Refinancing Private Student Loans Now Is The Best Way To Cut Costs – Here’s Why

There can be huge advantages to refinancing your private student loans, especially in today’s low rate market. (iStock)

Private student loans generally have higher interest rates than options supported by the federal government. If your rates are higher, refinancing of private student loans is now the best way to cut costs and save money. After all, interest rates have fallen dramatically since the spring – and refinancing is good. tip for reducing the interest rate on your loan Even further.

A student loan refi can lower your interest rate, lower your monthly payment, and spread your payments further. With Credible’s free online toolsYou can find the best rates available by comparing several private lenders at once without affecting your credit score.

Do you have private student loans in your name? Are you drowning in student loan debt and need better repayment options? So here are four reasons why you should refinance.

  1. Lower interest rates
  2. Loan consolidation
  3. To save money
  4. Federal benefits are not affected

1. Lower interest rates

The main reason you would want a student loan refinance is to lower your interest rate. In recent years (recently due to the pandemic), interest rates have dropped considerably.

  • Fixed rate loan rate have fallen by 31% since 2017
  • Variable rate loans slipped 63% since February last year
  • Private and variable rate student loan rates are now as low as 1.95%

“With interest rates at historically low levels, it makes perfect sense for people to take a look at the current interest rate on their student loans and see if they can refinance at a lower rate,” said Randy Lupi, vice -regional president of Equitable. Advisors. “It’s almost always worth refinancing, even for half a percentage point in savings. With the current interest rates so low, it is possible to refinance at a much lower interest rate in many cases.

If you have private loans, check to see if the current student loan refinance rate is lower than yours. If so, then use Credible to get real personalized rates based on your credit history.


2. Loan consolidation

If you have more than one private student loan in your name, refinancing may help you consolidate them – essentially consolidate all your loans into one. This can make them easier to pay off (only one bill to pay per month), and it could also give you a lower student loan interest rate.

Here’s how Jonathan Howard, financial advisor at SeaCure Advisors, explained: “When a student is in college, he or she takes out loans on an annual basis. This can lead to a confusing jumble of loans to repay after graduation. Refinancing allows a borrower to consolidate multiple loans into one loan. It can help someone make a complex situation much simpler and more manageable.

Student loan refinancing rates vary. To snag a good student loan refinance deal, you will need to have a good credit history, credit rating, and income, because the interest rate on your new student loan is based on your financial credentials.

If you have these items, you will likely be able to lower your total student loan repayment costs and get a lower monthly payment. Provide your current private student loan details to Credible – some simple personal information, including your current loan amount – and you can compare the rates and terms of several private lenders. Credible also offers a “Best Price Guarantee”.


3. Save money

You don’t need perfect credit to refinance student loans. Although a higher credit score can mean better interest rates, there is no need to refinance. In most cases, you only need a FICO score of 600 or slightly higher.

“Having a good credit score of at least 670 gives you the most options when refinancing for student loans, but it’s not always necessary,” said Anna Serio, a certified loan broker for Finder. .com. ” You can always refinance student loans even if you have bad credit, as long as you have a co-signer with good credit.

You also don’t need a ton of savings to pay for a student loan refinance. With the majority of private lenders, there are no fees or charges, and student loan refinancing is free.

“Unlike refinancing a home, there is no charge for refinancing a student loan,” Howard said. “This is great news for borrowers.

Credible’s partner lenders do not charge prepayment penalties, loan application fees, or set-up fees. So you can shop around for lenders and a better repayment term without the added headache.


4. Federal benefits are not affected

If you have both private and federal student loans, you don’t have to refinance both. In fact, keeping your federal loans as is (mainly because of the student loan forgiveness options available to you) and then refinancing your private loans is almost always the best option.

“Private loans should never be consolidated with federal loans,” Howard said. “Federal loans have forgiveness options that you can’t find in private loans. If you consolidate a federal student loan into a private loan, you will lose any chance to cancel your loan in the future.


Should I refinance my private student loans now?

With rates this low, refinancing can be a good idea if you have private student loans. Just make sure to research custom rates, lower your monthly payments, choose a more optimal repayment period, and find the right one. best possible lender for your needs (Credible’s tools can help here).

“Compare factors like rates, terms, loan amounts and additional services,” Serio said. “Once you’ve narrowed down your options, consider prequalifying with a few to get an estimate of the rates and terms you might qualify for. Once you’ve found a suitable lender for you, follow their instructions to complete your complete application. At this point, you will need to provide details about your current loan so that the lender can repay it. “

Before finalizing your application, you must use loan calculators like this to estimate your monthly payment. This will ensure that you get a payment that you can comfortably afford and manage in the future.

Still have questions about refinancing student loans? Consider contacting a financial advisor for more information.