Freshman Year

Stuck With Student Loans? Five Ways to Lower Your Payments

Americans owe $1.2 trillion in student loan debt — at interest rates, typically, of 3.4 percent to 6.8 percent on federal loans, and up to 14 percent on private loans. According to Sofi, a leader in the business of student loan refinancing, customers save an average $14,000 by refinancing their loans.

They're also making their day-to-day lives easier. Research has shown that young people are putting off getting married, buying homes, even having children because of their debt burdens, which average about $30,000 coming out of school — but easily soar into the six figures for people with graduate degrees.

So, how do you know if this route to free money is for you?

Step 1: Take stock.

Before you make a move, you'll need to understand what types of loans you have and what interest rates are. You can look up your federal loans on the National Student Loan Data System Call your private lenders if you need to gather that information from them.

Step 2: See if you can do better.

These days both banks and non-banks are in the business of refinancing loans. Rates are available as low as 3.5 percent on fixed rate loans and and as low as 1.9 percent on variable rate loans. (You can bring these rates down even further by electing to have your loan payments automatically drafted from your bank accounts).

RELATED: Want your kids to avoid college student debt? Start before high school

Step 3: Look at each loan in your portfolio separately.

Most students have loans at a variety of interest rates. Some of those loans might benefit from being refinanced into a private loan — but others may have interest rates lower than the rate you're being offered in the marketplace. This is not an all or nothing proposition. You can keep the ones where it doesn't make sense out of the deal. You need at least a 1 percent decrease in the interest rate on an individual loan to make it worthwhile.

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