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Student Loan Refinancing

3 Student Loan Refinancing Topics That Need a Second Look

August 4, 2016
Updated December 12, 2019

 

Many students will agree that student loans are a welcomed and often necessary part of the financial aid package when pursuing higher education – but most graduates don’t look forward to entering the repayment phase. 

 

Fortunately, student loan refinancing programs help borrowers by combining one or more federal and private student loans into a single loan with new terms – a new monthly payment amount, new repayment terms, and expectedly a lower interest rate. With the many positives of student loan refinancing — all of which may help borrowers save money during their repayment period — there are also some lesser-known topics that borrowers should always keep in mind when researching their refinancing options. Here are three things to never overlook when thinking about refinancing your student loans.

 

1. Always Research the Best Options:

Student loan refinancing programs should be given just as much consideration as the school in which you attended when said loans were created. Like choosing the wrong school, selecting the wrong refinancing program can be detrimental. Simply put, performing an internet search for “student loan refinancing” is not enough to obtain the terms needed to save money. You should thoroughly compare student loan refinancing lenders. There are hundreds of financial institutions, and with so many programs to consider, it is extremely important to find a program that is going to work for you and your budget. The best way for you to ensure that the lending institution is leading you in the right direction — and doing what is right for you and your budget — is to do research and ask questions. 

 

Start by making sure you understand the repayment terminology, and then investigate the company. Look for reviews (Trustpilot is a great resource for reviews) and call the lending institution to ask questions. At the very least, lenders must be credible and reputable, but they should also be available to thoroughly answer all of your questions. Finally, if you choose to refinance your loans, make sure you understand exactly what you have to gain or lose with each. Do this, and you are on your way to protecting your wallet and your financial independence.

 

2. Always Weigh the Implications of Refinancing Federal Student Loans:

Refinancing student loans with a private lender involves student loan consolidation, which means multiple student loans (federal and private) are combined into a single loan, with a single monthly payment. This newly refinanced student loan will have new terms, a potentially lower interest rate, a new monthly payment amount, and/or a new repayment length. See the benefits of refinancing student loans here

 

Before this process takes place, however, it is especially important to understand exactly what changes will take place if you choose to include any or all of your federal loans into the refinancing package, as refinancing a federal loan may nullify federal student loan protections, such as public service forgiveness and income-based repayment plans. With this in mind, and given that many private lenders are willing to offer similar benefits to help their clients remain in good standing, some people still choose to include federal loans in the refinanced package simply to create a single, more convenient repayment plan.

 

3. Always Compare Fixed and Variable Interest Rates:

When considering student loan refinancing, borrowers commonly forget to compare their options regarding the two types of interest rates on loans — fixed interest and variable interest rates.

  • Variable rates change over time based on current financial and economic conditions, including the current LIBOR rate. They can do so at any time in the financial climate, thereby affecting the interest applied to a loan. Variable interest rates will often start lower than fixed interest rates, but there is always the possibility that, as they fluctuate, they will rise and cause an increase in monthly payments.
  • Fixed rates, on the other hand, maintain the interest rate that was agreed upon in the initial contract, and remain at that rate over the life of the loan. With a fixed-rate loan, borrowers are protected against the possibility of rising interest rates during the entire repayment period.

 

Choose the Right Program

Finding the right student loan refinancing program (along with agreeable terms and rates) can be time-consuming and daunting, especially for first-time refinancers. However, understanding your options is the best way to obtain a firm grasp on your finances and find the best refinancing loan possible. If you need any assistance, Education Loan Finance’s refinancing experts and management team — with over thirty years of experience in the student loan industry — will gladly help!*

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

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2020-07-02
Should You Keep Paying Federal Student Loans During CARES Act Suspensions?

