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HomeMoneyYour MoneyWhich student loans should I refinance

Which student loans should I refinance

Those looking for increased financial freedom might be looking into the world of student loan refinancing to help them live a life that’s more conducive to their interests.

Put in as simple terms as possible, refinancing your student loans is swapping the terms of the loan (interest rates and monthly payments) for the terms of another loan. This is either done through the same person who lent the money or through a company that buys off the debt, and you pay them back instead. Most people have something in the realm of 3-4 student loans to pay off, so some people choose to refinance 3-4 loans into a single loan to make things simpler. There are some pitfalls to this decision, however, that I think need to be addressed, so people are more aware of them:

You might lose federal benefits.

Federal student loans are some of the most agreeable in the entire industry. The government has a larger priority of having people who go to school to contribute to the overall economy, than it does to have every single nickel and dime paid back as a bank would. These loans are the sweethearts of the realm of education loan finance. They offer much more flexible payment plans, and certain people are even eligible for loan forgiveness from the federal government. If you lump all of your loans together and refinance them at a private institution, you’ll forfeit your ability to take advantage of these government benefits. Only refinance the loans you’re willing to lose these benefits on.

It might be a better deal to refinance them separately.

When all of your loans are put together in the same heap, a new interest rate will be created and offered to you. If you have some high-interest loans, that’s good news. But then, if some of your loans are at an extremely good interest rate, you might end up paying more on that loan by including it in your refinancing plan. It isn’t in the rules that you have to refinance them all at once. Pick and choose which loans you’d like to pay less interest on, and see what the creditor has to offer you.

Shop multiple lenders.

It’s possible, but usually unlikely that the first refinance offer you get will be the best possible one. Getting an offer is free after you’ve supplied your information. It’s completely up to you whether or not you take it or walk away. Chances are you can be offered the same rates if you come back at a later date, so shop around. Not only that, some lenders have bigger grace periods if you happen to miss a day of payment, while others have programs for those who experience a sudden loss of income. You have options.


Before you get set on changing the terms on each one of your student loans, reconsider which loans are actually an encumbrance and which are just fine the way they are. The added inconvenience of having to pay two or more creditors might end up saving you a lot of money in the long run. Hasty decisions aren’t your friend in this scenario.

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