What is the process for refinancing student loans?
‣ The process of refinancing a student loan is rather simple. The goal of refinancing a student loan is either one of two things. Either you are looking for a lower interest rate than you currently have or you are looking to consolidate multiple loans into one more manageable loan. Regardless of what direction you choose, they both include getting a lower interest rate. With this lower interest rate, you may be able to save thousands over the lifetime of the loan.
How can I benefit from refinancing my student loans?
‣ As stated previously, the main benefit of refinancing a student loan is to obtain a lower interest rate. This is typically done through a private lender like the ones you see above. Let’s use an example to explain this a little better. Let’s assume that you currently have federal student loans, maybe even a Grad PLUS Loan. If the interest rates for these loans are up in the 7% range, you could find yourself paying a ton more money over the life of the loan than you would with a lower rate. Another key benefit of refinancing comes in the form of consolidation. Let’s say that you have a couple of student loans and you want to combine them all to make it easier on yourself. You now have the ability to do this through student loan refinancing. This can help your multiple loans to turn into a singular more manageable student loan. Finally, you may even qualify to refinance your student loan to allow for a longer payoff period. This is something that may seem appealing at first, but do keep in mind that if you choose to refinance for a new 20-year loan let’s say, you will be paying the interest on that loan for the entire time. We always recommend seeking financial guidance from a trained professional before making a decision on if refinancing your student loans is the best option for you.
In what case should I not refinance my student loans?
‣ While there are quite a few great reasons to consider refinancing your student loans, it’s not a great solution for everyone. One of the biggest drawbacks to refinancing your student loans is that any and all loans that were once federal now become private student loans. Why is that bad you ask? Due to the loans now becoming private, you no longer will have access to federally sponsored benefits. These benefits include things such as deferment, forbearance, Public Service Loan Forgiveness, and income-driven repayment plans just to name a few. Most of the lenders today do offer some form of Forbearance, but you will need to inquire with the lender for a full disclosure regarding your case. Unfortunately, once you refinance the change is permanent.
Another reason that you may not want to consider refinancing your student loans would be due to unstable income. One of the biggest factors when applying to refinance your student loans is your income. Many lenders have a minimum requirement that you must meet in order to qualify to refinance your student loans. If you do not have a stable income, it will make your application process that much harder even with a solid cosigner. You also may not want to refinance your student loans if you are pursuing any federal forgiveness programs as refinancing will disqualify you from those programs.
If you have an income, a steady job, a solid credit score, and would like to save yourself some money and time, student loan refinancing can be a solid route to take.
How do I go about qualifying for student loan refinancing?
‣ When looking to refinance your student loans, there are many factors that are considered. Since you are deciding to go private, you will need to qualify with the private lenders set of terms and guidelines. You can see some of this information highlighted above but each lender’s terms and conditions are different. When being considered for a private student loan, everything in your financial life will come into play.
Most of the refinancing companies we work with do require a high credit score and history, along with proof of stable income. Another thing to consider is that depending on the career field that you are in, you may not qualify as some lenders only work with specific degrees and degree fields.
The best way for you to find out if you are eligible to refinance your student loans is to look at the chart above and see the eligibility requirements. Each lender’s requirements will vary, so compare the lenders based on your needs. Always check the fine print and make sure that the lender you are looking at works in your state.
If you think refinancing your student loans is the right choice, you can start the application process by simply clicking on the request rate buttons on this page. Many of our lending partners how you to find out if you qualify without hurting your credit score. Please verify on the chart above regarding your credit score being soft or hard pulled. Get started today to see how much you may be able to save.
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