What You Need to Know Before Refinancing Student Loans

roll of money with graduation cap on topIf you are considering refinancing your student loans, it is important to understand what you are getting yourself into before signing on the dotted line. Below are a few tips regarding the information you want to obtain from the lender before refinancing your loan:

  • Term of the loan. Banks generally offer a variety of different terms for refinancing student loans ranging from 5 to 20 years. It is important to remember that while a longer term may mean a lower monthly payment, it also means you will pay more interest and a larger amount of money over the lifetime of the loan.
  • Interest rate. Loans will either have a fixed or variable interest rate. Variable interest rates tend to be riskier because the rate fluctuates with economic conditions, while a fixed interest rate remains the same for the life of the loan.
  • Terms. You need to be fully informed of the terms of the loan, including when your payments are due, the amount of your monthly payments, consequences of missing a payment, and what happens if your student loan goes into default. You also want to ask if there is an origination fee, which is typically a percentage of the total amount of the loan.
  • Cosigners. If your credit score is too low to qualify for refinancing the loan, the lender may require you to obtain a cosigner for your student loan. You may also be able to release a cosigner on your former loan.
  • Customer service. You should ask the bank or other lender what type of customer service it provides to its borrowers. Remember, you will be working with this lender for several years, so it is important that the lenderbe there to assist you when you need it.

Please keep in mind that every student loan matter is different. If you have questions about your student loan debt and you would like to schedule a no-cost consultation to discuss your options, please contact our office by completing the form on this website or calling us at (954) 280-5066.

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