Student loans help to cover living expenses and pay for college. However, once you graduate, it may be difficult to pay your student loan payment each month. Since student loans will not be forgiven even in a bankruptcy, you may need to look at refinancing options to make your student loan payment manageable. Refinancing will lock in a fixed interest rate and can lower your monthly payment.
Benefits of Refinancing Student Loans
Student loan consolidation is the only way you can refinance federal student loans. This process will take all of your student loans and consolidate them into one lower monthly payment. It locks in the current interest rate and you can adjust the length of your loan and lower your monthly payment if you need to. You can only consolidate the loans once, so you need to be sure that you are getting a good interest rate and that you choose the right length of time for your loan.
How to Refinance Student Loans
Contact your current student loan lender and see if it will consolidate your federal loans for you. You can also contact the federal government and apply for a direct consolidation loan. You will need all of your student loan account information when you apply for the loan. You can fill the application out and sign it online. Once your loan is approved, the bank will pay off your old loans and you will have one set monthly payment. Follow up with the banks that have your federal student loans to make sure they are paid off in full.
Choosing the Right Refinancing Options
Consolidation will lock in a set interest rate. If you do not lock in the interest rate, it can rise as the federal government adjusts the interest rates. You also need to choose your payment terms. Most student loans payments are set to be paid off in 10 years. Consolidation lets you change the term of your loan and increase it up to 20 years. This will lower your monthly payment. However, it will increase the amount of interest you pay over the life of your loan. You should pick the highest payment amount you can manage.
Refinancing Private Student Loans
Refinancing private student loans is a different process from that for federal student loans. You can talk to your current lender to see if it is willing to refinance to a lower interest rate. You also have the option of taking out a personal loan and locking in a set interest rate on that debt.
0 comments:
Post a Comment