The price of higher education has skyrocketed over the past few years; conversely student loans are treated as a massive burden one could add onto their shoulders. Trying to repay, refinance and consolidate student loans is easy said than done! However, refinancing is certainly an option students can use to reduce the net rate of interest. Over the entire loan period, refinancing will help you save several thousand dollars. And, in this article, you will learn how to do this!
Step #1 – Financial Assessment
First of all, do a quick yet accurate financial assessment. It would be wiser to know where you are hitting before starting the entire process. You should refinance student loans if repayment is tough or if it would reduce your monthly debt. Nevertheless, remember to keep a solid goal that is affordable and practical. During the assessment, you can make use of the following tools:
- Draft an accurate balance sheet with details about your income and expenses.
- Request for an up-to-date credit report that will define your credit score. If your credit score is bad, engage in deeds that would increase your credit score remarkably. According to experts, good credit scores have amazing benefits fit for a lifetime.
Moving on, you must evaluate your student loan. Generally, private student loans have higher interest rates than federal student loans. If you have two or more federal loans, consider yourself as lucky! This is because you can consolidate the federal student loans and keep your finances within control.
Step #2 – Talk To Your Lender
Now, you should talk to your lender. The loan market is a competitive industry that has ever changing rewards and pitfalls. Lenders consider borrowers with high credit scores as a priceless asset. If you have good credit scores, lenders will have no issues in extending your student loan duration or lowering your rate of interest.
Step #3 – Choose a Good Bank
It is quite interesting to note that many people have moved away from big, well established banks and started deals with local ones! They tend to feel satisfied and content with local credit unions and traditional community banks. With this in mind, you must not be reluctant to ask for help from local banks. They will give you further guidance on how refinancing works.
Step #4 – Use the Internet
Next, login into the Department of Education’s Direct Loan Program in the internet. The website will give you a comprehensive insight through various reimbursement plans. The program will help you switch between plans and make wise decisions at the right hour. Some plans must be changed for better and bigger benefits. For instance:
- You can make use of a potent public service career. Do you know that people who work in public services qualify for the loan forgiveness scheme?
- Do you know that if you have made 120 successful monthly payments, you can defer student loans?
Ultimate Bottom Line
Refinancing is a strategy used by students to steer away from hefty loans. Nevertheless, refinancing is a tacky process that should be done with lots of care and concern.