Not everyone is eligible for a student loan refinance. You may need to have a college degree, good credit, and a good stable income that will allow you to pay your expenses and pay off your debts without straining your finances. If you meet these conditions, the sooner you refinance your student loan, the better for you. As soon as you have a good credit rating and have a stable income, student loan refinancing can help you get a lower rate, save you money.
You must first of all consider your student loan refinancing in the following situations:
When the economy makes a significant difference
It is never the right time. Don’t put off refinancing your student loan until you have the perfect credit score. It will be fair to refinance as long as you can get better rates than your current rates. Bonus Tip: Some lenders offer student loan refinancing bonuses that would save you a lot more money.
When you have private student loans
You may not have much to lose if you refinance your private student loan because they are not eligible for federal loan programs.
When your student loans have significantly high variable rates
It is difficult to predict payments for variable rate loans. In fact, even low variable rate loans can get much more expensive on repayment. Don’t wait for the money to rise – consider refinancing these student loans to make sure you lock in a fixed rate.
When the pricing environment is strong
Depending on economic factors, such as rising and falling Federal Reserve rates, the refinancing rates for fixed and variable private loans can be significantly altered. You should take this opportunity to refinance your student loans when rates are lowered.
When your finances are strong
Refinancing may not make much sense immediately after you graduate. However, you should definitely consider refinancing your student loan if your finances have improved significantly.
If you had refinanced before and just wiped out credit card debt or got a raise, now you can get better rates. You can refinance your student loan as often as you can.
When you save a lot of money
You don’t have to force yourself to refinance the student loan if you don’t pay less interest.
However, you cannot or should not refinance your student loan if:
You are already serving federal loans
When you already have federal loans, you can end up having a significant drop in your income if you refinance your student loans. If your income is likely to be affected by other factors such as the coronavirus, do not refinance your student loans. You will not take advantage of federal loan relief options and government programs such as income tested.
You are looking for a student loan discount.
By refinancing your student loans, you are not eligible for federal loan programs such as Teacher Loan Forgiveness and Public Service Loan Forgiveness.
You recently declared bankruptcy
You may be able to refinance your student loan even after you have filed for bankruptcy, but it is difficult to do so. Most lenders take 4-10 years to pass after you file for bankruptcy
You recently defaulted on a student loan
Your default history is definitely a red flag for lenders. The default is cleared from your credit report after 7 years, which again qualifies you for refinancing, provided you meet the conditions including credit and income
You will take longer to repay your loans
If you refinance with a low monthly payment, you will attract more interest because you will have a longer loan repayment time.
Sometimes, it’s a good idea to refinance your student loan as soon as you meet the conditions. However, there are several factors that may cause you to reconsider your decision to refinance. When you qualify for student loan refinancing, check out the benefits you are likely to enjoy rather than blindly refinancing. For more information on student loan refinancing, please do not hesitate to contact us. Our team is always willing, ready and happy to help.