Student loan refinancing is getting a loan under new terms to pay off one or more of your existing education loans. Refinancing options usually apply to individuals who are no longer enrolled in college or graduate programs.
Students choose to refinance because the new loan terms translate to new benefits for the borrower. Let's walk through the benefits of refinancing as well as when and how to refinance.
Lower your interest rate
One of the top reasons to refinance is to get a lower interest rate, which can save you thousands. Many refinancers are eligible for a lower rate because they have a steady job and have improved their credit since taking out their loans. Do your research to find low interest refinancing options.
Get rid of your debt sooner
If you’re in a financial position to pay off your student loan debt faster, refinancing could be a great option for you. The simple fact is: if you pay off your loan faster, you pay less interest. An added bonus is that when you elect to pay off your loan faster, you often qualify for a lower interest rate, saving you even more.
Take advantage of special offers
A number of lenders have special offers that may not have been available when you originally took out your loan. For example, we offer a .25% interest rate reduction for borrowers who sign up for automatic bank draft. That means you save money and don’t have to stress about making your payment on time.
- Consolidate your loans
Do you have more than one loan? Are you making payments to several lenders? By refinancing you can combine all your loans together into one convenient monthly payment. Look for options to refinance both your federal and private student loans. Be aware though, if you refinance your federal loans, you're applying for one private loan, and you may give up some federal student loan protections like income-based repayments, loan forgiveness, and deferment and forbearance.
- Lower your monthly payment
Are you going back to school, planning for a family, or starting a business? If your priority is having a low monthly payment so you can commit your resources somewhere else, refinancing may make sense for you. Look for options to lower your interest rate or extend your loan term when you refinance.
- Set a fixed rate for the life of your loan
If any of your loans have variable interest rates, that means that your rate could increase over time as the market conditions change. If you’d like the predictability of having an interest rate that remains the same for the life of the loan, look for fixed interest refinance options.