WEBVTT - Private Student Loan Benefits and Pitfalls with $Pro Meagan Landress #068 0:00:00.080 --> 0:00:03.159 Welcome to How to Money. I'm Joel and I'm Matt, 0:00:03.240 --> 0:00:06.920 and today we're discussing private student loan considerations and pitfalls 0:00:07.000 --> 0:00:28.480 with money Pro Megan Landrus. So last week we had 0:00:28.520 --> 0:00:31.400 money Pro Megan Landrus with us, and she's back with 0:00:31.480 --> 0:00:33.720 us again. But Megan, we didn't ask you any questions. 0:00:34.120 --> 0:00:35.919 You see, she's the first return guest, by the way 0:00:35.960 --> 0:00:38.400 to the show. We've never done this before. We're making 0:00:38.680 --> 0:00:41.760 an exception because Megan is so great and so helpful, 0:00:42.040 --> 0:00:44.000 and you know what, student loans suck so bad that 0:00:44.040 --> 0:00:45.960 people need that much help with it. There's a hashtag 0:00:46.000 --> 0:00:50.800 for student loans suck there. All right, let's proliferate that 0:00:51.159 --> 0:00:54.240 like mad. We'll do it. Megan, so real quick. Have 0:00:54.400 --> 0:00:56.080 you ever had any student loans? We've you know, we 0:00:56.160 --> 0:00:59.360 spent the entire last episode talking about student loans. Is 0:00:59.360 --> 0:01:02.560 this something that you have personal experience with? No? Actually 0:01:02.640 --> 0:01:04.600 I don't. And that's why a lot of my friends 0:01:04.600 --> 0:01:07.280 and my family don't really understand why I'm so crazy 0:01:07.280 --> 0:01:09.920 about student loans or I'm so interested in them. I 0:01:09.959 --> 0:01:13.320 went to Kennesaw State University, so born and raised in Georgia, 0:01:13.400 --> 0:01:16.520 never left went to Kinnesaw state. At the time I went, 0:01:16.640 --> 0:01:19.120 it was a very affordable option for me. I had 0:01:19.200 --> 0:01:22.240 the Hope Scholarship which helped with tuition, and I worked 0:01:22.240 --> 0:01:25.080 full time, so I did pay for my my housing 0:01:25.160 --> 0:01:28.560 up there and my expenses. So I did not graduate 0:01:28.600 --> 0:01:32.280 with student loans fortunately. But like on the last episode 0:01:32.360 --> 0:01:34.560 I mentioned, I work with a lot of folks who 0:01:34.600 --> 0:01:38.360 have student loan debt in the mix that really affects 0:01:38.400 --> 0:01:41.720 their financial plan and delays a lot of decisions or 0:01:41.800 --> 0:01:44.480 savings goals or just financial goals that they have in 0:01:44.520 --> 0:01:47.800 the mix. So I'm really passionate about helping people navigate 0:01:47.840 --> 0:01:51.800 their repayment strategy to get them on a faster track 0:01:51.880 --> 0:01:55.160 to achieving their financial independence. Yeah, that's great. I feel 0:01:55.160 --> 0:01:57.600 like you are probably like the younger female version of 0:01:57.640 --> 0:01:59.800 myself because I went to Kinnessaw State as well at 0:01:59.840 --> 0:02:02.360 the scholarship. Actually, my first two years I went to 0:02:02.520 --> 0:02:05.000 a private college out of state, and I racked up 0:02:05.040 --> 0:02:08.560 some student loan debt there and decided, based on the 0:02:08.560 --> 0:02:10.960 fact that I didn't want to accrue anymore and I 0:02:11.000 --> 0:02:13.239 wanted to graduate with a reasonable amount that I could 0:02:13.240 --> 0:02:15.560 pay off in a shorter amount of time, I said, Okay, 0:02:15.560 --> 0:02:17.359 I'm going back in state, like, why did I leave 0:02:17.520 --> 0:02:19.639 in the first place. I mean, I was glad I did. 0:02:19.680 --> 0:02:21.840 I felt like the first two years that private school 0:02:22.120 --> 0:02:24.359 were formative years for me. I learned a lot and 0:02:24.360 --> 0:02:27.360 made some important relationships. I wouldn't go back and do 0:02:27.400 --> 0:02:30.760 it over. But I'm also glad that I left and 0:02:30.880 --> 0:02:34.800 I capped the amount that I borrowed because uh, some states, 0:02:34.840 --> 0:02:39.880 like Georgia Tennessee has a free college program for community 0:02:39.880 --> 0:02:42.200 colleges for people in their state. There are a lot 0:02:42.200 --> 0:02:45.160 more state based