Student Loan Refinance

Are you considering student loan refinance? With the high number of students acquiring multiple college loans these days, it's natural to consider student loan refinance. Student loan refinance, often called student debt consolidation, is the combining of multiple loans into a single loan. The goal is to reduce monthly payments and interest rates, as well as lengthen the term of the loan to reduce the stress of high multiple payments.

Is Student Loan Refinance a good idea?

That depends on your current financial situation and other factors. The cost of books, dorm or apartment housing costs, food and other living expenses can run into the tens of thousands. It's no wonder a large percentage of students turn to student loan refinancing to pay their tuition.

However, if you are able to pay all your current loan payments on time and the interest rates are reasonable, you will save money by staying with your current loans and paying them off on time. Banks and lenders encourage consolidation but it's always in your best interest to conduct ample research to find out if student loan consolidation is right for you.

Student Loan Refinance Advice

Determine the type of your current loans. Student loans are typically either private or federal. Federal loans typically have lower interest rates than private loans, as well as fixed interest with no penalties for early payment.

Private loans may have higher interest rates that can be fixed or variable. Calculate the total cost of keeping your current loans and paying them off individually versus consolidating all loans into a single loan. Private loans cannot be consolidated with federal loans into a Federal Student Consolidation Loan.

Private vs Federal Loans

In the event that Federal loans won't cover all your college expenses, you can also apply for private loans. Your own college may provide you with a list upon acceptance. Also, you can contact your bank and ask for a referral. Online research will also be beneficial in locating many options for private loans. More information can be found at Private Student Loan Consolidation.

Interest Rates

Keep and eye on the interest rates. For instance, federal loan rates only change once a year, are fixed. If you decide to go with a federal student loan refinance, lock in the interest rates before July 1st, which is when they typically change.

Credit History

When applying for student loan refinance, lenders will use your credit and payment history to determine rates and loan eligibility. Check your credit report, from all three bureaus, months in advance so you can make corrections if necessary.

It will take about two months to have errors corrected. A high credit rating will allow you to get a lower interest rate as well as reducing fees associated with other monthly bills.

Student Loan Refinance Requirements

Contact the lender prior to submitting the application to determine their standards and requirements that are necessary to qualify. Different lenders have different standards and requirements for loan eligibility.

Student Loan Refinance - Incentive Plans and Discounts

Some student loan refinance programs offer discounts for early payment, on-time payments and using a direct/automatic payment plan. Discounts may be as much as one percent or more.

Student Loan Refinancing

Traditional banks and credit unions provide student loan refinancing but another option to consider is that of online lenders. Online lending is a very competitive market which has resulted in many online lenders offering exceptional interest rates. Comparison shopping is of the utmost importance to make sure student loan refinancing pays off.