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Student Loan Refinancing Just Got Crazy Cheaper

Student loan refinancing rates have dropped even lower.

Here’s why and what you need to know.

Student Loan Refinancing: Rates Drop Even Further

Student loan refinance rates now have dropped to as low as 2.01%.

Why? The Federal Reserve cut interest rates, and lenders have reduced student loan refinancing rates to a near-term low. That’s great news for student loan borrowers who want to refinance student loans, get a lower interest rate and save money.

Here’s how to refinance your student loans.

Student Loan Refinancing: Should I Refinance Student Loans?

Today In: Money

Many people ask: Should I refinance student loans?

If you want to save money and pay off student loans faster, student loan refinance is an effective tool. When you refinance student loans, you exchange your current student loans for a new, single student loan with a lower interest rate.

Student loan refinancing has several advantages, including:

  • lower interest rate
  • single monthly payment
  • fixed or variable interest rate
  • flexible 5-20 year loan repayment term
  • one student loan servicer
  • pay off your student loans faster
  • save money

Student Loan Refinancing: How To Apply

If you want to know how to refinance student loans, it’s important to understand how to apply. The good news: the process is simple.

Step 1: Find the best interest rate

There are multiple trusted, online lenders that can refinance student loans with low interest rates and easy, online applications. Compare the best interest rates and loan terms. Most borrowers will refinance student loans with the lender who gives them the lowest interest rate. Most lenders allow you to check your preliminary interest rate online for free within two to three minutes without any impact to your credit score.

Step 2: Use a student loan refinancing calculator 

This free student loan refinance calculator shows you how much money you can save when you refinance student loans.

For example, let’s assume you have a $100,000 student loan at an 8% interest rate and 10-year repayment term. If you refinance that student loan with a 3.0% interest rate and 10-year repayment term, you would lower your monthly payment by $248 and save $29,720 in total payments. If you are a doctor, dentist or pharmacist with a large student loan balance, your savings may be even higher.

Step 3: Apply online

You can apply online for student loan refinancing. Most applications take 10-15 minutes to complete. You can also upload any supporting documents, which may include a copy of your driver’s license, transcripts, recent paystubs or job offer letter.

Student Loan Refinance: Key Questions

1. Do I qualify for student loan refinance?

While each lender has its own underwriting criteria, the best candidates for student loan refinancing typically have the following:

  • A credit score of 65o or higher
  • Current employment or a written job offer
  • Stable, recurring monthly income
  • A low debt-to-income ratio
  • No defaults on their student loans

What if you don’t satisfy these requirements? You should apply with a co-signer with strong credit and income. Your co-signer can help you get approved for student loan refinancing and help you receive a lower interest rate. Your co-signer will be equally financially responsible for the student loan. However, some lenders allow the co-signer to be released from any financial obligations after meeting certain requirements.

You can maximize your chances of getting approved to refinance student loans by applying to multiple lenders. Each lender makes a separate decision, so getting rejected from one lender does not negatively impact your chances with another lender.

2. Can you refinance Parent PLUS Loans?

Yes. Parent PLUS Loans carry relatively high interest rates, so refinancing Parent PLUS Loans is a smart way to lower your interest rate and save money.

3. What are the fees to refinance student loans?

There are no fees to refinance your student loans. If any lender tries to charge you a fee to refinance student loans, find another lender. There are also no prepayment penalties, so you can pay off student loans anytime with no charge.

4. Should I refinance my federal student loans?

You should not refinance federal student loans if:

  • you plan to pursue public service loan forgiveness or an income-driven repayment plan
  • you want access to deferral or forbearance options

You can still refinance your private student loans and leave your federal student loans outstanding. Most lenders today offer employment protection if you lose your job and want to pause your monthly payments.

5. When should I refinance student loans? How often can I refinance student loans?

When should you refinance student loans? The answer: you should refinance student loans whenever you qualify for a lower interest rate. If you can get a lower interest rate and save more money, then it may be a smart financial move.

How often can you refinance student loans? There are no fees to apply, no fees to refinance, and no limit to how often you can refinance student loans.

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Zack Friedman is the bestselling author of the highly-anticipated, blockbuster book, The Lemonade Life: How To Fuel Success, Create Happiness, and Conquer Anything. Zack is the founder and chief executive officer of Make Lemonade, a leading personal finance company that empowers you to live a better financial life. He is an in-demand speaker and has inspired millions through his powerful insights. Previously, he was chief financial officer of an international energy company, a hedge fund investor, and worked at Blackstone, Morgan Stanley, and the White House. Zack holds degrees from Harvard, Wharton, Columbia, and Johns Hopkins.