programs happening now to um incentivize people 0:02:45.240 --> 0:02:47.840 to stay in state at colleges and whether it's community 0:02:47.880 --> 0:02:51.320 colleges or public colleges in that state. UM, I'm a 0:02:51.400 --> 0:02:53.720 big fan of that, and I think, uh, the federal 0:02:53.760 --> 0:02:55.880 government has not been able to to make anything happen 0:02:55.919 --> 0:02:57.880 when it comes to free college for all. And I 0:02:57.880 --> 0:02:59.520 don't know if that's good or bad, depends on your 0:02:59.560 --> 0:03:01.840 political meaning, but I'm super glad that a lot of 0:03:01.840 --> 0:03:04.079 states are kind of taking that under their wing. And 0:03:04.280 --> 0:03:06.680 man moving back into the state of Georgia, you megan 0:03:06.720 --> 0:03:09.400 graduated with no student loans. I graduated with not nearly 0:03:09.400 --> 0:03:11.560 as much as I could have because of that, and 0:03:11.560 --> 0:03:13.560 I gotta say I'm super thankful for that. Yeah, you 0:03:13.600 --> 0:03:16.040 mentioned Hope scholarship. Guys, that's something I was able to 0:03:16.040 --> 0:03:19.760 take advantage of as well, just barely. I almost lost 0:03:19.800 --> 0:03:22.800 it several times. But having that as an option for 0:03:22.840 --> 0:03:25.639 me was was incredible. So very lucky to have had 0:03:25.639 --> 0:03:27.760 that as an option. But you know, as a bigger question, 0:03:27.800 --> 0:03:30.359 like the fact that student loans exist, we talk about 0:03:30.400 --> 0:03:32.520 it like it's this terrible thing and it can be 0:03:32.720 --> 0:03:35.560 right the way that they're given out and there's very 0:03:35.600 --> 0:03:40.720 little information being disseminated and taught to new borrowers. However, 0:03:40.760 --> 0:03:43.640 being informed and finding a way to manage those student loans, 0:03:43.840 --> 0:03:46.360 that is a completely different story. That's a completely different 0:03:46.360 --> 0:03:49.360 task and something that involves two full episodes of talking 0:03:49.400 --> 0:03:52.840 about in order to try to unpack. So we're excited 0:03:52.880 --> 0:03:55.000 to have Megan back on this week. But before we 0:03:55.040 --> 0:03:56.760 dive into the topic, let's go ahead and talk about 0:03:56.760 --> 0:03:59.480 the beer. Let's do it, Matt. So, my buddy Jeff 0:03:59.640 --> 0:04:02.080 at my local package store, he actually just gave me 0:04:02.120 --> 0:04:05.080 this beer, which was super sweet. Yeah, So Jeff the man, 0:04:05.200 --> 0:04:07.840 he's a good friend, and we text that's how good. 0:04:07.880 --> 0:04:10.120 That's a good friends we are. That's how well. I 0:04:10.160 --> 0:04:12.440 know the beer guy at my local beer story and 0:04:12.480 --> 0:04:15.960 he's like a beer Somali. Yes, yes he is. And 0:04:16.000 --> 0:04:20.040 so he had this bottle sitting in the back storage room. 0:04:20.120 --> 0:04:22.360 And this is a five year old beer. It's by 0:04:22.400 --> 0:04:25.040 Westbrook Brewing Company out of South Carolina. They're just right 0:04:25.040 --> 0:04:28.599 outside of Charleston. And this is a red wine barrel 0:04:28.640 --> 0:04:32.480 aged Belgian style quad. This was aged for three years 0:04:32.680 --> 0:04:35.560 in red wine barrels. Yeah, so super cool. We'll give 0:04:35.720 --> 0:04:37.760 our thoughts. All three of us are drinking this beer, 0:04:37.760 --> 0:04:39.240 will give of our thoughts at the end of the show. 0:04:39.400 --> 0:04:41.800 And by the way, if you didn't catch last week's episode, 0:04:42.040 --> 0:04:44.320 that's where Megan showed up with a beer. So mean right, 0:04:44.320 --> 0:04:45.840 I'm glad we can return the favor and you can 0:04:45.920 --> 0:04:49.560 enjoy with our beers. Yeah, definitely, this is up my alley. Awesome. 