Graduates with student loan debt aren’t the only ones who can benefit by refinancing their loans at a lower interest rate — parents can save thousands by refinancing the student loans they take out to help their kids pay for college, NBC Nightly News with Lester Holt reports.
The report features an Oklahoma mom, Colleen, who used Credible to find a lender to refinance high-interest federal parent PLUS loans she’d taken out to help her daughter Olivia pay for her $33,000-a-year tuition at Arizona State University.
Three years after Olivia’s graduation, Colleen was still paying off $50,000 in parent PLUS loans — at 6 percent to 8 percent interest.
The breaking point for her?
“When I saw I paid $4,000 in interest, none of which went toward the principal, I was outraged” Colleen said.
Refinancing her federal student loan debt at 4.5 percent interest will save her $12,000 over the life of her new loan.
“What a lot of people don’t know is that for every $3 in student loans outstanding, $1 could be refinanced at a lower rate,” Credible founder and CEO Stephen Dash tells NBC News Business and Tech Correspondent Olivia Sterns.
The average Credible user cuts the interest payment on their loan by 37 percent, Dash said.
Refinancing government loans with a private lender isn’t for everyone — you’ll lose access to some borrower benefits, like income-driven repayment plans and the potential for loan forgiveness after 20 or 25 years of payments.
Credible helps borrowers explore their options, by letting them request personalized rate quotes from multiple, vetted lenders, without sharing their personal information. The process takes about 2 minutes, and does not affect your credit score.
For those who decide it’s the right move for them, Colleen’s savings are not unusual. Borrowers who have refinanced their student loan debt with lenders on the Credible platform with the goal of reducing their interest rate, loan term and total amount repaid can expect to save $18,668 over the life of their loan.