I work with a variety of clients in my practice here at Student Loan Planner. One woman I recently helped had three variable rate loans with Discover student loans. They were at interest rates of 7.5%, 8.5%, and 9.75% respectively.
If you have student loans with greater than 7% interest, I can probably save you a lot of money. Check out the cash back refinancing bonuses at the bottom of the page.
How Do These Super High Rates Happen?
Prior to the government assuming the role of direct lender in the student loan marketplace, private lenders issued large volumes of student loans. The woman I helped above had signed several large loan agreements with Wells Fargo. She had no cosigner, no income, and a limited credit history, and they came back with sky high interest rates. It’s not like any of this was her fault. She just happened to be a student without well off parents.
Private lenders are making huge profits right now off the back of responsible students. This client of mine did nothing wrong. She just did not have the ability to get a cosigner. Now she has a good job with a stable salary. Her debt is low relative to her income, but she is still trying to pay off these high interest rate loans. At over 7% interest, this student debt is hard to conquer.
Student Loan Interest Should Never Approach Credit Card Levels
What shocked me is that her highest interest rate loan approached credit card interest rate levels. She has been paying this interest for several years, yet she is gainfully employed. The risk to the lender has substantially declined. Because of this, there’s no reason she should have student loans with greater than 7% interest.
Who Has Student Loans with Greater than 7% Interest?
If you graduated undergrad before 2014, there’s a chance that you could have borrowed at these sky high interest rates. Only private loans have interest rates above 7%. Government loans generally carry rates of 6.8% or below.
If you have debt with interest rates this high, there’s generally no reason you should keep it. If you have direct loans from the federal government, it’s necessary to look at your options through federal programs before deciding if refinancing with a private lender makes sense.
If you have high interest rate debt, check out the private student loan company Sofi to see what rate they’d offer you.
How I Helped Her Search for Better Offers
I want to stress that every case is different. I can’t guarantee that a client will receive a favorable interest rate in a refinancing. What I can guarantee is that I’ll work hard to find a better deal than the one you currently have.
Private student lenders love borrowers with high incomes. Unfortunately, my client with these sky high interest rate student loans had a moderate income. We had to look at several different lenders, but eventually we found a company that would refinance her private student loan debt at around 5.5%.
Additionally, this new loan was on fixed rate terms, eliminating the variable rate risk she already had. On average, her interest savings amount to about 3% a year on about $40,000 in debt. That means she saved about $1,200 in the first year alone.
I Can Help You Save Money on your 7%+ Student Loans
That’s why I love what I do at Student Loan Planner. I’ve saved people an average of $76,600 each since I started this practice officially in mid September 2016. If you have student loans with greater than 7% interest, I only charge a one time fee for student loan help.