If you've been diligently paying all of your bills every month, maybe you're reading this article while enjoying a congratulatory glass of wine or a piece of chocolate cake. After all, don't you deserve a reward for all that discipline?
But hold on ... shouldn't your excellent credit score be worth a little more than a booze or sugar hangover? So why, exactly, is your lender not showing you some love?
You could be paying less
Look, your lenders are fine people. They probably bake banana bread with their grandmas on the weekends and help little kids safely get their basketballs from the middle of the street.
But they're not going to send you a letter saying "Congrats! We saw that your credit score has improved, so we're lowering your interest rate!"
All lenders—whether they're private or public, whether they're helping you finance a car, a house, or an education—make money by charging borrowers interest. It's how they make enough to pay interest to their investors and banking customers.
When they keep charging you the interest rate from your original loan agreement—regardless of your credit score or your stellar payment record—they're just doing they're jobs.
And you just have to do yours.
Your responsibility to yourself
Your job as a loan holder is to find the best interest rate and terms you can. You wouldn't walk into a car dealership and say, "I'd like to buy a car today, and I'll pay whatever you ask."
Of course not. You'd shop around. You'd let them know that you've judged the competition, and you wouldn't leave until you knew you'd gotten the best deal.
You can (and should) do the same with your student loans.
Skip the rest of this article and go refinance your loans right now. You'll spend the next month counting your extra cash like a storybook villain—without having to rob anyone. #winning
The benefits of refinancing
Still here, huh? Then allow us to explain in more detail.
Refinancing your student loans is where that stellar credit score pays off. Check out some numbers.
What you started with
Let's say you graduated with $37,000 in student loans. (Coincidentally, that's the average amount of debt American college students have when they graduate.)
You got onto the standard 10-year payment plan at 6.8% interest with the federal government, and you're paying about $425 per month.
Over the next 10 years, you'll pay over $14,000 in interest. Your credit score has zero impact on your payments.
But what if you could make a small change?
What if you could refinance for an interest rate just 1% lower?
You'd save $18 per month. Might not sound like much, but that's over $2,000 over the life of the loan.
You could put a deposit on a new car with that money. You could buy a couple plane tickets for a European vacation.
What if you could make a BIG change?
Saving $2,000 is a nice thing, to be sure. But most people who refinance save significantly more than that.
In fact, the average borrower who refinances their student loans saves more than $16,000 over the life of their loans. That's a European vacation every year until you're sick of the travel ... or a down payment on a house or retirement savings or something else that's very financially responsible. You get the idea.
The time to cash in is now
So perhaps it's time to give your current lender the boot—not because they don't want you to get your picture taken in front of the Eiffel Tower. Of course, they do. They'd just prefer you did it while paying them 6.8% interest on your student loans.
Give them the boot because it's your job as a student loan holder to find the best deal you can.
Start your comparison-shopping with some of these high-quality lenders. And get your money-counting fingers ready.
You're about to save a heap of cash.