Those who are in the process of paying off their student loans might be wondering if it’s possible to refinance. The short answer is yes; you can refinance your student loans.
This can be a great option for those who have loans with elements that aren’t particularly appealing—such as a high interest rate, or a problematic payoff period.
Individuals who think they might benefit from refinancing their student loans should look more into some of the benefits and drawbacks of doing this.
Now that you’re aware of your ability to refinance student loans, let’s dig into some of the details.
What Are the Pros and Cons of Refinancing Student Loans?
Like most things related to finances, there are pros and cons to refinancing your student loans. While you’re going to want to consider your specific situation to determine what’s right, here are a few of the general positives to refinancing student loans:
- Lower interest rates – Maybe the most important aspect of any loan, interest rates determine how much you’ll have to pay back beyond how much was borrowed originally. Refinancing for a lower rate can save you hundreds, if not thousands, of dollars over the course of a loan.
- Consolidate payments – Refinancing also allows you to consolidate multiple loans into a single new one. This can vastly simplify your life if you’re just making one payment to a single lender as opposed to having to keep track of multiple loans and lending companies.
- Change your loan term length – If you’re wanting to get more aggressive with loan repayment, you can refinance to a shorter term loan with a lower interest rate. Conversely, those who are struggling might be able to get a longer duration loan with a lower monthly payment.
- No fee to refinance – Typically, you have to pay an origination fee to refinance loans. This isn’t the case, however, with student loans.
As you can see, there are good reasons to go through with a student loan refinance. Still, consumers need to understand there are things to take into consideration that can make refinancing student loans less ideal.
Here are a few things to keep in mind:
- Lose beneficial federal programs – Items like Public Student Loan Forgiveness, income-based repayment, and benefits related to the CARES Act can go away if you decide to refinance your public student loans into private ones. It’s important to see how losing these benefits might affect your finances in negative ways before going through with such a refinance.
- You’ll have to consider your credit – Credit scores are one of the most important elements in determining the terms you’ll be able to get when refinancing a loan. Those with great credit might be able to score a sweet refinancing deal on their student loans. Those with poor credit or adverse might not be able to derive much benefit.
Where Should You Go to Refinance Student Loans?
Now that you see the general lay of the land when it comes to refinancing student loans, where should you go to find an offer? Checking offers from every lender will take ages, and you might not even land the best deal. Juno is one place where those looking to refinance student loans can go to get a good deal. Instead of being a lender, they take bids from lenders and only offer the best ones to their member base. It’s free to join, so you can get an industry-best deal without having to seek it out.
Refinancing student loans can be a smart move if you have a good amount of debt outstanding and have a solid credit score. Check to see if refinancing your student loans can put you in a better financial position.