PITTSBURGH (CBS) — Students are heading back to school, and for those graduating from college at the end of the year, that diploma will also come with a lot of student loan debt.
In fact, the average college grad leaves school owing nearly $30,000. But a new company claims it can help slash those loan payments, saving students considerable amounts of money.
For many, graduation marks the end of college and the beginning of paying down college debt.
Ten years after graduation, Jason Clark decided it was time to speed up the process by re-financing his student loans.
With the help of a startup, he says he got a good start.
“It gave me about five or six different offers,” Clark said.
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Credible bills itself as an online-marketplace for loan offers. It works with about 15 lenders, including a new crop that specialize in refinancing student debt.
Credible founder Stephen Dash says the average user saves $18,000 over the life of their loan.
“It’s a Kayak or Expedia or Amazon for loans,” Dash said.
He said that on average people save 1.71 percent by refinancing their student loan to a lower rate.
But Suzanne Martindale, of Consumers Union, warns that refinancing isn’t for everyone.
“For people who are likely to have a high debt to income ratio for many years, they may not even qualify,” Martindale said.
She says borrowers with federal loans could lose important protections if they refinance with a private company, like the option to delay payments and loan forgiveness after 10 years in public service.
Martindale also says re-financing college debt is a relatively new and untested industry.
“Which tells us that we have to proceed with caution,” Martindale said.
So far, Clark is happy he refinanced a portion of his student loans after reviewing his options on Credible.
He calculates his one percent interest reduction and shorter loan term could save him about $10,000.
“It felt really good to see there was a light at the end of that tunnel,” Clark said.
Unlike mortgages, there are no fee or points to refinance a student loan. Credible does earns a fee from the lender if the refinancing takes place.