Refinancing Student Loans Now Can Increase Cash Flow

First in a series of blogs to help you reduce debt

If you are a physician, lawyer or a professional with a graduate degree, you probably have looming student loans. Current economic conditions provide an opportunity to refinance these loans, making the monthly payment a bit more palatable.

No one likes to see the small amount of interest income we earn each month on our bank statements, but there is good news on the other side. These lower interest rates also translate in lower loan rates and provide the opportunity to repay loans of many types at lesser rates.

Television and radio commercials are filled with advertisements encouraging home owners to refinance mortgage and credit card debt. Although not as readily advertised as other loans, many student loans can be refinanced at significantly reduced rates today. Now is the time to lock in these lower rates. Don’t delay; the decrease in the amount of interest paid can allow for an increase in cash flow.

Refinancing student loans for a lower interest rate may be more advantageous for a variety of reasons. Currently, there are income limits that determine if an individual is able to deduct any or all of the interest paid on student loans on their tax return. While new-to-the-profession physicians, dentists, lawyers and others may be able to deduct the majority of student loan interest now, and over the next couple of years, it is very likely they will be phased-out of this deduction in subsequent years, as salaries increase. If you haven’t already, it’s time to consolidate and refinance.