Source: Student Loan Refinancing Just Got Crazy Cheaper

14.7K subscribers
5.🔸Sofi ($100 Bonus): sofi.com/share/2345532 4.🔸Splash Financial ($300 Bonus for $30k refi or more): https://splash-financial.sjv.io/X5YXo 3.🔸Commonbond: http://bit.ly/CommonBondTF 2.🔸LendKey ($200 Bonus): https://mbsy.co/v9bGH 1.🔸Earnest: https://earnest.pxf.io/1KGY9 *Keep in mind that any bonus can change at any time* We go over the top 5 Student Loan Refinance Companies. As well as talk about a few important things to know before doing a student loan refinance. ●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●● 🔔SUBSCRIBE ➡ ​https://www.youtube.com/trufinancials…… ●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●● Disclaimer: I am not a CPA, attorney, or financial advisor and the information in these videos shall not be construed as tax, legal, or financial advice from a qualified perspective. If you need such advice, please contact a qualified CPA, attorney, or financial advisor. Some of the links are affiliate links. Which means if you click on some of the links I will make a small commission at no additional cost to you. This helps keep me making videos and providing value. Thank you for your support!

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How To Calculate Your College Education Return On Investment

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With all the talk about changes to student loan repayment plans, popular student loan forgiveness programs potentially ending, and now limits on student loan borrowing, it’s essential that you fully understand what your college return on investment (ROI) is.

Going to college is an investment – just like buying stocks or investing in real estate. You are spending money (tuition, room, board, and more) with the goal of earning more money in the future – due to better paying jobs and opportunities.

And this has shown to be true for the last several decades according to the National Center for Education Statistics. Adults who complete a bachelors degree, on average, earn 57% more than those who are high school graduates. That’s a significant boost in earnings. But, if you spend too much to achieve it, it might not be worth it.

The Basic Math Of College Return On Investment

When you’re 17 or 18 years old, thinking about your lifetime return on investment of your college expenses is challenging. When you’re that age, it’s hard to even plan what classes to take, let alone your college major, future career, the implications of borrowing money to pay for school.

Luckily, we live in an era where there is more data than ever to help us make decisions.

To think about your return on investment, you want to look at what you spend – the cost of tuition, room, board, and more, and then compare it to what you have the potential to earn.

The Social Security Administration has some aggregate data on earnings that’s useful here. Controlling for various socio-demographic variables, men with bachelor’s degrees would earn $655,000 more in median lifetime earnings than high school graduates and women with a bachelor’s degrees would earn $450,000 more in median lifetime earnings than high school graduates.

Here’s the more interesting part – let’s take that lifetime earnings potential and discount it for the present day value. Applying a 4 percent annual real discount rate, the net present lifetime value at age 20 of a bachelor’s degree relative to a high school diploma is $260,000 for men and $180,000 for women. For those with a graduate degree, it is $400,000 for men and $310,000 for women.

So, adjusting for nothing else (such as career choice), men should never spend more than $260,000 for a bachelors degree, and women should never spend more than $180,000 for a bachelors degree.

The Advanced Math Of College ROI

Now that we have the basics, you can take some of that same math and apply it to your situation and see if you’re getting a potentially positive ROI or a negative ROI on your education costs.

You can look at your school’s cost of attendance (COA), which can typically be found on their financial aid webpage. Using that data, you can see the cost to attend four or five years.

Then, look at what you’d expect to earn over your lifetime. This can be a challenge, but tools like Glassdoor (which show salaries in various industries and jobs) or even government websites like Transparent California, where you can view ever Californian Public Worker’s salary. Using that data, you can see what you’d expect to make throughout your career, and add up your earning potential.

Once you do the math, you can see how the cost of your education stacks up for ROI.

Easy Rules Of Thumb To Remember

Doing the math can be challenging, but there are also some simple rules to remember when calculating your ROI.

First, while it may not seem like it, you can adjust your variables. You can attend a less expensive college (or do a path like community college first, then a state school). You can also earn more after graduation. Look at not just a career but adding in a side hustle as well. Maybe you are really passionate about a certain career, even though it doesn’t pay very well. You can still have a positive ROI, but you’ll earn that ROI with other jobs.

Second, borrowing to pay for school is expensive. It is a drag on your ROI due to the interest that will be accruing on your loans. And easy way to keep your ROI in balance with student loans is to never borrow more than you expect to earn in your first year after graduation. This is very career dependent, but it highlights how you can borrow more if you plan on going into a higher paying industry.

Finally, this math only includes high school versus bachelor degree. However, the same logic can apply to trade school or graduate school. You just need to get data around what you expect to make after graduation versus the cost of your education program.

There’s More Than Money When Going To College

Some will argue that there is more than a money ROI when it comes to higher education. And I’d be remiss to ignore that because it’s true. There is more to higher education than dollars in, dollars out.

Going to college has a variety of secondary benefits, such as a student moving out from home and learning how to handle communication, problem solving, and more. These real world skills are tough to put a monetary value on.

But, on the flip side, college is an expensive way to find yourself. While moving out of the house and having new experiences can be a very positive thing, it can easily become a future regret if the burden of student loans and poor financial choices weighs on you for a large portion of your life.

And my challenge would be, are there other ways to get these experiences while trying to build a positive ROI on education spending? My answer is yes.

Final Thoughts

Thinking about the ROI of your education spending can be a challenge. But it’s a must for every high schooler and parent.

Robert Farrington founded The College Investor, a personal finance website dedicated to helping people get out of student loan debt and start investing as early as possible.

