What You Need to Know Before Refinancing Student Loans
Having student loan debt and staying on a journey to pay it off as rapidly as possible builds character. Dave Ramsey said it greatest when you step into the pathway to financial freedom, “Live like no one else so later, you can live like no one else.” This path will tend to shape your attitude about debt. It will bring you to a point where you learn where your money is being invested and have the knowledge to control where it is being spent. Also, you will identify areas to save and decrease debts.
So what can be done to expedite paying off student loan debt? Refinance your student loans into one new loan with one lender. The new loan will pay off existing federal and private student loans. Credible reports that borrowers who refinance into a shorter repayment term can expect to save at least $18,000 over the life of their new term. Refinancing student loan debt also reduces monthly payments and saves on total interest paid.
Prior to refinancing student loans, make sure to take in the following considerations:
Federal Repayment Plans
Federal Student loan lenders offer standard, graduated and income-driven payments to borrowers that private lenders do not.
Private student loans are not eligible on the state or federal level for the majority of loan forgiveness programs.
Deferment or Forbearance Options
If you are experiencing temporary financial difficulties and struggling to make on time payments, then you can apply for deferment or forbearance with your federal student loan lender. Federal Student Aid simply defines deferment as a period during which repayment of principal and interest on your student loan(s) is temporarily delayed and you are not on the hook to make payments on unsubsidized or subsidized loans. However, subsidized loans will still accrue interest. If you don’t qualify for deferment, you can apply for forbearance through your federal student loan provider which will allow you stop or reduce your student loan payments if approved. However, interest will continue to accrue if you have subsidized or unsubsidized federal student loans. Some private lenders allow borrowers to apply for forbearance, but be sure to check with the lender prior to completing the refinancing process.
If you are ready to move forward with refinancing your student loan (s) I am excited to partner with Credible to help you through the journey. To apply you must be a US Citizen or permanent resident, 18 or older, with more than $5,000 of student loan debt that is not in forbearance or deferment status. Get started here!