0:04:49.920 --> 0:04:52.400 We did something different with our money pro show. And 0:04:52.480 --> 0:04:55.799 normally we have a friend of ours submit five minutes 0:04:55.839 --> 0:04:58.520 of distilled wisdom about one topic. But Matt and I 0:04:58.560 --> 0:05:01.719 decided that the topic of student loans, well, not only 0:05:01.920 --> 0:05:05.240 is it big enough that we couldn't consolidate it to 0:05:05.360 --> 0:05:07.480 five minutes, but we needed a whole show. We actually 0:05:07.480 --> 0:05:10.040 needed two whole shows with an expert. And we also 0:05:10.080 --> 0:05:13.240 wanted to answer your listener questions, and so we took 0:05:13.279 --> 0:05:15.960 those on our Facebook page. You can find that if 0:05:16.000 --> 0:05:17.640 you at a Facebook dot com and you type in 0:05:17.760 --> 0:05:20.040 how to money in the search bar, you can find 0:05:20.040 --> 0:05:22.520 our group. And that group is an awesome place to 0:05:22.560 --> 0:05:26.080 ask questions, to to solicit advice, and where everyone kind 0:05:26.080 --> 0:05:28.400 of helps each other out. And so we said, you 0:05:28.400 --> 0:05:31.440 know what, let's answer a bunch of listener questions because 0:05:31.480 --> 0:05:33.320 everyone's situation is a little different and it kind of 0:05:33.360 --> 0:05:36.400 helps us understand and answering those specific questions kind of 0:05:36.400 --> 0:05:39.359 helps us understand a little bit better the specifics of 0:05:39.360 --> 0:05:41.200 how student loans work, because there are a lot of 0:05:41.240 --> 0:05:44.600 specifics and it's hard to summarize succinctly. And today we 0:05:44.640 --> 0:05:49.240 wanted to cover the considerations and potential pitfalls of private 0:05:49.240 --> 0:05:52.320 student loans and if you should consider refinancing or not. 0:05:52.600 --> 0:05:54.560 And so let's kind of give some rule of thumbs. Megan, 0:05:54.560 --> 0:05:56.680 you've kind of want to start us off in how 0:05:56.720 --> 0:05:59.760 people should think about private loans. Well, first and foremost, 0:05:59.800 --> 0:06:02.800 with the private student loan debt, we're looking at two 0:06:02.839 --> 0:06:05.920 different entities. Private student loan debt and federal debt are 0:06:06.080 --> 0:06:09.360 very different things. We need to understand that I always, 0:06:09.400 --> 0:06:12.920 always always recommend looking outside just the interest rate when 0:06:12.960 --> 0:06:17.280 you're considering private refinancing. When you consolidate your loans from 0:06:17.279 --> 0:06:20.200 federal to private, you lose a lot of federal benefits, 0:06:20.279 --> 0:06:22.840 some of those being you lose a lot of flexibility 0:06:22.960 --> 0:06:25.640 in terms that come with the FED loans, and you 0:06:25.720 --> 0:06:28.279 lose some of the interest subsidies or discounts that come 0:06:28.279 --> 0:06:32.400 with FED loans. Also those really attractive super low interest 0:06:32.480 --> 0:06:34.680 rates that may be reeling you in, like that two 0:06:34.720 --> 0:06:37.520 percent or three percent offer. You have to have stellar 0:06:37.560 --> 0:06:41.039 credit to get approved for those. So last year the 0:06:41.080 --> 0:06:44.680 average credit score or the average FICO score to even 0:06:44.680 --> 0:06:48.400 be approved for a private refinance was seven sixty four. 0:06:48.720 --> 0:06:50.520 So if you don't have a credit score in that range, 0:06:50.560 --> 0:06:54.000 you may get declined altogether. All right, Megan, So real quick. 0:06:54.040 --> 0:06:57.120 You mentioned the interest subsidies and the discounts, so those 0:06:57.120 --> 0:06:59.400 are specific to federal loans, But what is what does 0:06:59.440 --> 0:07:02.159 that actually mean and what protections are you losing when 0:07:02.160 --> 0:07:04.560 you refinance to a private loan? Right, So, on the 0:07:04.560 --> 0:07:08.440 federal side, UH subsidies or discounts to your interests or 0:07:08.480 --> 0:07:12.360 your accumulated interest. Depending on your repayment plan, your interest 0:07:12.440 --> 0:07:15.960 is discounted or cut in half or waived for certain 0:07:16.000 --> 0:07:18.840 periods of time. That is not a benefit on the 0:07:18.880 --> 0:07:22.080 private side. On the private side, your interests continues to 0:07:22.120 --> 0:07:25.680 accumulate on the principle, and if you have unpaid interest, 0:07:26.200 --> 0:07:28.800 that unpaid interest is added to the principle and then 0:07:28.840 --> 0:07:31.800 your interest is then charged off of that new principal balance. 