student loan refinancing can help resolve your student loan debt problems.
Your financial situation is different from someone else. The student loan refinancing service that works for someone may not be the best choice for someone else. You should take the time to understand all the debt relief options available to you to find the best solution for your needs and goals.
Student Loan Refinancing Guide Locator
What Is Student Loan Refinancing?
Student loan refinancing relief is a means for you to reduce the financial burden your student loans have on your life. Student loan refinancing is a great option for most people, but it isn’t always the best option for everyone.
Student loan refinancing allows qualified borrowers to reduce the interest rate and repayment terms on the new loan, saving thousands in total interest over the term of the loan. Student loan refinancing permits you to make monthly payments that pay off your loans faster, lock in a fixed interest rate, or remove a parent as the cosigner of a student loan. Depending on the interest rate and number of years it will take to pay off your new loan, refinancing can reduce your monthly payment, your total interest paid, or both.
Why Student Loan Refinancing?
Student loan refinancing is simply the process of converting your existing student loans to a new loan with a lower interest rate. This offers you three benefits: lowers the interest cost saving you money on your loan debt, permits you to reduce your monthly loan payment and allows you to consolidate (combine) multiple student loans into a single loan payment. Student loan refinancing is exclusively available from private lenders. Unlike other types of unsecured debt refinancing, student loan refinancing has virtually no cost to you (other then your time and paperwork) to convert your existing student loan. There is virtually no reason to not consider refinancing your private student loans.
You should refinance your student loans if:
- You Would Save Money – There is no reason to refinance your student loans unless you end up paying less in interest.
- You Can Qualify – You (or with a co-signer) generally need a credit score at least in the high 600s and enough income to consistently pay your debts and other expenses.
- Your Finances Are Stable – If you have federal student loans and choose to refinance, your federal loans will no longer be eligible for Income-Driven Repayment and loan forgiveness. You need to ensure you will be able to consistently make your new student loan payment without this federal student loan relief option.
How To Refi | Will You Qualify?
Finances | Credit Affect Approval?
Refinance Federal Student Loans?
The Standard Repayment Plan is the most popular plan for federal student and parent loans. It is a level payment plan, with up to 120 fixed monthly payments during a repayment term of up to 10 years.
An Income Derived Repayment (IDR) plan for federal student loans is different. Instead of setting monthly payments according to your student loan balance, the amount due is relative to your income. It is intended to make your payments affordable while taking income and family size into account.
The term of IDR student loans is 20 – 25 years, rather than the Standard Repayment Plan of 10 years. When combined with one of the various student loan forgiveness plans, you have the potential to have the remainder of the IDR loan forgiven after 10 years. This is a significant reduction in your student debt, regardless of whether you are obligated to pay taxes on the debt forgiven.
You should refinance federal student loans only if you’re comfortable giving up federal loan protections and it will save you money.
You should NOT refinance your federal student loans if you expect to qualify for federal loan forgiveness, are currently in an IDR plan or you are financial at risk and will not be able to make your new student loan payments.
Risks | Benefits
Student Loan Refinancing Summary
|Annual Percentage Rate||3+%||7%|
|Standard Payment Term||Varies||10 Years|
|Extended Payment Terms||Varies||20-25 YearsX|
|Bankruptcy Discharge (in rare cases)||X||X|
|Closed School Discharge||X|
|False Certification of Student Eligibility or Unauthorized Signature/Unauthorized Payment Discharge||X|
|Unpaid Refund Discharge||X|
Explore All Refinancing Options
Student loan refinancing does not cost money, unlike house mortgage refinancing. There are generally no origination, application or prepayment fees. But read your loan agreement carefully to make sure you understand any loan costs you could incur in the future, like late fees.
If you decide to refinance your student loans, compare multiple lenders to see who offers you the best rate. If you have similar offers you should give greater importance to lenders who offer the most flexibility with payments and the longest possible forbearance options.
When in doubt, do your due diligence, make a decision, and move forward with your life.