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Knowledge Hub / Helping Your Child Refinance Their Student Loans
Helping Your Child Refinance Their Student Loans

Helping Your Child Refinance Their Student Loans

Living with Student Loans
ELFI | January 28, 2020
Helping Your Child Refinance Their Student Loans

As a parent, it can be frustrating to watch your child pay so much toward their student loans each month rather than use their money to buy a home or invest for their futures. One strategy your children can use to accelerate their debt repayment and reach their goals faster is student loan refinancing. With this approach, they can get a lower interest rate and save money over the length of their loan.

If they don’t know where to start or how to go about refinancing student loans, there are several ways parents can help.

1. Research different lenders

There are dozens of student loan refinancing companies out there, but they’re very different from one another. Help your child find the best lender for them by considering the following factors:

2. Look up their student loans

To pay for school, your child likely took out several different student loans. Over time, those loans can be transferred and sold, making it easy to lose track of them. To help your child refinance their student loan debt, help them locate their loans and identify their loan servicers.

3. Create a monthly budget with your child

Even if your child earns a good salary and has excellent future earning potential, it’s a good idea for them to come up with a budget before moving forward with the student loan refinancing process. By seeing how much they have coming in and how much they spend each month, they can better come up with a plan to repay their loans.

You can sit down with your child and make a budget together. While you can use paper and pen, your child may find programs like Mint or You Need a Budget — which automatically sync with their financial accounts — more intuitive.

Make sure your child considers all of their expenses, including rent, utilities, student loan payments, and extras for entertainment. A portion of the money left over after covering their set expenses can be put toward additional student loan payments, reducing the interest that accrues over the length of the loan.

If your child wants to pay off their debt as quickly as possible, there are a few lifestyle changes you can suggest to help them reach their goals: 

4. Show them how to check their credit report

When your child applies for a refinancing loan, the lenders will review their credit report. Before your child submits an application, help them check their credit.

Your child can view their credit report from each of the three major credit bureaus — Experian, Equifax, and TransUnion — once a year at AnnualCreditReport.com. Review it alongside your child and look for errors, such as accounts that don’t belong to your child. If there are any issues, help your child dispute them with each credit bureau to improve their credit report.

5. Co-sign their student loan refinancing application

If your child recently graduated, they may have insufficient credit to qualify for a student loan refinancing by themselves. If that’s the case, you can help them manage their debt by acting as a co-signer on the loan.

As a co-signer, you’re applying for the loan along with your child. If your child can’t keep up with the payments, you’ll be liable for them, instead. Because you share responsibility for the loan, there’s less risk to the lender. Having a co-signer makes it more likely that a lender will approve your child for a loan, and give them a competitive interest rate.

Refinancing student loans

Student loan refinancing can be a smart way for your child to tackle their debt. However, recent graduates may not be aware of refinancing or how to proceed. As a parent, you can help your child tackle their debt by walking them through the refinancing process. With your help, they can refinance their education loans and become debt-free years earlier than expected.

Looking for more tips as a parent of a college graduate? If you took out student loans in your own name to help pay for your child’s education, parent student loan refinancing can be a smart strategy for you, too. With Education Loan Finance, you can refinance as little as $15,000 in parent loans and have up to 10 years to repay the loan.*


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