Even the most highly educated people can benefit from learning more about money management. When it comes to student debt, refinancing your loans could end up being one of the smartest decisions you’ll ever make.
You don’t have to be a math major to know that lower interest rates are better than higher ones, but many people don’t realize just how much money they could be saving by dropping their student loan interest rate by one or two percentage points. This can translate to savings worth tens of thousands of dollars over the life of the loan.
Higher education is undeniably expensive, which means many students apply for financial assistance ranging from a few thousand dollars to hundreds of thousands of dollars. In addition to scholarships, grants, and work study, there are Federal student loans available from the U.S. Department of Education. There are also private student loans, meaning the loans are made by private institutions such as banks, credit unions, and financial institutions. It’s common for students to have taken out loans from multiple sources in order to pay for their education.
When you’re finished with school and after a brief grace period, borrowers are required to begin paying full principal and interest payments on their loans. Monthly payment amounts are based on the terms agreed upon when the student accepted the loan, including the interest rate and repayment plan.
These payments can be hefty. This is where refinancing comes in. Private student loan refinancing allows borrowers to refinance and/or consolidate one or more student loans into one private loan at a potentially lower interest rate, monthly payment, and/or repayment term. Refinancing often allows the borrower to consolidate both their federal and private student loans, simplifying payments.
Not everyone qualifies for student loan refinancing, nor is refinancing the best option for everyone. Here are a few factors that U‑fi Student Loans takes into consideration when it comes to applying for refinancing:
Even if you don’t qualify on your own, you may be able to with the help of a cosigner. This is someone, generally with more established finances, who agrees to make payments should you ever default. This is a good option even if you have good credit, because it can decrease your interest rate further. And the cosigner can be released after 24 consecutive, monthly principal and interest payments are made on time, and the borrower meets certain eligibility and credit criteria.
The requirements are slightly different for those applying with the help of a cosigner, and they’ll vary depending on who your lender is. With U‑fi, applicants must be at least 17 years old, but they don’t have to be U.S. citizens or permanent residents. The cosigner has a few requirements, too – they must be a U.S. citizen (or have permanent residency status and a valid SSN), they must be the legal age of majority in their state/territory of residency, and they must have at least $24,000 in annual income.
Anything that can save you thousands of dollars may seem like a no-brainer, but there are some risks that come along with the benefits of refinancing – particularly if you’re refinancing federal loans. Terms will vary based on your lender, but let’s look at the biggest pros and cons of refinancing with U‑fi Student Loans.
Once you’ve weighed your options, you may have decided that refinancing seems like the best option for you. Here are the steps you can expect to take in the coming months.
Student loan refinancing isn’t right for everyone, but for some, it can mean the difference between struggling to survive your first few years of repayment and starting out with firm financial footing. Consider your decision carefully, and you’ll be prepared to manage your repayments with ease.