minimize student debt

Lender incentives can save big bucks when it's time to refinance student loans

Not all companies that provide college loan refinance products are created equally, and where they differ the most is in the interest rate reduction incentives offered. Aside from choosing to refinance student loans during the grace period, lender incentives can be the most effective way to shave a big chunk of money off of your monthly payment.

Look for those that offer interest rate reductions versus dollar amount reductions then compare the percentage of the reduction. Reductions for on-time payments and auto debit are the most common types of incentives. While many companies offer a .25% rate reduction for payments made by auto debit, ScholarPoint gives .5%. Many lenders also offer a 1% interest rate for making 36 months of consecutive on-time payments. ScholarPoint offers this 1% rate reduction a full year earlier.
Deferment and Forbearance starts over

If you've already put in a few years at a four-year institution, it's smarter to stay in school and keep taking on debt rather than dropping out. A study by the U.S. Census Bureau shows that full-time workers holding bachelor's degrees earn an average of $15,400 more per year than full-time workers with some college, but no degree. For workers holding associate degrees, the gap narrows to $14,000 per year. In both cases, a degree means substantially higher earnings prospects and therefore a higher likelihood you won't default on student loans.
Investigate jobs

Student loans allow a post-grad to put loans on hold for a specific amount of time over the course of the student loan repayment period. During this hold, called a deferment or forbearance, the borrower does not need to make payments on the loan although interest does accrue and is added to the balance of the loan.

The deferment and forbearance benefits aren't lost when you refinance student loans - in fact, the "clock" starts over again so that these hold periods are refreshed and can be used again in full.
You could pay more by incorporating fixed rate loans into your consolidation

The reason it's smart to get started with student loan refinancing now is that most student loans are written with a variable interest rate. This means that every year when the federal government decides on a new interest rate, the payment on your old student loan will change if you haven't refinanced.

However, not all student loans are written with variable interest rates. Some types of loans like the Federal Perkins Loan and the HPSL loan are fixed interest rates, meaning that the rates always remain the same. If the interest rate offered when you refinance student loans is higher than that of your fixed rate loans, then you could actually pay more by adding your fixed rate loans to the mix when you refinance student loans. ScholarPoint lending specialists can help you find the most cost effective solution in terms of which school loans to incorporate.

Two out of three students attending four-year colleges rely on student loans, according to FinAid.org. While students normally may not think about the debt burden they'll face until after they finish school, they can minimize the financial strain by taking some smart steps well before their debts come due.
Take a gap year

"Sometimes it benefits students to wait until they have a better sense of why they want to go to college and what they want to study," says Michele Kosboth, director of student financial planning for Lasell College in Newton, Mass.

The benefit of finding the right school and creating a career plan before you get there is twofold, Kosboth says. Students who have a clear idea of what they want to major in and what classes will be required are more likely to graduate on time. Students who attend a college that fits their academic and social needs are also less likely to transfer and lose credits moving from one school to another.
Pick a major

"Changing majors even just once can add on a year of school," says Heather Doe, associate director of marketing and communications for the Iowa College Student Aid Commission in Des Moines.

When choosing a major and a college, Doe says students should make sure the amount of debt they'll take on isn't disproportionately larger than the average starting salary in that major. To keep lenders at bay, Doe suggests figuring out what your monthly student loan payments will be after graduation and ensuring they don't exceed 8 percent of the typical starting salary in your field of choice.
Stay in school


Federal Stafford loans give students a six-month grace period between graduation and the time when they must start paying back their loans, reports the Department of Education, while private loans may not have any grace period. The bad news in both cases is that students may not have a job when the bills come due.

refinance student loan

Recent college graduates saddled with student loan debt and facing a weak job market can turn to a student loan refinance for some financial reprieve.

A student loan refinance lowers monthly loan payments by either locking in a lower fixed interest rate or extending the term of the loan. The latter lowers the monthly payment but costs more overall.

Many lenders will not refinance an existing student loan because it isn't profitable for them. However, if you're interested in trying to land a student loan refinance, consider these seven tips:

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7 Little-Known Facts about Refinancing Student Loans

When graduates refinance student loans, it is so simple that many people tend to overlook some of the key factors that can make a major impact on overall cost. By ensuring that you've utilized every money-saving opportunity when it comes to college loan refinancing, you can realize huge savings over the course of the 10-20 years you spend repaying your loan. You might be surprised at how many ways there are to easily save money when you refinance student loans.
Your interest rate will be .60% less if you refinance student loans during the grace period

The single most important way to reduce the total amount you repay is to refinance student loans during the post-graduation grace period. Following graduation, every student has the right to a 6 month grace period before they must begin repaying their loans.

During this grace period, the rates to refinance student loans are a full .60% lower than they are once the loan enters into repayment status. When you refinance student loans during the grace period, you will lock in these lower rates for the entire repayment period.

Think twice about refinancing if you have a federal Perkins loan. These low-interest loans help needy students finance postsecondary education. A refinance of this loan would eliminate some of its benefits.
Ask your current lender for a consolidation. This is far from a guaranteed deal, but it may be a way for your lender to retain your business.
Check with your community bank. At the very least, they will have a referral service.
Visit the U.S. Department of Education's Direct Loan Program online to look for a loan refinance. Unlike private lenders, the federal government isn't going to lose money on a college loan refinance because its costs of funds are lower.
Direct Loan offers a program that lowers your loan payments initially, and then gradually increases them over time as you expect your income to rise.
Look into unified lending if you don't meet the requirements for a refinance. This will consolidate all of your loans into one bill.
Once you successfully refinance your student loan, try to make the same payment you did before you refinanced as soon as possible. It will reduce the term of the loan and get you out of debt faster.