Many college students fund at least a portion of their college education through student loans, and because of this, many students graduate owing tens of thousands of dollars in student loans. In many cases, students have a different loan for each semester they attended college. Debt management with eight or more different loans to pay for each month can be monstrously difficult and time-consuming. More than that, it may actually be costlier than if you consolidate student loans through refinancing. Refinancing may also allow you to lock in a lower rate for all of your loans, which can lead to faster debt reduction over time. If you are dealing with several loan payments each month, it makes sense to explore refinancing as an option.
Review Your Current Loan Terms
The first step to take when refinancing your student loans is to review each of your current loan terms. It can take time to gather all of this information if you have many loans or if your loans are with different lenders. In some cases, the information is printed on your monthly billing statement, and in other cases, you will need to call the lender to obtain the information. List your interest rate, loan term, outstanding balance and minimum monthly payment on a sheet of paper. This information will prove to be valuable later when you compare refinance loan options available.
Seek a Refinance Loan Through Your Current Lender
Many lenders who issue student loans have refinancing information on their website, and this makes it convenient to learn more about your lending options. However, with some lenders, you will be required to call to get a refinance loan quote. Then, use an online refinance calculator, such as the one provided by the U.S. Department of Education. This will help you to more easily learn how much money you can save by refinancing with your current lender.
Compare Your Quote Against Other Lenders
It may also be helpful to obtain other quotes from different lenders, and you can continue to use the online refinance calculators to analyze each quote you receive. Community banks typically offer great loan terms on student loan refinances. The community banks who do not offer student loan refinance programs may have resources that you can use to refinance more successfully. Another program to consider is the U.S. Department of Education’s Direct Loan program. This program is specifically designed to help you make paying your student loans easier. The program sets up monthly payments that gradually increase over time, and this is because your income level may gradually increase as you can real-world work experience in your career.
Work With Your Lender to Satisfy All Refinance Requirements
After you have compared all of the lending options and you have used online calculators to analyze the pros and cons of each option, you can more easily decide which refinance loan program to use. The lender you choose to work with will walk you through the loan process. Typically, you will need to complete a loan application, and your current employment status and income may be verified. Your lender may have other requirements you need to meet as well before being approved for your loan.
Verify That the Loans Have Been Paid Off
Your lender will typically handle all aspects of paying off your current loans with your new loan proceeds. However, mishaps can happen, and this may be particularly true if you have multiple loans that need to be paid off. A smart idea is to confirm that each of your loans has been paid off. You can do this online or by calling the lenders directly. You may also wait for final statements to be mailed to you from each loan.
Refinancing your student loan debt is a great option that provides you with many benefits. Through refinancing, you may obtain a lower interest rate that allows more of your payment to be applied to principal debt reduction each month. You may also be able to set up a single monthly payment that is more affordable for your budget and that is easier for you to handle than multiple loan payments. Follow these steps to begin the refinancing process, and you may soon be able to enjoy these benefits yourself.