Millennials are the nation’s next greatest generation and they’re all fascinating. One of the most interesting things about them is their fear of refinancing student loans.
At the moment, student loan debt is one of the biggest challenges that millennials face. When you have to deal with multiple high-interest loans, the best way to get rid of them is to consolidate them into a single loan, with a lower rate. Although refinancing student loans can solve this important problem, millennials choose to stay as far away from it as possible.
Here’s what millennials know about refinancing student loans
This summer, Student Loan Hero conducted a survey to find out how borrowers of all ages understood the refinancing process. The survey was conducted via Google Consumer Surveys. It was carried out from June 30 until July 30, with a nationally representative sample of 1,001 individuals.
According to the survey, 62.11% of all those interviewed were familiar with student loan refinancing. However, 69.16% of them admitted that they had not refinanced their loans at the time of the interview.
A large percentage of those who participated in the survey, 23.40%, said that they didn’t refinance their student loans because they weren’t aware of student loan refinancing. But, almost as many people, 20.09%, motivated their decision by saying that they wished to remain on income-driven repayment.
A little over a third of the 1,001 individuals, 33,38%, said that, if they were to refinance their student loans, they’d do it for the lower interest rate. Meanwhile, 25.93% said they’d do it for the lower monthly payments. However, when asked if they’d be willing to give up access to federal student loan repayment options in exchange for a lower interest rate, only 24.72% answered “Yes”. Most of them, 39.40%, were not sure, while 35.88% said they’d refuse to do it.
Some more numbers
Right now, the United States collectively owes more than $1 trillion in student loan debt. This number is huge. Unfortunately, it will continue to grow, not just because of the rising costs of college, but also because large numbers of graduates come out of school unemployed or underemployed. They’re finding it difficult to pay their student loan debt and, a result, they’re putting off purchasing homes, buying cars or even getting married.
Refinancing might not be the solution to all their problems, but it could help millennials reduce their monthly payments. And, remember, each penny saved can be put to good use.