Refinancing Your Student Loans
Earning your degree is cause for celebration, and shouldn’t be overshadowed by high-interest or complicated student loans. Refinancing can help you lower your monthly payment, pay less interest or even pay off your debt faster.
Qualifying for student loan refinancing should be fairly straightforward. Typically, a lender requires a college degree, good credit and a stable income that comfortably covers your expenses. Once you feel confident that you’re ready to refinance, here are some tips on where to start:
Understand Your Current Loan
To decide what refinancing option is right for you, take a look at your current loan. Do you have federal or private loans? What are the terms? Once you understand where you’re at, it’ll be much easier to plan where you want to be.
- Federal versus private loans
- While there is no downside to securing better financing for private loans, if you have federal loans, it’s worth pausing to review all your options. Once these loans are refinanced, they are no longer eligible for federal programs, like COVID-19 loan forbearance, income-driven repayment plans and Public Service Loan Forgiveness.
- Interest rate
- Take a look at your interest rate and do a quick search to see how it compares to other current offers. If your rate is significantly higher, it may be a good time to make a change.
- Keep an eye on interest rates. Remember, there’s no limit on the amount of times that you can refinance your loan, so whether you’re new to refinancing or have already secured a lower rate, it’s worth noting changes in the market and your own credit score to take advantage of opportunities to improve your financial health.
- Fixed rate or variable rate
- A variable rate loan is one in which the interest rate changes over time, often starting low and increasing throughout the length of the loan. Refinancing these loans early can save you more in the long run.
Set Your Loan Goals
For most people, the goal of refinancing is to secure a better interest rate for predictable, lower monthly payments and to save money over time. However, some may be looking to pay off loans quicker, and are willing to have higher monthly payments in order to be debt-free faster.
Once you determine what goal will meet your specific financial needs, you’ll know what offers you’re looking for. Our loan calculator is a great place to start to understand what the actual impacts of refinancing would be on your budget.