I’m a personal finance expert that focuses on helping millennials get out of student loan debt and start investing for their future. I also help parents make smart choi…

Source: How To Calculate Your College Education Return On Investment

6 Best Financing Options For Franchising a Business

 

The 6 Best Financing Options for Franchising a Business

Offering both the flexibility and independence of being a small business owner, plus the support and infrastructure of a large corporation, a franchise can be the ideal opportunity for anyone interested in becoming an entrepreneur.

Even so, opening a franchise requires a significant investment of capital — often including a hefty franchise fee along with ongoing royalties and advertising costs. Not everyone has access to that kind of cash.

So, if you need a business loan to fund your franchise investment, you might find it challenging to navigate the various options available.

One benefit of using franchisor financing is that it becomes a one-stop shop for everything you need. Many of these programs offer financing not only for the franchise fees but also to purchase equipment and other resources you need to start up the business.

If you’re working with a franchisor who offers their own financing program, chances are you won’t need to look much further for funding. After all, who knows the business better than the franchisor? They know the risks you’re taking on and the ins and outs of the business better than any other lender ever could.

Related: Starting a Franchise But Need Financing? Here’s What to Do.

Each franchisor financing agreement will differ, but some offer to take on as much as 75 percent of the debt burden from the new franchise owner. Agreements might involve deferred payments while the business is starting up, or they may structure repayment on a sliding scale. Have your independent business attorney or accountant review the terms of both your franchise agreement and the financing agreement to help you understand the full terms before you sign.

2. Commercial bank loans.

Another common way of financing your franchise is through a traditional term loan from a bank. A term loan is what most people think of when they think of any form of loan financing, especially if you’ve ever taken out a student loan or home mortgage. Under this model, a bank or alternative lender offers you a lump sum of cash up front, which you then repay, plus interest, in monthly installments over a set period of time.

When you apply for a commercial bank loan to purchase a franchise, your lender will want to review your business plan and personal credit history. The lender will use these documents to assess your creditworthiness. Essentially, through this process, the bank is trying to determine whether or not you can reasonably afford to repay the loan you’re requesting, and thereby how likely they are to get their money back.

Overall, you can assume that the stronger your financial history and the higher your credit score, the better the terms and interest rate will be for your term loan to finance a franchise.

Related: His Parents Loaned Him $30,000 to Start a Company. Now It’s Valued at $1.7 Billion.

3. SBA loans.

Of all the loan products on the market, one of the most desirable option for aspiring franchisees tends to be the SBA loan. SBA loans are loans partially backed by the U.S. Small Business Administration and funded by their intermediary lending partners.

Effectively, these loans follow a very similar model to traditional term loans from a bank or alternative lender. However, because the SBA reduces the risk to lenders by guaranteeing a portion of the loan amount, lenders are incentivized to offer more loans with lower interest rates and longer repayment terms than they otherwise would.

The SBA loan is certainly a desirable option for financing a franchise, so if you have the financial chops and credit score to be eligible, you should absolutely apply. That said, keep in mind that qualification standards can be stringent, and the application process is a long one. It’s worth carefully considering your chances of being approved for an SBA loan before you spend significant time pursuing a financing option that may be unreachable for the current stage of your franchise.

4. Alternative lenders.

If you need money to fund your franchise quickly or want to secure additional capital to supplement your commercial or SBA loan, you may want to consider applying for franchise lending through an alternative lender.

Typically, alternative lenders have less stringent requirements and shorter turnarounds than traditional financing options. They offer a variety of loan options like equipment financing, business lines of credit and even term loans. That said, this access and convenience may cost you. Alternative loan products tend to be more expensive, offer shorter repayment terms and lower loan amounts than their more traditional counterparts. However, it may be worth it if you need to supplement your existing financing, can’t qualify for a bank or SBA loan or need cash quickly to jump on a life-changing opportunity.

Related: The 4 Ways Associations Can Help Franchisees

5. Crowdfunding.

If franchise financing isn’t available and bank, SBA, or alternative loans don’t pan out, obtaining financing for your franchise may require some creativity. One of the newer and more creative ways of financing a franchise is through crowdfunding.

You might choose to set up and promote your own personal crowdfunding page or look towards specific organizations that crowdfund for businesses and franchises. There are also websites that crowdfund for specific industries and business types, which they then lend those funds to people in need of financing.

Crowdfunding is a great option if you have a blemish or two in your financial history and aren’t satisfied with the loan products and interest rates for which you qualify.

6. Friends and family loan.

Believe it or not, one of the most common ways to finance a franchise is by borrowing from your friends and family.

Whether you choose to borrow money outright, ask for a gift, or bring a friend or family member on as your business partner, these types of loans generally come at a very good price. That being said, some come at the cost of lost friendships and family disagreements.

If you do choose to take a loan from a friend or family member, be sure to write up a contract that includes repayment terms and expectations. If everyone understands the agreement before signing, breakups and disagreements will be less likely later on.

Becoming the owner of a franchise is a wonderful opportunity to get your feet wet as an entrepreneur. You get to try your hand as a business owner with the safety net of a large corporation behind you. With these financing options in your back pocket, you’ll be ready to get your franchise up and running in hardly any time at all.

By: Jared Hecht – Guest Writer
Co-founder and CEO, Fundera

 

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