Get more out of life when you refinance your student loans

When you refinance student loans, you’re taking out a new loan to pay off your old loans, leaving you with one loan and payment to manage. Depending on your credit, you might be able to lower your interest rate through refinancing.

You could also extend your student loan repayment term through refinancing, which could reduce your monthly student loan payments. It’s important to remember that choosing a longer term means you will pay more in interest over time.

Refinancing could have several benefits, including:

• You might get a lower interest rate: Depending on your credit, you could lower your student loan interest rate through refinancing. This could save you money on interest charges and might even help you pay off your loan faster.
• It could reduce your monthly student loan payments: If you choose a longer repayment term, you could reduce your monthly payments. It’s important to remember that doing so means you’ll pay more in interest over time.
• You can combine multiple loans: If you refinance your student loans, there’s only one loan and payment to focus on.
• You can remove cosigners: If you’d like to remove a cosigner from your student loans, you can do so when you refinance as you’ll be paying off the old loan.

There are some potential downsides you should consider before making a decision, including:

• If you have poor or fair credit, it could be harder for you to get approved for refinancing. You also might not qualify for the best interest rates.
• If you refinance a federal student loan, you could lose out on federal benefits. You’ll no longer have access to federal benefits and protections, such as student loan forgiveness programs and federal forbearance options.

There are several types of student loans that are eligible for refinancing, including loans for undergraduate, graduate and professional studies. These loan types include:

• Federal student loans
• Private student loans
• Medical school loans
• MBA loans
• Law school loans

If you’re ready to get started, you can follow these four steps:

1. Research and compare lenders. Be sure to compare as many lenders as possible to find the right loan for you. Consider interest rates, repayment terms, any fees charged by the lender and eligibility requirements.
2. Pick your loan option. Review your options carefully and choose the loan option that best suits your needs.
3. Complete the application. Once you’ve picked a lender, you must complete a full application and submit any required documentation.
4. Manage your payments. If you’re approved, continue making payments on your old loans while the refinance is processed. Afterward, you’ll start making payments on your new loan.

That depends on your financial situation, needs and long-term goals. Here are some scenarios where refinancing might be the right move:

• You can qualify for a better interest rate, which will save money on your student loan payments.
• You need a lower monthly payment based on your current budget and financial needs.
• You have multiple student loans and want to combine them to simplify your repayment plan.
• You have private student loans, so you won’t lose any federal benefits by refinancing.

The requirements for refinancing can vary based on the lender. Here are some common requirements:

• Good credit score: You’ll typically need good to excellent credit to qualify for refinancing. While some lenders offer refinancing for bad credit, these loans generally come with higher interest rates.
• Verifiable income: You’ll likely need to provide proof of income, and some lenders have minimum income requirements.
• Low debt-to-income (DTI) ratio: Your DTI ratio is the amount you owe in debt payments each month compared to your income. A DTI ratio of 50% or below is usually preferred but some lenders might require even lower ratios.
• Current student loan information: This may include loan balances, current lenders and what schools you attended.