Student loan rate refinance
The main purpose of refinancing is to decrease the monthly payments of loans. This applies to student loans as well. There are a number of ways to get this done. Student Consolidation Programs have been organized by various banks to facilitate student loan rate refinancing.
There are numerous things to be considered before going for student loans refinancing. At first, both-private loans and federal student loans need to be refinanced separately. This has to be done because the structure of the federal loans implies getting a lower interest rate, as compared to private loans. Private Student Loans can be defined as the personal loans granted under the assumption that the income of the student would rise as he/she would get educated further. If the student tries to combine both of them, he/she might end up repaying the combined amount at a greater interest rate than that of financing separately. Secondly, student loan rates vary from student to student in terms of credit score.
Hence, the students having a good credit score might have an edge over the poor creditors. The next step towards availing Student Loan rate Refinance is that of reviewing the credit report, and take further actions. The rates from various lenders need to be got and compared. The rates for federal student loans refinancing undergo a change once a year (normally around 1st of July). At present, the rates have reached rock bottom, but nothing can be predicted as of now.
Qualifying for low-interest refinance for student loans
The qualification requirements vary from lender to lender. Majority of lenders put up the condition that not a single loan of the concerned student should be in the status called in-school. It means, the student could not pay for education by using the present loan. For some lenders, a minimum balance is mandatory, and that too, an arbitrary balance.
Ways of reduction of student loan payments
When the student opts for student loan rate refinancing, he/she can lessen the monthly payments by any one of the two ways-by having loan at a lower rate of interest, or by cutting down the loan duration. The first method is more feasible as it would ultimately help in lessening the long-term student loan debt. However, if the student has chosen the option of high monthly payments initially, the second method can help a great deal. It would result in reducing the monthly payment. Longer duration is equivalent to higher rates of interest, and one ends up shelling too much. Thus, the second method would make the student shell out more money in the long run, but help in managing finance.
Some vital facts
The statistics say that almost 50% of recent graduates opted for Student Loans refinancing in the last financial year. The amount borrowed on an average was about 10,000 pounds. The interest rates have been reported to be between 6-8%. But this year, interest rates are expected to drop by 3-4%. Hence, the students who intend going for loan rates refinancing can breathe easier.