The numbers are staggering. Unfortunately the numbers we're referring to are the figures associated with the massive amount of student loan debt that Americans are burdened with.
Because of this, the need for student loan refinancing is HUGE these days. According to the Federal Reserve, outstanding student debt in the U.S. surpasses $1.3 trillion. Nearly 40 million U.S. citizens are carrying this debt, a debt toll so high that it has surpassed credit card debt and is only outranked by the level of housing debt.
Such extreme debt levels is of course a major source of stress, frustration and financial strain on debtors, but has an undeniably negative effect on the American economy as a whole as well, everything from housing affordability to general consumer spending takes a hit as debtors struggle to payoff high interest student loans.
Even when/if students secure a good job out of college, make their payments on time and gradually improve their credit scores, they still remain locked into ridiculously high fixed interest rates.
Not Much Student Loan Refinancing Offered Through Traditional Banks
Many people could be getting relief from the high rates they are paying on loans.
According to Goldman Sachs, an estimated $211 billion worth of student loans could be refinanced at a lower rate, that includes $150 billion in federal loans. But for the most part student loan refinancing through tradition banks hasn't been happening.
Most of the major financial institutions in the private loan sector brush off student loan refinancing efforts, they don't see a benefit in actively marketing refinancing options and actually view student loan refinancing for consumers as a threat to their bottom line.
Why educate people on refinancing options and spend marketing dollars to help consumers get better deals on student loan when it hurts their bottom line? Many major financial institutions are more than happy to continue on as usual.
It means more money for them, even if it doesn't serve the consumer's true needs.
Credible Bridging The Gap Between Borrowers & Lenders
Credible is an innovative San Francisco-based company that focuses on helping school graduates free themselves from burdensome high fixed loan rates, and making it easy to switch lenders and save on their loan payments through student loan refinancing.
The company, called a “Kayak for student loans,” is intent on alleviating some of the financial pressure young Americans are facing by disrupting the way students and graduates find and refinance their student loans.
There are many new "fintech" companies entering the student loan market, Credible operates differently than many of the others, Credible is not a lender, rather, an independent matchmaker between borrowers and lenders, giving recent graduates an easy way to determine if they are paying too much interest on their existing loans and offering student loan refinancing options.
The company provides much needed transparency for borrowers and enables recent graduates and young professionals to shop and compare offers from multiple lenders. Borrowers saved an average of $11,688 by refinancing through Credible in 2014.
That's a substantial savings, allowing many young people to hold onto more of their hard-earned cash in order to get themselves more firmly established after getting out of school.
And lenders that are willing to pursue refinancing clients are benefitting from Credible's service as well.
Stephen Dash, CEO of Credible explains...
“Credible has also seen significant growth in lender participation in our platform,” said Dash. “More lenders are providing student loan refinancing options, but the benefits are not realized unless qualified graduates can easily find loans on terms that best meet their needs, like specific loans for physicians or graduated repayment structures.
We are removing friction from the process, and giving lenders access to the exact types of borrowers they want to underwrite.”
How You Can Use Credible To Refinance Student Loans
Credible helps you find the best offer to refinance your student loans through their easy-to-use and free online tools. They allow you to quickly estimate your potential new loan rates and refinance savings, and then submit your info to various lenders so that you can match and compare the personalized loan offers you receive against each other. This can all be done from the comfort of your home in a low stress environment.
From their homepage, you can either use their Comparison Tool, which asks five simple questions to help give you an estimate of how much similar student loan borrowers have saved by refinancing their student loans, or you can proceed directly to creating an account with Credible.
Next, you complete your profile, which collects all of the financial information needed to request your personalized loan offers from their network of partner lenders. A network of vetted and reliable lenders that are ready and willing to refinance lower rates for eligible borrowers.
After the lenders respond, Credible will invite you to view their responses on your Offer Dashboard. The Dashboard allows you to easily compare offers based on a number of important criteria including total repayment amount, loan APR, and monthly loan payment. If you find a refinance loan offer through their platform that you'd like to take advantage of, you'll then complete the final step of the student loan refinancing process directly with the lender.
Frequently Asked Questions About Credible's Service
How does the Comparison Tool work?
The Comparison Tool provides a quick estimate of your potential savings from refinancing and also allows you to quickly compare your student loan situation to others who also have student loan debt. It's a useful self-help tool for your independent use and is not intended to provide investment advice.
Can I use Credible for student loan refinancing even if I didn't graduate?
Yes, borrowers with eligible student loans who did not graduate and are no longer in school can get student loan refinancing too. Please include as much information about your degree program as possible, including your last date of attendance.
Can I include Federal and private Loans? Or even Parent PLUS loans?
Yes, Credible's partner lenders will accept both federal and private loans used to finance your education, including Parent PLUS loans. If you are refinancing federal loans, please be aware of the federal benefits that don't transfer to private lenders when refinancing.
If you'd like to learn more about Credible's innovative service and your student loan refinancing options, visit them today at Credible.com.