0:07:32.080 --> 0:07:35.120 So your balance, if you refinance into a private student loan, 0:07:35.320 --> 0:07:37.520 it's just going to grow more quickly because of that 0:07:37.560 --> 0:07:40.640 compounding effect, right right, it can, especially if you're just 0:07:40.720 --> 0:07:43.720 paying the minimum. So when it comes to interest rates, 0:07:43.880 --> 0:07:46.600 I feel like people get interested in private student loans 0:07:46.640 --> 0:07:49.560 because there are some really slick websites offering some really 0:07:49.560 --> 0:07:53.560 attractive looking interest rates. And so if you're paying seven 0:07:53.600 --> 0:07:57.720 percent on your federal student loans and you go to 0:07:57.840 --> 0:08:01.360 one of those private student loan website that offers rates 0:08:01.360 --> 0:08:04.360 into three percent range, that looks really good. But can 0:08:04.360 --> 0:08:06.080 you tell us why that might not always be the 0:08:06.120 --> 0:08:09.000 best choice for someone with a higher interest payment. Yeah, 0:08:09.040 --> 0:08:12.400 So going back to your FICO score again, it's really 0:08:12.440 --> 0:08:15.320 hard to qualify for those really low interest rates that 0:08:15.320 --> 0:08:19.000 they advertise, and that is what they advertise the lowest available, 0:08:19.440 --> 0:08:21.400 So keep that in mind. The other thing to keep 0:08:21.440 --> 0:08:24.720 in mind is the flexibility in terms if you're if 0:08:24.720 --> 0:08:28.560 you're switching from federal loans to private loans, you lose 0:08:28.600 --> 0:08:31.760 the option to have income based payments on the private side. 0:08:31.960 --> 0:08:34.160 That is not an option. You pay what they tell 0:08:34.240 --> 0:08:36.960 you to pay. If you lose your job, They're not 0:08:37.120 --> 0:08:39.800 very flexible on if you can't afford the payments anymore, 0:08:40.000 --> 0:08:43.640 and that's going to continue to affect your credit and 0:08:43.679 --> 0:08:47.720 balloon your balance. You can't reverse once you've gone private, 0:08:47.880 --> 0:08:50.280 you can't go back to federal. So if you if 0:08:50.320 --> 0:08:55.120 you consolidate, do a a private refinance and you decide, 0:08:55.200 --> 0:08:57.559 oh crap, I really like the federal system. I want 0:08:57.559 --> 0:08:59.960 to hop back on an income based payment, you can't 0:09:00.040 --> 0:09:02.680 reverse what you did. So that's something you need to 0:09:02.720 --> 0:09:04.960 keep in mind as well. All right, Megan, I feel 0:09:04.960 --> 0:09:08.199 like that brings up the question of who do private 0:09:08.240 --> 0:09:11.040 student loans actually make sense for? And so when does 0:09:11.080 --> 0:09:15.120 it make sense for someone currently repaying their loans on 0:09:15.160 --> 0:09:17.240 a federal student loan repayment plan? When does it make 0:09:17.280 --> 0:09:20.680 sense for them to actually potentially refy. So I think 0:09:20.720 --> 0:09:23.280 it makes sense when you have a very low balance. 0:09:23.480 --> 0:09:26.000 And I keep talking about these balanced rules of them, 0:09:26.200 --> 0:09:30.080 but my opinion is your balance should be very low 0:09:30.240 --> 0:09:33.640 compared to your income, usually manageable. Yes, do you even 0:09:33.640 --> 0:09:37.160 consider a refinance because of all of those benefits that 0:09:37.240 --> 0:09:42.640 you're losing, But there is value in finding a vehicle 0:09:42.760 --> 0:09:45.920 that has a lower interest rate if you're starting to 0:09:45.920 --> 0:09:49.720 tackle your debt faster. So, for example, if your federal 0:09:49.760 --> 0:09:53.520 student loans are at a six point eight percent interest 0:09:53.600 --> 0:09:57.000 rate and you're down to a balance of let's say 0:09:57.080 --> 0:10:00.360 eight thousand, and you think you can manageably start to 0:10:00.440 --> 0:10:03.160 really tackle and pay down that balance to get it 0:10:03.200 --> 0:10:05.880 out of the mix sooner rather than later. If you 0:10:05.920 --> 0:10:08.160 have stellar credit and you can you can test this. 0:10:08.280 --> 0:10:11.400 