Student loan refinancing is a way to lower your interest rate and monthly payments if you have multiple student loans. While it can be confusing to compare all the options for student loan refinancing, there are certain things you can do to ensure you get the best terms when funding your education.
Student loan rates.
There are two main options for student loan rates: fixed and variable. Fixed-rate loans are those that have an interest rate that doesn’t change over the life of the loan. Variable-rate loans can change if the prime rate changes or if you take advantage of any special offers made by your lender. You must compare student loan refinance rates before you make a decision.
“According to Lantern by SoFi, “Personal loan offers provided to customers on Lantern do not exceed 35.99% APR.”
Loan term.
The term of your loan is the length of time that you’ll be paying it back. It’s usually 10, 15 or 20 years, but it can be shorter if you want to pay off your loan faster. The longer the term, the lower your monthly payment will be—but more interest will also be paid overall.
Longer terms are good if you have a stable income and know that dropping out of school won’t affect any future plans (like buying a house). A longer-term loan also gives you more flexibility when it comes to repaying them since there will always be another temporary job available for anyone who needs one. If this works for you, we recommend checking out student loan refinancing companies with varying loan terms!
Loan fees.
The first set of fees you’ll need to be aware of is the origination fee. Origination fees are added to your loan balance and can cost hundreds of dollars. Fees can be paid upfront when you take out the loan—or they can be added to your balance as a lump sum at the end of the term. Other loan fees, such as processing costs, underwriting charges and document preparation fees, are usually listed on an invoice with other closing costs that student loan lenders must approve before disbursement.
Co-signer release.
Considering refinancing your student loans, checking all options makes sense. One of those options is a feature called co-signer release.
This feature allows you to remove your co-signer from the loan, which can be helpful if you want to take over the loan. But keep in mind that this option is only available on certain loans. For example, if you’re looking for an online college loan refinance with cosigner release, make sure your lender offers it before applying for refinancing.
Repayment options.
If you are unable to pay back your student loans, several repayment plans are available. The most common of these is an income-based repayment plan (IBR). In this case, your monthly payments are based on what you earn rather than your loan amount. However, the government only requires you to make payments for up to three consecutive years after graduation if you’re unemployed or working in public service positions such as teaching or healthcare.
Ultimately, it’s important to remember that deciding to refinance isn’t just about money. It can also help you get out of debt faster, which means more money in your pocket for other things.