You probably already know that the CARES Act has suspended Federal student loan payments for the time being. Until September 30th, you aren’t required to make payments, and the interest rate of your loans is set to 0%. This is primarily to help those with student loans who are struggling during these uncertain times. If your student loans are in forbearance due to the CARES Act suspensions, you have several repayment options based on your financial goals.

 

Option 1: Take Advantage of That 0% Interest

Normally, when making extra payments on student loans, your money is first attributed to any collections charges or late fees, then to accrued interest, then to the principal itself.

 

With the current 0% interest rates, however, if your account doesn’t have any fees or charges, you’ll save some money at that step. The more you can reduce your principal balance, the more money you’ll save over time in interest.

 

For example, let’s say you have $25,000 in student loans at a 4% interest rate and you want to pay it off in the next 10 years. Over that period, you accrue $5,373.54 in interest. However, if you take advantage of the CARES Act 0% interest, you can change the course of your repayment.

 

For instance, if you continue to pay your student loans during this period, the payments will be attributed straight to principal and will save you about $300 in accrued interest over the course of your repayment.

 

Option 2: Wait Until September And Resume Payments

If the coronavirus has affected your finances, don’t worry about paying down your student loans too quickly. Instead, use this time to get your other debts under control. Focus on paying back higher interest rate debt, like credit card debt, which will impact your long-term financial health.

 

Option 3: Refinance and Take Advantage of Low Interest Rates

During this time, many student loan refinancing companies are offering low interest rates. If you’re locked into an unfavorable rate, this would be a great time to consider refinancing student loans to save on interest costs.

 

This is an especially great option for borrowers with private loans, as these types of loans aren’t currently receiving any type of federal forbearance benefit. For a personalized look at how refinancing could improve your financial health, check out the ELFI Student Loan Refinancing Calculator.*

 

So, should you keep paying federal student loans during the CARES Act suspensions? The answer depends on your unique goals. Whether you choose to pay your federal loans, take care of other expenses, or refinance your student loans, this is a great opportunity to eliminate some additional debt before the September 30 deadline. Happy saving!

 
 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

student loan news
2020-06-18
This Week in Student Loans: June 18, 2020

Please note: Education Loan Finance does not endorse or take positions on any political matters that are mentioned. Our weekly summary is for informational purposes only and is solely intended to bring relevant news to our readers.

  This week in student loans:
photo saying legislation

NAACP And 60 Other Groups Call On Congress To Cancel Student Debt

After the federal government has provided student loan relief to all federal student loan borrowers through the CARES Act, a coalition of over 60 organizations including the NAACP, American Federation of Teachers, and the National Consumer Law Center are now calling Congress to cancel student loan debt altogether in their next stimulus package.  

Source: Forbes

 

low rates on federal student loans

Student Loans: 3 Ways To Get A Lower Interest Rate

This Forbes article lays out the three ways to get a lower interest rate on your student loans, covering options such as refinancing, borrowing a new student loan, or even switching to a variable rate loan.  

Source: Forbes

 

question mark

How to Pay Off Student Loans When You’re Broke

With many individuals struggling to pay off their student loans due to lack or income or overwhelming expenses, this Fox Business article lays out options for paying down student debt when faced with difficult financial circumstances.  

Source: Fox Business

 

student debt in america

How Student Loans Became a $1.6 Trillion Problem

With the cost of college increasing almost 25% in the past decade and total student loan debt reaching $1.6 trillion, this CNBC video offers a historical view of the path the U.S. took to arrive at this state.  

Source: CNBC

    That wraps things up for this week! Follow us on FacebookInstagramTwitter, or LinkedIn for more news about student loans, refinancing, and achieving financial freedom.  
 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

2020-06-17
Should You Prequalify With Multiple Student Loan Refinancing Lenders?