You can softly apply with some of the refinance companies 0:10:11.440 --> 0:10:14.319 out there see if you do qualify for a really 0:10:14.400 --> 0:10:16.720 low interest rate, If you qualify for a two or 0:10:16.720 --> 0:10:19.600 three percent interest rate, that's when it could make sense 0:10:19.760 --> 0:10:22.080 when you have a very low balance, you're willing to 0:10:22.120 --> 0:10:25.480 walk away from the flexibility of those federal loans and 0:10:25.920 --> 0:10:28.719 you get approved for that lower interest rate. That I 0:10:28.760 --> 0:10:30.760 think that's when it can make sense. Cool, and you 0:10:30.760 --> 0:10:34.040 mentioned softly apply, Like, what exactly does that mean? So 0:10:34.200 --> 0:10:37.000 you can softly apply through I mean, there's a lot 0:10:37.040 --> 0:10:40.960 of private refinancing brokers out there that will shop the 0:10:41.040 --> 0:10:44.320 rate out for you. Credible is one, there's a few 0:10:44.320 --> 0:10:47.839 others out there. But basically, you type in your basic information, 0:10:48.000 --> 0:10:51.120 how much your your student loan balance is, what your 0:10:51.160 --> 0:10:55.080 annual income is, and your basic information, and they do 0:10:55.160 --> 0:10:58.000 a soft check on your credit, but it will tell 0:10:58.040 --> 0:11:00.600 you whether or not you're going to be approved one 0:11:01.120 --> 0:11:04.160 and if so, what you could expect your interest rate 0:11:04.240 --> 0:11:06.240 to look like. So that can be kind of a 0:11:07.240 --> 0:11:11.000 either a deterrent or something that drives you to actually 0:11:11.040 --> 0:11:14.720 execute that into refinancing. Yeah, and so if you're able 0:11:14.760 --> 0:11:17.679 to get into an interest rate that is sufficiently lower 0:11:17.720 --> 0:11:20.600 than the one that you currently have, it could make sense. 0:11:20.720 --> 0:11:22.440 Like Megan said, if you have a super low balance, 0:11:22.840 --> 0:11:25.360 if you're barely moving the needle, if you're going from 0:11:25.600 --> 0:11:28.880 six and a half percent to six percent, it probably 0:11:28.960 --> 0:11:31.280 isn't worth first off, the hassle, but then second off 0:11:31.520 --> 0:11:33.600 the fact that you are losing some of those if 0:11:33.600 --> 0:11:36.200 you do run to a hardship not to have those 0:11:36.320 --> 0:11:39.079 benefits of being in a federal student loan. I mean 0:11:39.120 --> 0:11:41.040 that just stinks, and so you don't want to refi 0:11:41.160 --> 0:11:43.240 out of that if you're barely moving the needle when 0:11:43.280 --> 0:11:44.840 it comes to interest rates. So I think that's like 0:11:44.880 --> 0:11:46.679 a really good rule of thumb. And then so we're 0:11:46.679 --> 0:11:49.080 talking about interest rates, I want to talk to about 0:11:49.360 --> 0:11:52.439 time frames or terms, and so we're talking about refinancing 0:11:52.480 --> 0:11:55.600 down to, you know, a rate that's significantly lower. Do 0:11:55.600 --> 0:11:58.600 you at all recommend for folks to consider the length 0:11:58.640 --> 0:12:00.880 of time that they would be able to actually pay 0:12:00.920 --> 0:12:03.480 down that debt if they're going to refinance to a 0:12:03.520 --> 0:12:06.400 private loan. Do you want your clients to be out 0:12:06.480 --> 0:12:09.240 of debt within a year? Uh, two years, three years? Like, 0:12:09.320 --> 0:12:11.360 is there a period of time that, yeah, that you 0:12:11.360 --> 0:12:13.800 want to see folks out of it completely? Yeah? So 0:12:13.840 --> 0:12:16.240 I think it comes back down to the goals in 0:12:16.280 --> 0:12:18.559 your plan. If you have if you if you've got 0:12:18.559 --> 0:12:20.600 to prove for a super low interest rate, let's say 0:12:20.600 --> 0:12:23.200 you've got three point five uh, and you're able to 0:12:23.240 --> 0:12:26.199 refinance your student loans into that three point five interest rate? 0:12:26.600 --> 0:12:29.559 Are there other areas in your financial plan that need 0:12:29.679 --> 0:12:32.520 beefing up? Do you have other higher interest debt that 0:12:32.600 --> 0:12:35.400 maybe you can start to prioritize and