If you have student loan debt, refinancing could be a great way to achieve your financial goals. When you refinance, your old loan or loans are paid off with a new loan, and the old terms are replaced with new terms. Consolidating or refinancing could be a good option if you are looking to pay off your loans faster, pay less overall interest, or reduce your monthly payment. Whatever your goals, our Student Loan Specialists can answer all your questions and match you with the best plan for your situation.
The benefits of refinancing
- Lower Monthly Payments – Interest rates change and so does your credit score. If you have graduated and started your career, this could be a good time to check your credit score to see if you can get a better deal. Good financial choices like making payments on time can improve your credit score possibly making you eligible for a better rate. Securing a better rate not only lowers your monthly payment, but reduces the amount you owe over the life of the loan.
- Readjusted Loan Terms – Years down the road, you may realize the loan you have is no longer the best fit for your needs. Readjusting your loan terms can lower your monthly payments and even reduce your overall debt.
- Consolidate and simplify– If you are paying different rates on multiple loans, you may be able to simplify your payment and even save money by consolidating the loans into one loan. While many sources advise against combining federal loans with private loans, you could benefit by consolidating your federal loans into one loan and private loans into another. An experienced First Tech student loan specialist will go over the terms of your current loans with you to make sure you’re aware of all the potential benefits or drawbacks.
Other factors to consider
- Interest payment amount – Even if refinancing lowers your monthly payment, it’s possible to pay more in interest over the life of the new loan. Also, switching your type of loan might mean facing higher interest rates. It’s important to be aware of how much interest you’ll be paying overall on your new loan.
- Other costs – Another consideration is the cost of refinancing fees, versus how much you’ll save. Penalties from paying off your existing loan early, fees and other costs may all factor into the overall expense. It’s important to make sure the benefits outweigh the costs before refinancing. (First Tech does not charge an early payment fee for Student Loan Refinance.)
- Loss of Loan Benefits – Although refinancing to find a loan that’s a better fit is a good thing, losing benefits or terms might not be. When it comes to student debt, consolidating federal and private loans may disqualify you from some federal loan benefits. Make sure to review your loan terms thoroughly and waiting until any grace periods are over before refinancing to a new loan.
Still wondering if refinancing is right for you? Schedule a no-cost, no-obligation refinancing consultation with one of our Student Loan Specialists by calling 855.422.5680 or visiting our Student Loan Refinance page today.