According to a recent survey conducted by LendEDU, graduates don’t know much about their student loans; only 6.1% of the 477 students surveyed knew their repayment terms. What’s even more surprising (especially considering that 37% of the students surveyed felt they would not be able to repay their loans), is that 96.02% didn’t even know that they could refinance their loans. Myths about student loan repayment, and a general lack of knowledge about the options available are a dangerous combination threatening the financial future of graduates.
The interest rates for many student loans, particularly private loans, are pretty steep. If you qualify, refinancing can be a great way to lower the interest rates which you’re currently paying. The methods of doing this vary depending on the loans you have, as well as your financial circumstances. Refinancing can be an excellent option, but it’s important to get the facts since every situation is different.
How to Know if it’s Right for You
When considering student loan refinancing, you must be well informed about your current loans and options to be sure it will be beneficial for you. For instance, the only way federal loans can be refinanced is through consolidation, which involves combining several loans into one. This typically means keeping the highest interest rate of your previous loans, so it often isn’t a good move on the part of the borrower.
There are two instances where you should seriously consider refinancing your student loans. If your current interest rates are sky-high, you’ll save a substantial amount of money over the time of the loan. However, this option will involve reducing your repayment schedule. If you’re in a financial position that allows for you to pay more each month, this is a viable option. Refinancing is also recommended if you meet the lender’s criteria for financial stability. If you’ve got solid credit, or your co-signer does, that will sit well with the lender. Lenders consider your credit score, income and debts when determining your refinancing options. If your credit score is above 690, and your income suggests you are capable of repaying any debts, you’re in good shape.
Refinancing can be a great option, but it isn’t the only alternative for people struggling to repay student loans. For some borrowers, especially those who have filed or are considering filing for bankruptcy, discharging loans may be the best recourse. If this sounds like you, it’s in your best interest to seek out an experienced bankruptcy attorney before proceeding. Contact the West Palm Beach bankruptcy attorneys at Kelley & Fulton to learn more.