Refinancing loans may not be best option to save money over time

(WLNS) – Refinancing is marketed as a cheap way to pay off college loans but may not always fit the bill for the future.

There is more than a trillion dollars of student loan debt being carried by people in the United States, last year the average student had more than $37 thousand in loans.

Many are left trying to figure out how to pay them, including the option of refinancing.

Refinancing is a way to pay off loans with a cheap interest rate, but local financial planners say you can’t judge a cook by its cover, or in this case, a repayment program by its benefits.

“It kind of came as a shock,” Lansing Community College Sophomore Courtney Garlock said.

Garlock knows prices for college, and student loans can be intimidating, and refinancing can feel like an easy way to make them disappear.

“I would definitely like to get that loan paid away, as fast as I can,” Garlock explained.

A mentatlity financial advisor David Shotwell says many students have.

“Their gut reaction is, I want to make this loan go away as fast as possible,” Shotwell said.

But Shotwell says refinancing isn’t always the nest way to make loans go away.

“Before somebody goes and refinances their loans, they really need to look at what they have, and not just focus on the rate”.

Shotwell says options that allow for changes in payments with sometimes high interest rates could end up helping you cash in in the long run.

LCC Director of Financial Aid Stephanie Trapp agrees, saying trying to predict your future can help you understand the need for flexibility.

“Really understanding the job your going into, where you’re going to be employed at the market at that state that you’re going to be working on,” Trapp said.

 

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