Savings Tips / Student Loans / Refinancing

Should You Refinance Your Student Loans?

Words by Abbie Dyer on Dec 21, 2021 1:57:21 PM

Investing in your education, your future, and your dreams is always a smart choice. If you have student loans, maybe now it’s time to consider another smart option to help you pay them back. Refinancing your student loans could be a great option to help you save a little more each month.1 Learn more about what it means to refinance to decide if this is the right financial move for you.

Think of refinancing as a rewrite of your current loan(s). You’ll need to apply for a refinance2, just like you had to apply for your original student loans. We, and our partners at Student Choice, will then look at the amount you currently owe on your student loans and see if you qualify for a lower interest rate or a new loan term (the amount of time you have to pay back a loan). If you have loans with multiple lenders, you may be able to combine all of these loans into one easy monthly payment when you refinance. After you close your refinanced loan, you’ll make your new payments with to our loan servicer.

Here are a few reasons you should consider refinancing your student loans today.

You could lower your monthly payment.

Interest rates are always changing, so you may qualify for a lower rate than you did when you originally took out your loan. And getting a lower interest rate could lower your monthly student loan payment and help you save money over the life of your loan.1 You can use a student loan refinance calculator2 to see how your payment amount might change with a new interest rate on either a fixed- or variable-rate loan. You’ll also get a better idea of how much you can save over the life of your loan by refinancing. An interest rate decrease of even one percent can make a big impact!

Extending your loan term when you refinance could also help you get a lower monthly payment. Just keep in mind that you may pay more money in interest over the life of your loan if you extend your loan term.

You could make one payment.

When you refinance your loans, you may have the opportunity to consolidate multiple loans into one monthly payment. So instead of trying to remember to make multiple payments to multiple lenders, you’ll only have to make one easy payment. This is an especially great option if you can get a lower interest rate.

You want your loans in your name.

If you didn’t have a lot of credit history when you took out your student loans, you may have needed a parent or other relative to sign on the loan with you as a co-borrower. Or your parents may have taken out a Federal Parent PLUS loan in their own name to help you pay for school.

Now that you’re done with school, you may want to refinance your student loans (if there is no co-borrower release option) so your loans are only in your name. By doing this, your loan payments will count toward your credit history. Making full, on-time payments can help increase your credit score, which may make it easier to get other types of loans in the future.

Other factors to consider. 

The Biden administration recently announced several measures related to federal student loan repayment and possible debt cancellation. If you have federal student loans, we encourage you to contact your federal student loan servicer to learn more or visit studentaid.gov/coronavirus2 for more information.

Ready to get started?

College can open the door to new possibilities. Helping you achieve your dreams. And find a new passion. But the price of paying back college expenses can make it difficult to achieve your other goals. Refinancing your student loans may help you achieve these goals sooner. Let’s work together.

SEE ALSO: 7 Easy Ideas To Help You Reach Your Savings Goals Factors That Affect Your Credit Score

 

This post was previously published on December 21, 2021 and then updated on December 23, 2022. 

 

1IMPORTANT NOTICE :Federal loans offer certain benefits and protections that do not transfer to a private loan. If you refinance some or all of your federal student loans into a private student loan with a credit union, you will lose access to any current and/or future federal student loan benefits, such as potential debt cancellation or income-driven repayment options. With the August 2022 announcement from the Biden administration, it’s more important than ever to evaluate your options if you have federal student loans so that you can make educated decisions. Make sure to explore all available resources by visiting the Department of Education’s website at www.studentaid.gov or contacting your federal student loan servicer to understand how any federal student loan proposals may impact you, so that you can determine if having access to federal student loan benefits outweigh the benefits of refinancing your loans. All loans subject to credit qualification and additional criteria, including graduating from an approved school. You may qualify for a Federal Direct Consolidation Loan. For additional information about a consolidation option for federal loans, contact the Department of Education at http://studentloans.gov/.2 See Important Disclosures | Lake Trust CU2 for more details.

 

2Third party website. Lake Trust Credit Union is not responsible for the content, availability, security or compliance of any linked third party websites. In addition, the site's privacy policies may differ from those of Lake Trust.

 

 

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