Student loan debt is a major problem for many mamas and their families―but it doesn't have to be. Refinancing companies like Laurel Road help families every year by offering better rates, making payments more manageable or helping them shorten their loan term.
If you're ready to start taking control of your student loan debt, here are five steps that could help you conquer your student loan debt and get a loan that works for you.
1. Understand your refinancing options.
Like motherhood, managing student loan debt is a journey made much easier by experience. If your eyes start to cross when you hear variable and fixed rates or annual percentage rate, start your process with a little education. Laurel Road offers a user-friendly resource hub with student loan refinancing guides and articles that can help explain your options and get you started on a more informed foot.
2. Potentially improve your credit score.
Your credit score is important because it provides an objective measure of your credit risk to lenders. It also has an impact on many aspects of your finances, so it's a good idea to understand and track your score regularly. To try and improve your score, pay your bills on time—your payment history is one of the most important factors in determining your credit score. Having a long history of on-time payments is best, while missing a payment may hurt your score. Another action to improve your credit score would be to keep the amount you owe low—keeping your balances low on credit cards and other types of revolving debt, such as a home equity lines of credit, may help boost your score. Remember, good credit scores don't just happen overnight, but taking positive financial steps now can lead to more positive outcomes in the future.
3. Get a better understanding of your current loan benefits.
Different loan types have different benefits and you want to make sure you don't lose any valuable benefits by refinancing your current loan. Before you're ready to apply for a better option, you need to know what you have. Determine your loan terms (how long you have to pay off your loan and how much you're required to pay each month) and find out your current interest rate.
When you took out your original loan, especially if it was a federal loan, everyone who applies is given the same rate regardless of their personal credit. When you look to refinance, companies like Laurel Road look at your credit score and other attributes to give you a personalized pricing option―one that's often more competitive than your original terms. However, it is important to know that federal loans offer several benefits and protections, including income based repayment and forgiveness options, that you may lose when refinancing with private lenders (learn more at https://studentloans.gov). Try Laurel Road's Student Loan Calculator to get a bigger picture perspective of what it will take to pay off your loan and the options available to you.
4. Pick the terms that fit your lifestyle.
Your long-term financial goals will determine what refinancing terms are right for you. For example, a 3- or 5-year loan means faster payoff times, but it will mean a higher monthly payment―which might not be possible if you're planning to purchase a home or looking to move your toddler to a more expensive school. A loan with a longer term will have lower payments, but more interest over the duration of the loan.
Want to see what your options are? Check your rates on Laurel Road. They'll perform a "soft credit pull" using some basic information (meaning initially checking your rates won't affect your credit score ) so you can make an informed decision. If you do proceed with the application Laurel Road will ask for your consent on a hard credit pull.
5. Don't miss out on discounts.
With a little research, many people can find opportunities for lower rates or discounts when refinancing their loans. For example, if your credit isn't the best, look into the possibility of adding a cosigner who may help boost your rate. There are also many associations and employers who offer student loan benefits. Laurel Road partners with a number of groups and employers who offer discounts on rates―so check with your professional associations or HR to see if any options are available to you. Finally, talk to your financial institution, especially if you're planning to take out another major loan like a mortgage. In some cases, having another product with an institution can get you a preferred customer rate.
This article is sponsored by Laurel Road. Thank you for supporting the brands that support Motherly and mamas.