accelerate. Now with 0:12:35.440 --> 0:12:37.400 that extra money that you have in your cash flow, 0:12:37.760 --> 0:12:40.920 are there extra savings goals or investing goals that maybe 0:12:40.920 --> 0:12:43.800 you should prioritize because you're only being charged three point 0:12:43.840 --> 0:12:47.120 five now, so maybe we can beat that in the market, 0:12:47.280 --> 0:12:50.360 or maybe we can finally get that emergency savings account 0:12:50.600 --> 0:12:52.920 up and going. So it comes down to the goals 0:12:52.960 --> 0:12:56.760 of priorities there so not not necessarily a term I'd 0:12:56.800 --> 0:13:00.480 recommend it. It just needs to fit within the plan. Yeah, 0:13:00.480 --> 0:13:02.120 I love that, But it's also kind of what makes 0:13:02.160 --> 0:13:05.280 it so tough, right as an individual with personal you know, 0:13:05.320 --> 0:13:07.480 financial goals, like what it is that you're trying to 0:13:07.520 --> 0:13:10.080 achieve because there is no clear answer, Like it's not 0:13:10.120 --> 0:13:11.880 like you can say, Okay, if it's gonna be less 0:13:11.880 --> 0:13:13.520 than twelve months and I'll be able to knock this out, 0:13:13.520 --> 0:13:15.280 sure let's go for it. But like you said, in 0:13:15.360 --> 0:13:17.640 some instances, you might want to actually stretch that out 0:13:17.679 --> 0:13:20.719 because there's other opportunities, there's other things that you want 0:13:20.720 --> 0:13:24.160 to achieve from a financial standpoint. Having your student loans, 0:13:24.200 --> 0:13:26.000 they're keeping you from that and you know, like as 0:13:26.040 --> 0:13:27.800 sort of a blanket statement may not be the way 0:13:27.840 --> 0:13:30.280 to approach paying off your student loans, right. I feel 0:13:30.320 --> 0:13:33.120 like there is no blanket statement. It really just comes 0:13:33.120 --> 0:13:36.120 down to your priorities, what's keeping you up at night 0:13:36.160 --> 0:13:39.400 financially speaking, and where you're trying to get ahead in 0:13:39.400 --> 0:13:42.400 your financial situation. Yeah. I think the biggest thing though, 0:13:42.400 --> 0:13:44.240 when it comes to private student loans that we just 0:13:44.280 --> 0:13:47.400 have to reiterate is that private student loans are not 0:13:47.480 --> 0:13:50.240 nearly as forgiving as federal loans, And like Megan said, 0:13:50.440 --> 0:13:52.480 you can't go back, you know, once you've actually pulled 0:13:52.520 --> 0:13:54.920 the trigger and you've done the refinance, and so you're 0:13:54.920 --> 0:13:59.199 gonna want to make sure that before you actually refinance 0:13:59.240 --> 0:14:02.280 into a of a student loan that the terms are 0:14:02.480 --> 0:14:05.280 much much more favorable and that you feel like you 0:14:05.320 --> 0:14:08.640 have the financial breathing room to take on an increase payment, 0:14:09.040 --> 0:14:11.200 that you can afford that in your budget, and that 0:14:11.280 --> 0:14:13.800 you will be able to for the life of that 0:14:13.880 --> 0:14:16.920 private student loan, however long of a term you take on, 0:14:17.160 --> 0:14:19.560 because you're gonna miss out on some of those benefits 0:14:19.960 --> 0:14:22.720 of having a federal student loan if times get tough 0:14:22.920 --> 0:14:25.920 and you don't have enough money to meet that obligation, 0:14:26.080 --> 0:14:28.920 so make sure you consider that before you do a 0:14:28.960 --> 0:14:32.480 private student loan refinance. They can be good, like Megan said, 0:14:32.480 --> 0:14:34.200 if you can get one of those sweet three percent rates, 0:14:34.200 --> 0:14:36.480 if you've got a great, great credit score, but if 0:14:36.520 --> 0:14:39.560 you don't, if you aren't one of those people, be very, 0:14:39.640 --> 0:14:42.160 very careful before you make that decision. So the rest 0:14:42.200 --> 0:14:44.280 of this episode, we're planning to get to a lot 0:14:44.320 --> 0:14:46.440 of listener questions that are posted in our Facebook group. 