(*Content provided by the White Coat Investor)
Perhaps the worst part about being a high-income professional is beginning your career with a massive debt burden hanging over your head. Eliminating your student loan debt at the beginning of your career will increase your happiness and speed your way to financial freedom, allowing you to take advantage of future opportunities, both professional and personal.
En route to debt elimination, most professionals should take advantage of the ability to refinance your debt with a private company. It is usually a no-brainer, but there are a few things to know about it.
# 1 You Save a Ton of Interest
If you have $300,000 in student loans at an average rate of 7%, and refinance that to 2.5%, you will spend $13,500 less in interest in the first year alone. That is $13,500 that can go toward principal instead of interest. The same monthly payment that would pay off a 7% loan in 20 years pays off a 2.5% loan in less than 10 years. A 10-year loan becomes a 6 1/2 year loan. A 5-year loan goes away in less than 4.
# 2 You Get Cash Back Now
As if saving tens of thousands of dollars in interest isn't enough, WCI has negotiated a special deal with each of the main refinancing companies for you as a little extra icing on the cake. When you refinance, you get some money back (and you help support this site.) If you're smart, you'll throw that at your loans too.
# 3 Refinancing Is Usually Quick and Easy
When these companies first showed up in 2013, there were lots of kinks to work out. Well, they've all been worked out. Now you can get a preliminary quote from most of them online in 5 minutes or less.
If you have all your loan paperwork handy, you can usually upload it electronically in a few more minutes. Once you've gathered the paperwork to refinance with one lender, checking your rate with a couple of others is no big deal either (and I recommend you do so.)
I don't know how long it takes you to make $13,500, but I guarantee refinancing your loans will take less time, especially since it is all after-tax money.