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Stop Juggling Loans: The Simple Guide to Refinancing Student Loan Debt

Do you ever feel like you're scrambling to meet the due dates on your student loans? Does it feel like as soon as you make one payment, another one is due? Managing multiple student loans is challenging, with various payments, balances, and interest rates to keep straight. But paying them off doesn't have to be a juggling act.

 

Refinancing allows you to combine multiple student loans into a single loan with one monthly payment and, depending on your credit scores, may allow you to receive lower interest rate which could save you money. Here's an overview of what student loan refinancing can do for you.

How refinancing works

When you consolidate and refinance your student loans, you are applying for a new loan with a new interest rate and a new monthly payment. This new loan replaces your old loans and may offer simplified repayment terms, depending on the lender’s offer and the loan terms you choose.

 

Once you’ve finalized your loan documents, the funds of your new refinance loan are used to pay off the old student loans you choose to refinance, leaving you with a single monthly payment, and a potentially lower interest rate depending on your credit score.

Am I a candidate for refinancing my student loans?

If you're feeling overwhelmed by managing student loan debt and struggling to keep track of payments, combining your loans through student loan refinancing may be a good option. You can combine your loans into one monthly payment and potentially get approved for a lower interest rate, which may reduce the amount of interest you pay over the life of the loan.

 

While refinancing can be a good option to manage student loan debt and save money on interest, it's not for everyone. For example, refinancing may not be a good option if you are eligible for features or benefits that are not available from your new lender. Take time to compare the options available on your current loans to the potential features and benefits of a new refinance loan, especially if you:

Keep in mind, those benefits are only available on federal student loans, and by exchanging those for a new loan from a private lender, you would no longer be eligible for them.

 

Additionally, you typically need to have a good credit score and income to be approved for refinancing. If you have poor credit or are between jobs, it may not be the right time. But that doesn't mean you can't refinance later once your financial situation improves. You could also consider applying with a cosigner, which may increase your chances of approval and receiving the lowest possible rate.

 

If you have multiple student loans, strong credit, and an annual income that supports your new loan, refinancing your student loans may be a good option.

The pros and cons of student loan refinancing

If you're thinking about consolidating your student loans through refinancing, take time to understand the pros and cons.

Pros:

  • Simplified payment process
  • Potential for a lower interest rate (depending on creditworthiness)
  • Choice of fixed or variable interest rate
  • Longer repayment term, which could lower monthly payments

Cons:

  • No longer eligible for federal student loan benefits such as income-driven repayment plans
  • You may pay more interest over the life of the loan if you choose a longer repayment term
  • Depending on your credit, you could receive a higher interest rate and higher monthly payments

As a student loan borrower, it's wise to consider any options that may reduce or streamline your payments. Refinancing could be a smart move that may save you money in the long run, but take the time to compare the features of your existing loans with those of the new loan before deciding. For more information check out “Should I Refinance?” or call 1-888-411-0266 to speak with a Student Lending Specialist today.

Helpful Tools & Information
Refinance Loan Glossary An easy-to-use guide for the terms you’ll encounter in the student loan process.
FAQs Answers to frequently asked questions about the Education Refinance Loan.
Loan Refinance Estimator Use our Refinance Estimator to see how much you could potentially save.