students looking for other ways to save money.

Seth Dunlap, a graduate from Washington State University and Pima Medical Institute, said he was able to drop four to five years off his student loan payments by refinancing his student loans with the personal finance company SoFi.

SoFi, a company designed to help users manage personal finances and loans, offers a student loan help center on its website that provides helpful information on all things student loans. Aside from a plethora of resources, such as definitions of student loan terminology or the “student loan savings calculator,” the site also includes articles like, “Strategies for Lowering Your Student Loan Interest Rate.”

Dunlap said he found SoFi after doing some research on what he could do to lower the interest rate on his student loans.

According to SoFi’s website, the process of refinancing loans is the receiving of a new loan at a new interest rate and/or a new term. 

“My student loan interest rate was fixed at 10.5%,” Dunlap said. “I knew that the federal ones were locked in at five or five and a half, so I figured, ‘Hey, why don’t I do some research and see what I can do?’”

By refinancing his loans with Sofi, as well as setting up automatic payments Dunlap was able to lower his interest rate on his student loans to 4.7%, he said.

His advice for students with student loans? Don’t wait to explore the possibilities of lowering your interest rates.

“If you can do anything you can to reduce your monthly payments, or reduce the amount of time you have on your loans, do it — don’t wait,” Dunlap said.

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