0:14:46.560 --> 0:14:49.360 We're gonna cover some of the companies to refinance your 0:14:49.360 --> 0:14:52.000 student loans with, as well as a lot of other 0:14:52.080 --> 0:15:04.160 questions right after the break. All right, Matt, Megan, we're back. 0:15:04.280 --> 0:15:06.960 Let's get right into this. Let's talk about the best 0:15:07.120 --> 0:15:10.120 lenders where you should consider going if you are one 0:15:10.120 --> 0:15:12.200 of those people, Megan that you mentioned would be a 0:15:12.240 --> 0:15:15.520 good candidate for refinancing your student loan into a private 0:15:15.560 --> 0:15:18.600 student loan. Where should people actually start If they feel 0:15:18.600 --> 0:15:21.440 like they've got a small enough balance they can significantly 0:15:21.480 --> 0:15:24.280 lower their interest rate and they want to attack it quickly, 0:15:24.320 --> 0:15:26.680 Like where should they go? So, yeah, I'm a big 0:15:26.720 --> 0:15:30.520 fan of looking at brokers for refinancing. Credible is a 0:15:30.520 --> 0:15:32.440 really big one you can take a look at, and 0:15:32.520 --> 0:15:34.920 what a broker means is it compares a lot of 0:15:34.960 --> 0:15:38.640 different companies for you based on a soft inquiry. So 0:15:38.800 --> 0:15:41.720 FI is another good option that you can take into account, 0:15:41.840 --> 0:15:44.560 but definitely one that you can compare a lot of 0:15:44.560 --> 0:15:47.280 different offers all in the same place. And can you 0:15:47.320 --> 0:15:49.200 compare the different fees as well when it comes to 0:15:49.240 --> 0:15:53.560 refinancing those you should, yes, And there are still companies 0:15:53.600 --> 0:15:56.760 out there that don't have fees associated with refinancing, so 0:15:56.800 --> 0:15:59.840 I said, I would suggest finding those companies. There are 0:16:00.040 --> 0:16:03.120 actually a lot of companies that offer cash rewards for 0:16:03.200 --> 0:16:06.480 choosing their company to refinance with. Sometimes it's you know, 0:16:06.560 --> 0:16:08.800 two hundred dollars, three hundred dollars, and you have the 0:16:08.840 --> 0:16:11.160 option of taking that as cash or applying that to 0:16:11.160 --> 0:16:13.640 your student loan balance. I would recommend applying that to 0:16:13.680 --> 0:16:17.280 your student loan balance. So yes, definitely, I think it's important, 0:16:17.360 --> 0:16:19.400 just like we talked about Matt on our Buying a 0:16:19.440 --> 0:16:23.440 Home episode that people compare multiple apples to apples quotes 0:16:23.640 --> 0:16:25.800 the same thing here. It doesn't hurt to look at 0:16:25.880 --> 0:16:28.960 multiple lenders and kind of compare what they're offering you 0:16:29.040 --> 0:16:31.080 based on not just the interest rate, but the fees 0:16:31.120 --> 0:16:33.440 involved as well. And the great thing is that with 0:16:33.480 --> 0:16:35.640 a site like sofi or credible, and we'll link to 0:16:35.640 --> 0:16:37.600 those in the show notes, those are going to be 0:16:37.640 --> 0:16:41.080 comparing many, many different lenders and that's just helpful, right 0:16:41.120 --> 0:16:43.000 because you can see it all in one place. It's 0:16:43.040 --> 0:16:46.280 like going to the Kayak of student loan refinancing. Yeah, exactly. 0:16:46.400 --> 0:16:49.520 So there were multiple questions from Bridget and Frank asking 0:16:49.560 --> 0:16:51.600 about paying their loans off early and is it worth 0:16:51.600 --> 0:16:53.680 it to REFI for the lower rate, and I think, Megan, 0:16:53.680 --> 0:16:56.120 you would say right that if they feel pretty confident 0:16:56.200 --> 0:16:58.840 that they can pay off their student loans quickly and 0:16:58.840 --> 0:17:01.000 they can find a lower rate in the refi world, 0:17:01.080 --> 0:17:06.639 like they are perfect candidates for a private student loan refinance, right, definitely, yes, So, 0:17:06.760 --> 0:17:09.359 and again you can usually choose the terms. You can 0:17:09.440 --> 0:17:13.959 choose one year, two year, five years, seven, whatever really fits, 0:17:14.160 --> 0:17:17.479 and you can pick the term that fits best with 0:17:17.520 --> 0:17:20.159 what you can commit to on a monthly basis. But 0:17:20.240 --> 0:17:22.600 you can always accelerate those payments and I would definitely 0:17:22.640 --> 0:17:25.879 suggest doing that as well. And Megan Daniel was asking 0:17:25.920 --> 0:17:28.160 should he pay attention to REFI offers in the mail 0:17:28.200 --> 0:17:30.280 I mean, could that Could that hurt? No? I don't 0:17:30.320 --> 0:17:32.400 think it get hurt. I think if you're getting those 0:17:32.400 --> 0:17:35.159 offers in the mail that means your credit score is 0:17:35.320 --> 0:17:39.440 within the range of maybe considering a lower interest rate refinance. 