Refinancing for Student Loans

Refinancing is a term most associated with mortgage payments on homes, but now refinancing is involving student loans.

Refinancing student loans will essentially save borrowers money; that is the goal. However, one needs to qualify to refinance first, and most student loan debtors are not eligible. Refinancing student loans requires a high credit score and a steady income from applicants.

For those who do qualify for refinancing of their student loans, a lot of private lenders offer refinancing at low interest rates, thereby lowering their payment. This gives borrowers a financial boost and a good way to begin buying a home or starting their own business. However, those who do choose to refinance federal student loans with private lenders are at risk of losing the federal repayment options that come with government student loans. Private refinancing does not give you any protection for income-based repayments or forbearance in case of emergency. These are all risks anyone thinking of refinancing student loans should be aware of before they choose to refinance with a private lender.

Refinancing student loans is a way to get ahead financially, and not recommended for borrowers struggling to make payments on debt. If you are a borrower who does not qualify for refinancing, work on improving your credit score by making regular, on time payments. Also if your debt situation is looking bleak, contact an attorney who can lead you in the right direction that will help you become financially stable.

Work Cited:

Paquette, D. (2014, October 15). Student loan refinancing will save you money - if you don't actually need it. The Washington Post. Retrieved October 17, 2014, from http://www.washingtonpost.com/news/storyline/wp/2014/10/15/student-loan-refinancing-will-save-you-money-if-you-dont-actually-need-it/