Private and Federal Student Loan Refinancing

By Sam Ferdi

Refinancing Student Loans

Refinancing or Consolidating your Student Loan.

If you can’t meet your monthly payments or you want to take advantage of better market conditions you may want to take a student loan refinancing program. By refinancing you’ll take a loan in order to cancel previous debt. When a single loan is used to repay more than one loan or other debt, the process is known as consolidating. By refinancing or consolidating student debt you can save thousands of dollars on interests.

Refinancing your student loans can prove to be very beneficial to you and your financial situation. It can save you money right now, as well as in the future. It could lower your interest rate and even lower the amount you pay each month into your student loans. You can refinance through a bank or lender.

There are basically two types of Student Loans:

• Federal loans are based on the financial need of the applicant [student] and are backed by the US government. Federal Loans carry, as regular loans, capital and interests. Though the interest rate charged is lower than private loans, so is the loan amount. Otherwise the interest, though present, is deferred till after graduation.
• Private loans are personal consumer loans. Private loans are based on the credit history of the student or the student’s parents or guardians. Private student loans have higher interest rates but you can request higher loan amounts. There are mainly two types of private student loans: Secured Student Loans and Unsecured Student Loans. Unsecured Student Loans are generally requested by student themselves and do not require collateral in order to be approved.

Private loans and federal loans cannot be combined when refinancing

Those who have both types of education loans will need to secure two different consolidation loans. It’s best to consolidate federal education loans first and then start the process of consolidating your private education loans. You can however, consolidate federal subsidized and unsubsidized loans together

Just as in other refinances, the main aim of student loan refinancing is to reduce monthly payments to the lender.

Most student loans allow monthly repayments that stretch over 12-30 years, usually, and come due after the student graduates from the program or the course for which the loan was sought. The longer the period of repayment, more expensive it turns out to be. . There are numerous instances where students have saved thousands of dollars in interest.

On-line research.

Researching lenders online by using search terms such as “”student loan refinance,” or “consolidating student loans,” allows you to build a side-by-side comparison of potential lenders and the benefits and savings offered by each.

Most internet-savvy student loan refinancing companies give you the opportunity to log in and see the status of your application as it travels through the loan process.