Student loan is offered for a students to pay their educational expenses. Students loans are often have a low interest rates. Student loans gives flexibility of time repaid to pay back these loan. Normally students have to pay back their loans after their educational peroid.
After the first student loan, students can also apply for another loan that is known as “student loan refinancing”. In student loan refinancing, there is a new interest rate. You can refinance both loans at a same time. The main advantage of refinancing is the potential to again save the money in interest over the life of the loan.
Should you Refinance your Student Loan?
To manage your payments in more effectively way, student loan refinancing is the best way for students. However, there are some important considerations before applying for student loan refinancing.
Loan forgiveness: When you obtain your student loan for the first time, it gives you a flexibility in program conditions such as Public Service Loan Forgiveness and Teacher Loan Forgiveness Program. But after the first student loan, when you apply for the refinance student loan, you will be not facilitate with these programs again. If you working in a government sector, and you want to do so for a while, once you’ve made 120 payments towards your student loan, you could qualify for loan forgiveness.
Income-driven repayment (IDR) plans: IDR plans are also a smart option for first time student loans program. Those who afford their payments are eligible for IDR plans. With the IDR plans, you can decrease your minimum payment with a longer repayment terms as per policy.
Deferment and forbearance: If you are obtaining your first time student loan, you can postpone your repayments in your difficult or serious financial hardships. For example, according to your loan agreement, you have to repay your laon on a monthly basis but due to some financial ups and downs you can’t repay every month then you can postpone your repayments of your loan. But if you refinance your student loan, you are probably not eligible to postpone your repayments of your loan.
In refinancing your student loan, the interest rate could be higher and payments could be lower. When you obtain your student loan for the first time, the federal protection offered to you with your federal student loans. But when you refinance your student loan, then you work with a private lender and you will lose your federal protection. Before refinancing your federal student loans into a new private loan, make sure that you have understand all the options that what you’re giving up. Before making this choice, discuss with your lender company about the advantages and disadvantages of refinancing the student loan. To lower your payments, you must have a reliable job, some savings and a strong credit.