Refinancing student loans can be a great way to save money on interest and get a lower monthly payment; refinancing is also referred to as consolidating student loans. If you took loans out for college, chances are you have a number of different loans in varying amounts with different interest rates, possibly even from various financial institutions. Choosing to refinance student loans can help to get all of those loans in one place with one interest rate, meaning you will only need to make one monthly payment. It is a fairly simple process to refinance student loans, and just requires an application process.
Before you refinance student loans, begin by researching various banks and financial institutions to determine interest rates, and if it is even possible to consolidate the loans you have. It may not be possible to consolidate private and federal student loans together, for example. Once you have found a consolidation loan with a low, fixed interest rate, begin the application process; this will typically just require your basic identifying information, as well as all the information about your existing student loans, such as amount, interest rates, and account numbers.
If you have good credit, you may choose to refinance student loans on your own. Getting a parent or spouse to cosign the loan, however, can help you to get a lower interest rate, particularly if they have good credit. Keep in mind that consolidating the loan can make it take longer to pay off the loan, but usually you will still save money on interest rates by only paying interest on one large loan rather than a number of smaller loans. Usually, there aren't many fees associated with refinancing student loans, but be sure to research this ahead of time as well and determine if it will actually be advantageous to refinance student loans.
Once you have been approved for the consolidation loan, payment will generally be due immediately. Some lenders will offer income sensitive repayment plans when you refinance student loans, which may be something to consider as well. Though it may be tempting to make interest-only payments to keep the payments lower, keep in mind that this will exponentially increase the time it will take you to pay off the loan. Finally, keep in mind that the interest you pay on student loans is tax deductible, so be sure to remember this when you are doing your taxes at the end of the year, and to keep thorough records.
