Many students and recent graduates have trouble paying back their student loans. For their monthly payments to go down, they have to refinance the loan. Refinancing student loans can be a good idea sometimes, but it's not always a good idea. Interest rates have been low lately, but they are going up, and most economists agree that they will keep going up. Most student loans have a variable interest rate that won't be fixed until you refinance or consolidate your loans.
The only people who can refinance are those who have built up good credit by paying back their loans on time. If you haven't paid on time or have missed payments, it's pretty much over. Most of the time, refinancing rates are 1 or 2 points lower than your current rate. This is done to make the loan look better, but you should be careful.
It's nice to pay less each month, but what was supposed to be a 5-year loan often turns into a 15-year loan. You can avoid this, and I strongly suggest that you do, by paying off as much of the principal as you can. This will cut down on how long you have to pay back the loan and how much interest you have to pay. This is great in the best case scenario, but if money is tight, you can reduce your payments, even to the bare minimum.
Like any other type of bank loan, you get the principal up front, and you won't know how much the loan really cost until all the principal and interest have been paid back in full. It's likely that this is where a lot of students have trouble. Too many people act like their student loans are free money. Many people probably do the same thing with credit cards, but that's a topic for another day.
Most students understand that student loans can help them pay for school. They are an important part of our society and help us and the world we live in get better by getting an education. If you have a student loan, you owe it to yourself to know exactly where you stand and make any necessary changes.
