If you’re like me and have a lot of student loan debt, there are essentially two options: refinance student loans into a smaller payment or pick one loan to pay off completely to start a snowball debt method. I’ve done a lot of research for my own personal interest on this topic due to the fact that my student loans are upwards of tens of thousands of dollars. After much thought, for me, refinancing student loans wasn’t in my best interest, here’s why.

Deciding Not To Refinance My Student Loans

The first step in deciding whether or not I should refinance my student loans was doing an inventory of where my student loans currently stand. As of this writing, my student loans total $67,244.06.

To break things down even further my student loans consist of six different loans (only one of those being Federal):

  1. Mohela Loan: $3088.85:     $61.23/month
  2. Wells Fargo:   $12,263.82:   $95.04/month
  3. Chase 1:         $2,171.39:     $25/month
  4. Chase 2:         $13,898.75:   $111.45/month
  5. Chase 3:         $20,804.72:   $194.68/month
  6. ALPLN:           $15,016.73:   $148.96/month

Monthly total in student loans: $636.36!!!

The Option To Refinance Student Loans

When I was looking into refinancing my student loans, I took all factors into consideration: my overall debt, my monthly debt owed, as well my interest rates on each loan. Half of the loans that I took out, have decent interest rates. The other half my interest rates vary between 6-8% which is quite a bit when it comes to student debt. When I was looking into refinancing, I couldn’t find a lender that would give me a fixed rate. The rates that I was being offered were all at around 8%. All the offers that I got were also variable rates.

Taking this information into consideration, the math was fairly simple. If I agreed to the terms of a an 8% variable interest rate, it would bring half of my student loans to a higher interest rate. This new interest rate would make my overall monthly payment slightly higher, not lower. Refinancing student loans would not better my monthly financial situation.

Using The Debt Snowball Method

It has been a few years since I’ve looked into student loan refinancing for myself. I’m sure I could probably (hopefully) find another offer that would lower my monthly totals. However, I’ve really taken a liking to the Dave Ramsey Debt Snowball principle. Under this idea, you essentially take any extra money that you earn and throw it at ONE debt of yours. Once that debt is paid off you take the money that you were applying on that balance and put it on the next one. Under the debt snowball method, I’d actually pay off my student loans sooner than refinancing student loans altogether. The sooner I pay them off, the less interest I have to pay, and the sooner I will be able to keep money that’s actually mine.

Currently, the loan I’ve decided to pay off with extra money is my car payment: $571(I knowwww, it’s a huge amount). I currently have just under two years left on my car payment. Aside from my student loans, my car payment is my biggest expense and I can’t wait to knock it out of the way. After my car payment is done I’ll split some of that $571 up between saving, a little spending money, and debt repayment.

For more on Dave Ramsey’s debt principles you can check out a snippet of his book here (I would suggest this book to anyone who is climbing out of the debt valley. This book is actually one of five books I recommend to anyone getting out of debt):

Has anyone here refinanced their student loans or chosen not to? Why or why not? 

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