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The federal government announced that interest will not accrue and payments will not be due for a period of 6 months on federal student loans. We recommend that all customers with federal student loan debt carefully consider their options before refinancing with a private student loan. This interest free period is beneficial to customers and we advise you to consider these benefits during the six month period and over the life of the loan prior to refinancing. When you refinance, you waive any current and potential future benefits of your federal loans and replace those with the benefits of the Education Refinance Loan.
Depending on your rate and amount borrowed, refinancing may still be a good lifetime savings option for you. We are here to help you think through what might be your best option. Please call us at 1-800-708-6684.
Please carefully review your current and potential future benefits on your federal loans before refinancing.
The federal funds rate and London Interbank Offered Rate (LIBOR) continue to rise.
What does this mean for you? Student loan rates continue to rise in 2018. Generally speaking, when the federal funds rate increases, so do interest rates on new federal loans. When the LIBOR rises, the same happens for private loans. However, these changes only affect new loans and existing loans with variable interest rates.
Rising interest rates are obviously a big deal for students who are still taking out loans for school. But what about graduates who are paying off their student loans? Will anything change?
Well, it depends. If your loan has a fixed interest rate, you won’t experience a change.
However, if you have a variable-rate loan, you’ll likely see your interest rate go up. Any interest rate increase will result in less of your monthly payment being applied to the principal. That means paying more in interest over the life of the loan.
Again, it depends. First, look at the interest rate and repayment terms of your existing loan(s) to see if it’s worth looking into refinancing. Second, check your credit score.
That’s because private lenders base your interest rates on your credit history, in addition to other factors that determine your ability to repay. That means if your credit is in good standing, you could qualify for a rate that’s better than your original loans, regardless of whether you currently have a fixed or variable rate. Or, if your credit isn’t great, you could consider adding a co-signer, which may help your chances of being approved for a lower rate.
However, if your loan(s) has a variable rate, it’s especially important to look into refinancing. Changing to a fixed-rate refinance loan could be ideal since you’ll be protected against future rate changes.
With a lower interest rate, you could either reduce your monthly payment or continue to make the same payment, but have the extra money go towards the principal. This second option would pay off your loans quicker. What’s not to like about that?
Refinancing could also combine multiple loans into one, giving you one easy-to-track student loan payment to make each month.
However, there are still a couple of scenarios when refinancing doesn’t make sense, even if you qualify for a better interest rate:
Just remember to check your credit before applying and weigh the pros and cons of federal and private loans to make sure refinancing makes sense for you.
We are committed to helping you reach your potential. To learn more about how refinancing your student loans could help you reach your saving goals, check out our refinance calculator, call 1-877-405-2262 to speak with one of our Student Lending Specialists, or visit your nearest Citizens Bank branch.
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