Tax Planning Earnest Q&A: Should I Refinance My Student Loan? Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by TurboTaxBlogTeam Published Feb 6, 2017 3 min read “Should I refinance or stay the course with my student loans?” It’s a great question to ask yourself if you’re currently making monthly payments to pay off your education debt. The good news is that it’s easier than ever to find out if refinancing will save you some money. Intuit recently partnered with student loan refinancer Earnest to enable TurboTax customers who may have student loans the ability to use their own data to easily get a refinance estimate. We asked the experts at Earnest about why you should consider student loan refinancing. Why should I consider refinancing loans? Refinancing is the process of getting a new loan that is optimized to your preferences, like a faster payoff, lower rate or smaller monthly payment. It is common practice for home loans, but these days you can do it for student loans, as well. There are three good reasons for refinancing. 1. Rates The original rates you have on your student loans might vary depending on whether you borrowed from the government or a private lender, and if they were for undergraduate or graduate school. Federal loans for undergraduate study tend to be very affordable and have low rates, but loans for graduate school are more expensive, with rates over 6%. Private student loans tend to be even more expensive with rates from 6-12%. Take a look at your current rates, and then use this student loan calculator to see how much you can save. After you have graduated and have regular income, lenders may be willing to provide better rates to you than the ones you were offered when you originally took out those loans. Lowering your rate (and shortening your term) will save you money over the life of your loan. For example, the average savings for an Earnest client is $21,810 over the life of their loan. By using TurboTax to complete your income tax return, you can get sneak peek of your personalized student loan savings. 2. Managing Your Bills & Payments When you graduate, you might have more than a dozen different loans, each with its own payment schedule. Refinancing can help you consolidate all your loans under one “roof”. Instead of having multiple loans to keep track of, you can refinance to obtain one new loan, with one unified payment. 3 . Your Budget What can you afford to pay on your student loans each month? Is it $350 or $750? At Earnest, we believe your student loan payment should match your budget—rather than forcing you to structure your budget around your student loans. You can set your desired monthly payment with our Precision Pricing feature, and we’ll provide a customized rate and term matched to that amount. How does refinancing my student loans affect my taxes? With all student loans, private or federal, you can deduct the full amount of interest you paid (up to $2,500) during the taxable year, so long as your modified adjusted gross income (MAGI) doesn’t exceed $80,000 as a single/head of household filer or $160,000 as a married couple filing jointly (but note, if you’re married filing jointly you can only claim one deduction, not two.) The deduction is gradually reduced according to your income level, and eventually eliminated when your MAGI reaches the annual limit for your filing status. When you refinance, you still can still qualify for the deduction on your income tax return as long as you are within the income limit. Previous Post Meet a TurboTax SmartLook™ Expert! Next Post La llegada de la W-2: Todo lo que necesitas saber… Written by TurboTaxBlogTeam More from TurboTaxBlogTeam 2 responses to “Earnest Q&A: Should I Refinance My Student Loan?” My daughter has a loan with NJ class its an income based loan the rate increases are unrealistic its aways a fight when they raise it and you have to pay the full amount plus interest daily (i call it extortion) were trying to find a reasonable way to refinance the loan but most places wont or the payment is to high and some because it’s a nj class loan do you of a bank or someplace we can look into into safely to refi this program Reply Hi Donald, I would try Earnest here https://www.earnest.com/student-loan-calculator Hopefully they will be able to refinance your loan into a better loan. Thank you, Lisa Greene-Lewis Reply Leave a ReplyCancel reply Browse Related Articles Life Interest Rates Increased to Fight Inflation Deductions and Credits How Do I Deduct Points Paid on My Mortgage? Education Is This Tax Deductible? Student Loans Life How Your Tax Situation Might Change with the Resumption… Tax Tips Are Student Loans Tax Deductible? Education Real Talk Series: My daughter needs to take out student… Education Can I Claim a Student Loan Interest Deduction? Self-Employed Student Loan Options When You’re Self-Employed Life Interest Rates, Inflation, and Your Taxes Self-Employed How to Pay Student Loan If You Are Self Employed
My daughter has a loan with NJ class its an income based loan the rate increases are unrealistic its aways a fight when they raise it and you have to pay the full amount plus interest daily (i call it extortion) were trying to find a reasonable way to refinance the loan but most places wont or the payment is to high and some because it’s a nj class loan do you of a bank or someplace we can look into into safely to refi this program Reply
Hi Donald, I would try Earnest here https://www.earnest.com/student-loan-calculator Hopefully they will be able to refinance your loan into a better loan. Thank you, Lisa Greene-Lewis Reply