Many people think about how they can refinance their student loans for 30 years. Student loan refinancing is one of the most common ways to lower monthly payments, but it is only suitable for some. If you can’t afford to pay back your loans after 10 or 15 years (the typical length of a federal student loan), then you’ll want to keep their term as short as possible. This article will explain why and show you how to decide if a 30-year student loan refinance makes sense.
Refinancing student loans
- Student loan refinancing is the process of consolidating your existing student loans into one new loan with a lower interest rate.
- This process aims to take out a new student loan at a lower rate than what you’re currently paying, making it easier to pay off your debt faster and save money over time.
- But before you jump on board, it’s important to know what refinancing entails and whether or not it will benefit you in the long run.
The longer the term, the more interest you’ll pay. The shorter the term, the more interest you’ll pay. Interest rates are lower on 30-year loans than on 5-year loans. In short: if you can afford it, get a shorter term! According to Lantern by SoFi experts, “you’ll need to perform continuous refinances to achieve a goal of a 30-year student loan refinance.”
But what about refinancing your student loans for a 30-year term?
If you can afford a 30-year term, it is worth refinancing.
- Calculate your monthly payment and interest rate by adding up the total amount of money you owe and multiplying that figure by 0.0049271.
- Then, divide the result of your multiplication by 12 to get an annual percentage rate (APR) for your loan refinance.
- Finally, multiply this APR with your monthly payment from Step 1 to get an estimated total cost for repaying your student loans over thirty years!
The longer the term, the more interest you’ll pay.
The longer the term, the more interest you’ll pay. The shorter the term, the less interest you’ll pay. If your goal is to pay as little each month as possible, then a longer loan term would be better for you. However, if your goal is to have a lower total cost of ownership (TCO), then a shorter loan term would be better for you.
The reason why it’s important to know what type of student loan refinance will work best with your situation is because different factors come into play when choosing between them:
monthly payments vs. total costs, length of repayment vs. interest rate, and so on—and not all options are created equal.
Refinance for a shorter term if you can afford it.
To refinance your student loans, you’ll need to find a lender that offers a lower interest rate. If you can afford it, refinance your student loans for a shorter term and get the lowest interest rate possible.
Refinancing may be worth it if you can’t afford to pay off your loan immediately and are okay with paying more each month. But if you have a high-interest rate on your current loan and refinancing will lower it only slightly (because of low credit), then this isn’t an option for you—it would cost more in the long run.
You can refinance your student loans to a 30-year term, but it’s more challenging than you think. Hopefully, this article has helped you to deal with refinancing your loans.