student loans refinance

student loans refinance

 

Today, the answer to that question is probably yes! 7 out of 10 graduates are now graduating with some form of student loan debt. With an average balance of $30,000, student debt is a big part of the average college graduate's life. That being said, not all student loans are created equal. Interest rates on student loans usually vary by loan type, rate type, and credit worthiness. If you find yourself paying 4% to 10% in interest each year you are paying too much.

​Over the last couple years student loan refinancing has become a hot topic in the United States. As it sounds, refinancing allows undergraduate and graduate borrowers to refinance educational debt at a potentially lower interest rate. Student debt refinance rates can be as low as 2.13%, refinancing with these lower rates can save some borrowers upwards of $14,000 over the life of their loan. At Lend EDU, we help borrowers compare all of the top student loan companies in one place. We put together this guide to help you get information on all of the top student loan refinance lenders without having to jump around multiple websites. Below we've ranked the leading student loan refinancing companies. It is free to apply, and the process usually takes about 15 minutes. How much could you save? Find out today! In just 15 minutes you might be able to save $14,000.



    A student loan refinance calculator, which can help you find out how much money you can save if you refinance
    A comparison tool which lets you see student loan terms all at once, with no need to give up personal information.

But before you refinance, read on to see if you are ready to refinance your student loans.
Can I Get Approved?

Loan approval rules vary by lender. However, all of the lenders will want:

    Proof that you can afford your payments. That means you have a job with income that is sufficient to cover your student loans and all of your other expenses.
    Proof that you are a responsible borrower, with a demonstrated record of on-time payments. For some lenders, that means that they use the traditional FICO, requiring a good score. For other lenders, they may just have some basic rules, like no missed payments, or a certain number of on-time payments required to prove that you are responsible.

If you are in financial difficulty and can’t afford your monthly payments, a refinance is not the solution. Instead, you should look at options to avoid a default on student loan debt.

This is particularly important if you have Federal loans.

Don’t refinance Federal loans unless you are very comfortable with your ability to repay. Think hard about the chances you won’t be able to make payments for a few months. Once you refinance, you may lose flexible Federal payment options that can help you if you genuinely can’t afford the payments you have today. Check the Federal loan repayment estimator to make sure you see all the Federal options you have right now.

If you can afford your monthly payment, but you have been a sloppy payer, then you will likely need to demonstrate responsibility before applying for a refinance.

But, if you can afford your current monthly payment and have been responsible with those payments, then a refinance could be possible and help you pay the debt off sooner.
Is it worth it?

Like any form of debt, your goal with a student loan should be to pay as low an interest rate as possible. Other than a mortgage, you will likely never have a debt as large as your student loan.

If you are able to reduce the interest rate by re-financing, then you should consider the transaction. However, make sure you include the following in any decision:
Is there an origination fee?

Many lenders have no fee, which is great news. If there is an origination fee, you need to make sure that it is worth paying. If you plan on paying off your loan very quickly, then you may not want to pay a fee. But, if you are going to be paying your loan for a long time, a fee may be worth paying.
Is the interest rate fixed or variable?

Variable interest rates will almost always be lower than fixed interest rates. But there is a reason: you end up taking all of the interest rate risk. We are currently at all-time low interest rates. So, we know that interest rates will go up, we just don’t know when.

This is a judgment call. Just remember, when rates go up, so do your payments. And, in a higher rate environment, you will not be able to refinance to a better option (because all rates will be going up).

We typically recommend fixing the rate as much as possible, unless you know that you can pay off your debt during a short time period. If you think it will take you 20 years to pay off your loan, you don’t want to bet on the next 20 years of interest rates. But, if you think you will pay it off in five years, you may want to take the bet. Some providers with variable rates will cap them, which can help temper some of the risk.
Places to Consider a Refinance

If you go to other sites they may claim to compare several student loan offers in one step. Just beware that they might only show you deals that pay them a referral fee, so you could miss out on lenders ready to give you better terms. Below is what we believe is the most comprehensive list of current student loan refinancing lenders.

You should take the time to shop around. FICO says there is little to no impact on your credit score for rate shopping as many providers as you’d like in a single shopping period (which can be between 14-30 days, depending upon the version of FICO). So set aside a day and apply to as many as you feel comfortable with to get a sense of who is ready to give you the best terms.