As the cost of a four-year education rises, so too does student debt. The statistics are pretty alarming. The most recent reports indicate there is:
- $1.44 trillion in total U.S. loan debt owed by 44.2 million Americans
- The average 20-30 year old borrower owes $351 per month.
- Almost 5 million borrowers are more than 90 days delinquent.
- Students earning graduate and professional degrees have it worse:
- MBA grads owe an average of $42,000
- JD grads owe an average of $140,616
- MDs owe an average of $161,772
And student loan rates are set to increase in July by as much as 20%.
There are many companies touting schemes to help pay off or refinance the debt, but the best deal is now offered to homeowners with sufficient equity.
It‘s a government-sponsored (Fannie Mae) guideline change which allows a borrower to extract cash from their property to pay off student loans without incurring the usual penalties for “cash-out” transactions.
Depending on the amount of equity in a property, those penalties could have cost a borrower more than $6,000 under the old rules, or increased the interest rate by as much as .375%.
Under the new rules, a borrower with a $500,000 loan at 4% and payments of $2,387 per month could incorporate $30,000 in student debt and borrow $530,000 at 3.875% and have a payment of $2,492, only $105 higher. If they’re paying $350 per month for the student loan, that cuts $244 from their monthly bills.
Not all borrowers will qualify, but if you or any homeowner you know has student loans, a quick call to Finet will provide the answers you need.
Call us at 408-872-8100