0:17:39.480 --> 0:17:42.320 So definitely don't ignore them. Maybe consider it and do 0:17:42.359 --> 0:17:44.920 a soft inquiry and see where it takes you. Yea Jell. 0:17:44.920 --> 0:17:46.200 I feel like that's something you're really good at. Is 0:17:46.240 --> 0:17:48.040 kind of keeping your mind open to like the different 0:17:48.040 --> 0:17:50.120 deals that are out there, regardless of where they're coming from. 0:17:50.119 --> 0:17:52.000 You know what I'm saying. Yes, sometimes I get those 0:17:52.040 --> 0:17:54.080 mailers and I try to refinance the student loan I 0:17:54.080 --> 0:17:55.880 don't even have because the deal is so good. I'm 0:17:55.920 --> 0:17:57.680 just like, please let me get this low interest rate. 0:17:57.760 --> 0:17:59.760 But they're like, you're a weirdo. You don't even have 0:17:59.840 --> 0:18:02.119 to and loan, and then I feel weird at the 0:18:02.200 --> 0:18:05.480 end of the phone call, so I know I'm odd alright. 0:18:05.520 --> 0:18:08.000 So Carrie had a question for you, Megan. She says, 0:18:08.080 --> 0:18:10.479 what are the benefits and risks of taking out a 0:18:10.520 --> 0:18:13.920 personal loan to get better terms on an existing student loan? 0:18:14.560 --> 0:18:18.360 So a personal loan is very comparable to a private 0:18:18.480 --> 0:18:22.119 student loan. There's not a lot of differences between the two. 0:18:22.520 --> 0:18:25.200 It's still a private debt, it's still based on your credit. 0:18:25.680 --> 0:18:29.199 Personal loans, from what I've seen, can have higher interest 0:18:29.280 --> 0:18:31.919 rates than what I've seen on branded student loan private 0:18:31.920 --> 0:18:35.160 refinancing rates. So again that's where you go in and 0:18:35.200 --> 0:18:37.720 you shop it around. You figure out what the best 0:18:37.760 --> 0:18:40.159 avenue is for you, what the lowest interest rate is 0:18:40.280 --> 0:18:42.440 that you can acquire. Yeah, that's what I've seen to 0:18:42.680 --> 0:18:45.320 like personal loan, if you could somehow find a lower rate, 0:18:45.600 --> 0:18:47.840 I mean, go for it. But typically, like you said, 0:18:48.080 --> 0:18:52.040 personal loans carry a higher interest rate than private student loans. 0:18:52.080 --> 0:18:54.440 And so looking at a site that looks at a 0:18:54.440 --> 0:18:56.840 bunch of different lenders like Credible or so far, you're 0:18:56.840 --> 0:18:59.960 going to find better rates typically then you would find 0:19:00.000 --> 0:19:02.760 on a personal loan, even a Sweet Mailer for a 0:19:02.800 --> 0:19:05.080 really low rate personal loan, you're just gonna get a 0:19:05.080 --> 0:19:08.080 better rate on a an actual private student loan. Typically. Cool. 0:19:08.119 --> 0:19:10.280 And we've got another question here from Julie, and she 0:19:10.480 --> 0:19:13.560 asked one question that I've been asking myself is how 0:19:13.600 --> 0:19:16.960 to balance investing into my future when I'm still paying 0:19:17.000 --> 0:19:19.560 off my student loans. I think I'm pretty set on 0:19:19.600 --> 0:19:22.240 opening a roth ira a with my tax refund and 0:19:22.280 --> 0:19:24.840 the money I've saved up for it. But additional insight 0:19:25.000 --> 0:19:28.080 is never a bad thing. So also, maybe how seriously 0:19:28.160 --> 0:19:30.480 to take student loans? I love that how the money 0:19:30.520 --> 0:19:33.199 is all about balance and mindful budgeting. And while I 0:19:33.240 --> 0:19:36.720 feel I'm living my best life while making significant lifestyle 0:19:36.800 --> 0:19:39.280 changes to pay off my student loans in three years, 0:19:39.440 --> 0:19:42.639