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MBA Grads: Student Loan Refinancing Could Save You $5,000+

Business school graduates are ideal refinancing candidates. That means they can develop a refi strategy while they're still in school.
Nov. 16, 2018
Loans, Student Loans
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Business school graduates are ideal candidates for student loan refinancing. Here’s why:

  • They earn high incomes relative to their debt. Lenders give good deals to borrowers in this category, who are likely to make payments on time.
  • They often work in the private sector, meaning they don’t need to worry about losing access to federal loan benefits when refinancing.

If you’re currently in business school, knowing that student loan refinancing is in your future can help you decide how to pay for your MBA, and to start preparing your credit now.

» MORE: How to pay off $100,000+ in student loans

How much could student loan refinancing save?

The average MBA graduate could save $5,310 in interest if they refinance.

Here’s how we got there: The average employee in management occupations earns $119,910 per year, according to the Bureau of Labor Statistics. MBA graduates leave school with $55,792 in debt on average, including loans from undergrad, according to the National Center for Education Statistics.

The average MBA graduate could save $5,310 in interest if they refinance.

Assuming that total includes a mix of federal direct unsubsidized loans and direct PLUS loans culminating in the 2017-18 school year, the average interest rate would be about 5.15%.

On the standard repayment plan, that’s $596 per month for 10 years, and $71,514 overall. Refinancing to a private student loan at 3.5% interest over 10 years would mean a $552 monthly payment, saving $5,310 in interest.

How much you save will depend on how much debt you have and the spread between your old and new interest rates. You can choose to refinance just a portion of your debt, too, if you have a mix of federal and private loans and want to keep federal loan benefits.

» CALCULATE:  How much you could save by refinancing

How to get the most savings from refinancing

Borrowers with high incomes, excellent credit and a history of on-time debt payments will get the lowest interest rates when they refinance. Get in the best position possible with these tips:

Clean up your credit

In the years before you refinance, put all your loan and bill payments on autopay to avoid forgetting due dates and having late payments reported to the credit bureaus. Pull your free credit reports from and make sure they are error-free.

Take out the lowest-rate student loans you can

Interest will accrue on the loans while you’re in business school, so you want to seek the lowest rate possible on the initial loans, even if you’re intending to refinance. If you plan to refinance your loans after graduation and won’t use federal loan benefits anyway, you can safely take out private loans. Consider them if you have good or excellent credit, since you’ll likely get a lower interest rate on a private loan than you would on a federal loan for graduate students. If you can’t get a private loan that’s cheaper than a federal one, federal loans are still a strong choice.

If you plan to refinance your loans after graduation and won’t use federal loan benefits anyway, you can safely take out private loans.

The very lowest rates are usually variable, which wouldn’t be a good idea in a rising interest rate environment — except that you’ll refinance them, potentially to a fixed rate, within a few years. A fixed-rate loan is a good idea if a variable rate feels too risky.

Consider lenders that let you refinance while in school

A few lenders, including Earnest and SunTrust, allow borrowers to refinance before they graduate. Look into this option if you have a job offer in hand and your interest rates might otherwise increase before your official repayment term begins.

No matter which lender you choose, as you decide when to refinance student loans, consider doing so during your grace period. It’s usually the six months following graduation. Refinancing then can help you avoid interest accruing at your original, higher rate.

Use these resources to help you feel as confident as possible when you refinance:

NerdWallet writer Elizabeth Renter contributed reporting to this article.

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