Is It Really That Beneficial to Reduce Your Student Loan Interest Rate?

As a student loan holder, you know that the interest rate matters. In fact, it is one of few loan terms that most of us know anything about. However, many borrowers are hesitant to reduce student loan interest rates. They figure that the process is too complicated and the reduction too small to be worth it. In reality, the process of reducing student loan interest rates is pretty straight-forward, assuming that you do it by refinancing your student loans. Additionally, the reduction can be more than you would expect; even if it isn’t, you will be amazed at the money you will save in the long term.

So, is it really that beneficial to reduce your student loan interest rate? Yes, it absolutely is. Consider the following ways in which a lower interest rate on your student loans can help you.

Monthly Payments Get Smaller

What is the worst part of having student loan debt? Making those monthly payments, of course. Every month the money goes out and you are left trying to not just get by, but enjoy life on the money that is left over. Between your loans, house payment or rent, car payment, and other bills, you might find yourself eating ramen more than you did living in the dorms.

However, reducing the interest rate on your loans means smaller monthly payments. Even when the difference isn’t a large sum each month, it is a difference you will feel. A few more bucks can mean more gas in the car, nicer food in the fridge, or a new item added to your professional wardrobe. All of these things are small, yet feel significant.

Saving is Easier

So smaller monthly payments mean you can have more money for the now, and that is great. But if you are looking more into long-term planning, having money to save likely means more to you. So, instead of using that extra money to purchase something that will make you more comfortable at the moment, the money you are saving each month can be put in a savings account. What seems like a small amount of savings when viewed on a monthly basis suddenly becomes much more significant sum when you take a look at it over an entire year, and then over the many years of the life of your loan.

Debt is an Emotional Burden

Debt, as we all know, is a financial burden. But it is an emotional one as well. When we feel crushed by debt, it impacts us in every area of our lives. Reducing student loan interest rates means that we alleviate some of that stress. While not as measurable of a benefit as saving money, this might be the biggest benefit of all.