How Student Loan Refinance Works
Attending college is a dream for many people. But after your classes end and your degree is handed out, there’s a looming problem: student loans. Taking out student loans while earning your degree is incredibly common, but repaying those loans is no easy task. Right now, former students owe more than $1.56 trillion dollars in student loans. And that debt increases as interest makes your loans skyrocket in price.
But there is a way to make repaying those loans easier: student loan refinance. Refinancing your student loans could help you pay off your debt faster. That single factor alone could save you thousands of dollars – and it could potentially make repayment easier too.
Here’s what you need to know about school loan refinance options in order to decide if refinancing’s right for you.
What Is Student Loan Refinancing?
Student loan refinancing gives you the opportunity to change the terms of your loans. When you refinance, you take all of your student loans and bundle them together into a single new loan. And in doing so, you can often get better terms on that new loan.
Refinancing your student loans can get you a lower interest rate. With a lower interest rate, both your monthly payments and your total repaid over the loan’s lifetime can be reduced – which saves you money. And you might be able to consolidate your loans to make repayment more straightforward.
Can I Refinance Federal Student Loans?
You can refinance both private and federal student loans. When refinancing, you’ll likely either group together all of your federal student loans or private student loans. Or you may, depending on the refinancing terms, be able to group every one of your loans together. This makes repayment easier, and you’ll only need to make one payment and manage one account going forward.
Some refinance companies handle both private student loans and federal student loans.
Reasons to Refinance Student Loans
The number one benefit of student loan refinancing is financial: you’ll save money if you can get a lower interest rate. However, a lower interest rate is just one of the reasons refinancing is a smart idea.
You can reap other advantages when you refinance student loan debt and get new loan terms, including the following perks.
Save Thousands of Dollars: When you refi student loans and get a lower rate, you’ll save money on interest month after month. This can also help you pay down the loan’s balance faster, which reduces the amount you owe year after year.
Improve Your Credit Score: If you’re struggling to repay your student loans, your credit score is likely suffering. Late payments, forbearance, and delinquency on student loans can all lower your score significantly. Refinancing, however, can make it easier to pay, helping you make on-time payments and raise your credit score.
Reduced Monthly Payments: If you can’t afford your current monthly loan payments, refinancing may lower that total. With new loan terms through refinancing, you could opt for a longer loan lifetime and lower monthly payments.
More Flexible Repayment Terms: Refinancing your student loans can allow you to renegotiate the repayment terms. You could get lower interest, a lower monthly bill, savings over the course of the loan’s lifetime, and other repayment benefits for added flexibility.
Many top student loan refinance companies provide free online student loan refinance calculators to help you see how you stand to benefit. So, if you’re one of those who’ve ever wondered on Reddit if student loan refinancing is right for you, then you can use free tools and free pre-qualifications to see if it is.
How to Refinance Student Loans
Refinancing student loans is a simple process. And taking the steps to refinance can offer a huge financial benefit.
Before you begin the process with college loan refinance companies, however, it’s important to know what requirements you need to meet. Lenders will check to see if you and your student loans qualify for refinancing, so save yourself some time by knowing the requirements in advance.
To refinance your student loans, you’ll generally need to be:
- A U.S. citizen or permanent resident
- At least 18 years old
- Employed, have sufficient income, or have an offer of employment
- A graduate from a Title IV college or university
- An undergraduate degree holder (some companies refinance student loans even if you didn’t complete your degree, though)
Lenders will also take a look at your credit score and history, your income, any savings you have in the bank, and any other debt you’re carrying. These factors will let a lender know if you qualify for refinancing. If you don’t meet requirements on your own, you may be able to refinance your student loans with a co-signer.
Once you’ve met all of these requirements, you’re ready to refinance your student loans. You can do so by applying for refinancing from different lenders. You can find these lenders online, through your local banks or credit unions, and other financial institutions. Make sure to compare lenders first – doing your research will help you get the best student loan refinance rates and loan terms.
Refinance Your Student Loans Today
If you’re looking for a way to repay your student loans but can’t afford to do so, you aren’t alone. Student debt is a difficult situation for many people. And thanks to new options, you may be able to refinance your student loans to make repayment easier. Student loan refinancing options can help you take control of your debt and get to work at reducing your payments and what’s owed.
You can refinance your student loans at any time. But you’ll want to make sure you consider all of your options before choosing a new lender and loan. Refinancing can save you significant money with a lower interest rate and more flexible terms. Wondering where to refinance student loans? In order to find the best fit for your needs, you should:
- Consider trustworthy refinancing options
- Know current student loan refinance interest rates
Get your rate from top providers and compare student loan refinance rates now.