Depending on what kind of student loans you have, you could be stuck with high interest rates. For example, federal Grad PLUS Loans are currently at 7.08%. At such a high rate, you could end up paying thousands in interest charges.    By Kat Tretina   Refinancing your student loans can help you save money, but you should think twice before submitting a full loan application with multiple lenders. According to myFICO, the organization behind the FICO credit score, each hard credit inquiry can drop your credit score by up to five points.    Submitting several loan applications isn’t wise, but should you prequalify with multiple student loan refinancing lenders? Absolutely! By rate shopping with just a soft credit check, you can ensure you get the best deal.   

How student loan refinancing works

With student loan refinancing, you apply for a loan with a lender like Education Loan Finance for the amount of existing education debt you have, including federal and private student loans. The new loan has completely different terms than the old debt, including the interest rate and term length, and you use it to pay off the other loans. Moving forward, you have just one loan to manage with only one easy monthly payment.    What’s the advantage? With good credit — or with a parent, relative, or friend with good credit who acts as a cosigner — you can qualify for a loan with a lower interest rate. Over the course of your loan repayment, you can save a substantial amount of money by refinancing your debt.    For example, say you graduated from graduate school with $35,000 in PLUS Loans at 7.08% interest. If you made the minimum payments on a 10-year repayment term, you’d pay $13,939 in interest charges.    If you refinanced your loans and were willing to shorten the loan term to seven years, you could qualify for a 4% interest rate. You’d have a slightly higher monthly payment, but you’d be debt-free three years earlier. And, you’d pay just $5,186 in interest charges. By refinancing your loans, you’d save over $8,000. That’s a significant amount of savings you could put toward other goals, like building an emergency fund, buying a home, or starting a retirement nest egg.   Chart displaying the repayment examples for an original loan and refinanced loan, showing monthly payments, total interest paid, and total repaid.
Note: Figures are rounded to the nearest whole dollar.
  Use the student loan refinance calculator to find out how much you could save.*   

What is loan prequalification? 

With private loans, lenders decide whether or not you qualify for a loan — and determine your interest rate — based on your credit, income, and other factors.   Lenders often list a range of interest rates on their websites. While the lowest rates are tempting, you may not qualify for the lowest advertised rates.  The lender’s advertised lowest rates aren’t an indication of what rates you’ll actually get.    Only a select number of borrowers will qualify for the best terms. The lowest interest rates are typically reserved for candidates with the highest credit scores who opt for the shortest loan terms.   To give you a real idea of what rate to expect, some student loan refinancing lenders — like Education Loan Finance — offer prequalification tools. By entering basic information about yourself, you can get a rate quote without undergoing a hard credit inquiry. You can see what rates and loan terms you’d qualify for before submitting a full loan application.   

Should you prequalify with multiple student loan refinancing lenders? 

When you refinance student loans, rates and terms can vary widely from lender to lender. Some things to keep in mind when shopping around include: 
  • Interest rates: Your interest rate will have the biggest impact on your total repayment. When rate shopping, pay attention to the total APR to see what you’ll repay over the life of your loan. 
  • Rate type: While some lenders only offer fixed interest rates, which stay the same for the entire repayment period, other lenders also offer variable-rate loans. Variable interest rates often start off very low but can fluctuate over time. Education Loan Finance has both fixed and variable-rate loans.*
  • Loan term length: The shorter the loan length, the lower your interest rate. However, a shorter loan term also means a higher monthly payment. Depending on the lender, your loan term could range from five to 20 years.
  • Hardship policies: Not all lenders offer forbearance, so double-check the lender’s economic hardship policies. With Education Loan Finance, you may be eligible for up to 12 months of forbearance if you lose your job or face another financial emergency. 
  • Customer service: The quality of customer support is important as you make payments and have questions. ELFI has an award-winning customer service team and a 4.9 rating on TrustPilot.
There’s no downside to shopping around. With loan prequalification, there’s no impact on your credit, so you can get several rate quotes and find the best rates and loan terms for your situation.   Use the Find My Rate tool to get personalized rates without impacting your credit score.*   
  *Subject to credit approval. Terms and conditions apply.   Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.