Do you feel overwhelmed by your student loan payments?
It can be time-consuming and tedious to keep track of all of them. Not to mention expensive to pay interest on several different loans each month.
That’s where student loan refinancing and consolidating could help. It can modify your existing student loans to save you money, get you out of debt faster, and eliminate a bunch of headaches in the process.
1. Lock in a lower interest rate
If you have a steady monthly income and good credit score, then your risk as a student loan borrower has dropped significantly since you initially got the loan.
Student loan refinancing can help you take advantage of your decreased credit risk.
With a lower interest rate, you pay less overall on your loans. Plus, you have one interest rate for your entire student debt, which makes the whole thing a lot less confusing.
2. Lower your monthly payments
Refinancing your student loans can mean a lower interest rate. But it can also modify your repayment terms.
Most federal and private loans come with a 10-year repayment term. Although student loan refinancing options vary by bank, most options range from five- to 20-year terms.
If your current loan has a 10-year repayment term and you refinance to a 20-year term, your monthly payments drop significantly. This can help increase cash flow in your monthly budget.
Student loan refinancing is also ideal for grads who may not qualify for income-based repayment, but don’t quite make enough money yet to comfortably make their student loan payments.
Smart money tip: A longer payment term can mean more interest paid over time, even though the rate is lower. Pay attention to the total cost of the loan and consider paying it off early when your finances improve.
3. Get a flexible repayment plan
These benefits can protect you during your early working years when your income might not be very high. You can still make progress on your student loans, but the monthly payments are more manageable within your budget.
However, income-based plans often extend your loan and you may end up paying more in the long run. As your income situation improves, ramp up your repayment efforts to get rid of your debt sooner.
Private student loans usually offer limited repayment programs such as interest-only payments, economic hardship deferment, and a grace period.
But, if you are experiencing financial difficulty, speak with your private lender about your options for creating a new repayment plan.
4. Release a cosigner from your student loan
If your parents are cosigners on your student loans, you already know the stress this adds to your relationships. What’s more, your loan impacts a cosigner’s credit and their ability to borrow additional funds.
When you refinance with a private lender, you may be eligible to release your cosigner. The cosigner can then improve their credit score and gain access to new lines of financial capital to buy big-ticket items like a home, car, or even start a business.
Find out which banks are willing to work with you. If you have good credit and steady income, it should be a lot easier to release your cosigner.
5. Switch to a bank that cares about you
Many borrowers find themselves dissatisfied with the student loan servicing they receive.
Student loan refinancing gives you the opportunity to switch to a new bank with a great customer service record and better track record working with student loan borrowers.
Research your options before making the move. You might find it easier to work with another lender with more flexible options. Plus, if you can get a lower interest rate on top of better service, that’s a win-win situation.
6. Consolidate multiple student loans for easier management
Did you know the average Student Loan Hero user has seven loans with two or three different student loan servicers?
On top of that, student loan services buy and sell loans. That means you could end up sending your payments to new places every few years. This becomes confusing to manage after a while.
Student loan refinancing allows you to consolidate multiple student loans into one debt, making your student loan debt easier to organize, track, and repay.
Rather than keeping track of multiple payments (and interest rates) each month, you only have to worry about making one payment (with one lower interest rate).
If you are tired of dealing with multiple student loans with multiple terms, research your student loan refinancing options. You could save money, time, and hassle.
Interested in refinancing student loans?Here are the top 6 lenders of 2017!
|Lender||Rates (APR)||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!|
|2.34% - 6.74%||Undergrad & Graduate||Visit SoFi|
|3.64% - 7.20%||Undergrad & Graduate||Visit DRB|
|2.55% - 6.74%||Undergrad & Graduate||Visit Earnest|
|2.35% - 7.74%||Undergrad & Graduate||Visit CommonBond|
|2.22% - 7.26%||Undergrad & Graduate||Visit LendKey|
|2.38% - 8.24%||Undergrad & Graduate||Visit Citizens|
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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.