Should You Refinance Your Student Loan?
Author: Deb / Date: August 8, 2023 / Tags: debt consolidation
(MoneyHippo.com) – When interest rates drop, homeowners often consider refinancing their mortgage loans to reduce their monthly payments or interest rates. Yet, you could refinance and consolidate many outstanding loans, especially higher-interest ones, including the student debt you carry, but should you? Here are some factors to think about before making the decision.
- Rate: Look at your current student loan rate to see if the percentage is higher or lower than the present rate. If your interest is higher, you might consider refinancing to pay less monthly and save money over the loan term.
- Qualification: When you took out your loan, you had to qualify, and the same holds for refinancing. If you’re in a better financial position than when you initially received the loans and currently have a good credit score, consider talking to a bank. The institution will let you know if you qualify to take the leap.
- Benefits: Carrying federal student loans comes with a unique set of advantages you would lose access to if you refinance the debt. Those perks might include forbearance, forgiveness, and income-based monthly payments. Before refinancing or consolidating these types of loans, understand all the implications to determine if the move is financially sound.
Refinancing could make sense for some student loan borrowers. Consider talking to a lender or your current creditor to see if it’s the right move for your situation.
Copyright 2022, MoneyHippo.com