Student loans are increasing rapidly because the number of students and the college costs are
increasing. According to a stat, the delinquency rate of student loans is 11.2% which is quite higher as
compared to other consumer loans. This is due to the problems that students face after they graduate
and then they have to pay their monthly payment. 45% students do not get a job with the expected
salary that they would get with a job after graduation. Due to this reason, they cannot fulfill their
dreams and they only have enough money to make a living.
This problem has some solutions and one of them is to refinance your student debt. Many graduated
students have successfully saved thousands of dollars by just refinancing student loans. You can do this
so but you need to make some research before you refinance your loan because there is no returning in
the refinance process. So make sure you keep your information right.
Why you should refinance?
This is an important question to be answered because you should know why you are refinancing your
loan so that it could keep you motivated. If you are unable to handle your monthly payments and you
are facing difficulties in paying them, than you should think of refinancing. Another reason can be that if
you want to get a lower interest rate on the same interest as you have already.
If you are facing the 1 st issue and have federal loan, then you have some solutions for your problem. The
Federal loans allow you to extend the time period of your loan so that you can make lower monthly
payments. This is the problem with many students because many a time’s students fail to get a job with
the amount of income they want. You can change the duration of your loan whenever you want, for
example if you are facing financial issues then you can shift your loan to longer terms and if you get back
on track, you can again change the time to shorter time.
If you have the 2 nd reason, then you can only choose a private company because federal companies does
not provide any refinancing. If you have a federal loan, then you should think carefully before you
refinance because after you refinance, you will not be able to enjoy the facilities that come with federal
and you will not will be able to apply for loan forgiveness programs, forbearance and deferment
programs that you can with a federal loan. So if you are eligible for loan forgiveness program than you
should keep your federal loan instead of refinancing. If your student loan lender is a private company
than you should think about refinancing whenever you can get a lower interest rate than the previous
one. There are no facilities with a private student loan that you will miss after refinancing.
Refinancing your private loan for even a slightly lower interest rate can help you save thousands, so you
should be looking to find any opportunity.
Before you Refinance your Student Loan,
If you want to refinance your student loan, then the first thing you need to do is to check your credit
report. Credit score plays a vital role in determining the interest rate you will get so it is better to check
the report for errors that can decrease your score. Whenever you contact with a company, the company
looks at your credit report you income and financial history to provide you a quote. So if after checking
your report, you see errors than you should contact with the concerned departments for a review. You
can see your score from other platforms such as your bank statements.
Most of the companies require a good credit score or a score higher than 700, so if you are lagging in
this score, then instead of refinancing you should try to increase your score because you can get a lower
interest rate only if you have a higher credit score. You can personally contact with companies for the
removal of negative marks or you can contact a company to help you so.
Which Company to Choose?
If you have a score higher than 700, than you can easily get a lower interest rate. In the past few years,
there is a rapid increase in the number of students that have refinanced their student loans and there is
also an increase in the number of companies that are providing refinancing services. This increase in
competition has enabled the student to get a lower rate.
One of the top and famous companies to consider for student loan refinancing is SoFi. SoFi is a complete
financial company that will help you to invest and save money and will provide you almost all kind of
financial services. You can get one of the best rates for refinancing your student loans from SoFi.
There are many other companies that offer these services too so if you want to choose the best one for
yourself then you should get a quote from more than one companies. It is not a bad idea to get quotes
from multiple companies at the same time because this can help you get a lower rate, you can also use
comparison website for this purpose. You can get fixed and variable rate from different type of lenders.
When you get a fixed rate, you can easily calculate the amount of interest you will pay. If you get a
variable rate then you should think carefully before you choose that whether you can pay a high
payment if the interest rate rises.
The second thing you need to do is compare the time period for you which you are offered the loan. This
will allow you to calculate the amount of interest rate because if your rate is lower and you got a loan
for longer period of time then you will eventually end up paying more interest than of a loan with higher
interest rate and a shorter time period. So the time also plays an important role, make sure you count it
well. Other than that some of the companies also charge an origination fee and closing fee, so count it
Putting all the factors in your mind, you should compare the rates available from different lenders. Keep
a count on monthly payment, total interest paid and interest rate to make a good deal for yourself.
Chose the company that suits you the best in your style but also keep in mind that you can refinance
your student loan as many time you want. That means if the rates get lower at times, then you should
refinance at that time or if you refinanced in the past because you were unable to pay the high monthly
payments and now you think that you are able to pay then you can also refinance again to save money.
Refinancing is an easy task to do and it can help you save thousands of dollars, although it can create a
small dent on your report but the savings you do are worth it. You can use this money to go to vacation
or you can invest this money. So it is up to you to choose the best for yourself. Do comment in the
section below and let us know if you have any queries regarding the article because we would love to
hear from you. Best of luck!