It was only in the month of February that Forbes reported that the total amount of student loan in the country had actually crossed a worrisome $1.13 trillion. In the United States of America itself there are around 45 million borrowers. While paying off the student loan itself tops the list of every student out there but very unfortunately they are yet to figure out ways to do it. The almost abysmal figures that we have offered above are ample proof of this fact.
How Much do we Understand Student Refinancing Loan?
Joanne Bradford (CEO, SoFi) opines that most the people out there do not really become aware of or understand the concept unless they have a mortgage but they do have the chance of refinancing or consolidating them at lower rate. Ask us and we can tell you that not many people realize how easy it is to refinance student loan. Yes student loan refinance is actually way easier than we actually thought it to be.
How can a Private Lender Help?
To start off with, let us tell you that the process initiates with your search for a private lender who can pay off all your federal and private loans at once by offering you a new loan at lower rate of interest. The lower rate – of course – serves as the immediate incentive for borrowers. However, you need to remember that since the federal and private loans are all blended together you may have to forego some protections that come with the federal loans at the first place. For instance, in case of federal loans, if you work as a teacher or are in public service then after a few years you can even apply for student loan forgiveness. So there are a few who might as well regard student loan refinancing as something which doesn’t really save them much in the long run.
Reasons why Student Refinancing Loans are Worth It
We would still like to point out that student loan refinancing is definitely a feasible option for everyone grappling with their student loan.
Firstly, with refinancing, you will be able to secure better rates. So, the interest thus saved itself can go on to help you in case of your future loans. There are graduates who even end up securing better rates because their credit scores have improved since they had first applied for the loan. Those who have chosen a 10 or 20-year loan can actually go on to experience drastic cuts as far as the monthly payments are concerned.
There is definitely the advantage of settling for a single payment (the federal and private student loans are combined). So, in that way it gets easier for you to keep track of your loans. There are several private lenders that might as well go on to offer you a discount if you end up enroling for automatic payment. However, please remember that refinancing and consolidating is not the same thing. Both the financing options allow you to replace old loans with a new single loan. However, let us tell you that federal loan consolidation doesn’t really reduce your rates like refinancing does.
Flexible repayment terms are a definite pro of student loan refinance. There is no dearth of private lenders who can help you refinance your student loan. Even the local credit union or bank can come to your help and you can go on to settle for fixed or variable rate as per your choice. Irrespective of who you are procuring your financing option from, you can actually go on to access flexible loan terms and other perks.