Student loan refinancing is certainly an effective way to pay off all your student loans at once and even save money. But who can refinance their student loans? Unfortunately, it’s not quite as simple as you might think. You have to qualify on multiple levels before your lender is willing to refinance your student loans, which means you may not get approved just because you want to save money. This guide breaks down different types of people eligible for refinancing and helps figure out how to refinance student loans.
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People With Federal Loans
You can’t refinance Federal loans with a private lender. But, you may be able to lower your monthly payments or get out of default by consolidating your federal loans.
People With Private Loans
If you have private loans, you may be able to refinance with a private lender. According to the experts at SoFi, “This can help you get a lower interest rate or monthly payment.” However, keep in mind that if you want to refinance your federal and private student loans, it’s best to find a company that offers both types of student loan refinancing.
Borrowers With a High Loan Balance
If you have a high loan balance, you may be able to save money by refinancing your student loans. By refinancing, you can get a lower interest rate and monthly payments. To see if refinancing is right for you, calculate how much more in total interest and savings it would cost over the life of the loan.
Borrowers With a Low Credit Score
If you have a low credit score, you may still be able to qualify for student loan refinancing. Some lenders offer programs specifically for borrowers with bad credit. These loans will come with higher interest rates than those typically offered to those with better credit scores. But this might be your best option if you can’t get approved anywhere else.
Borrowers Pursuing Public Service Careers
If you pursue a career in the public service sector, you may be eligible to have your student loans forgiven after ten years. You can also refinance your loans to get a lower interest rate.
Anyone in School, at Any Level
You don’t have to wait until you’re about to graduate to refinance your student loans. You can do it as soon as you start taking out loans for school.
Working in Public Service Fields
If you work in a public service field, you may be eligible for student loan refinancing through the Public Service Loan Forgiveness (PSLF) program. To qualify, you must work for a government organization or nonprofit and make 120 qualifying payments on your loans. After ten years of qualifying payments made on time and working full-time at an eligible job, any remaining balance on your loans will be forgiven.
If you’re looking to lower your monthly payments, save money on interest, or both, student loan refinancing may be a good option. Remember that every lender has varying requirements, and it’s important to shop around before making final decisions.