The cost of attending a state or public university can easily reach $10,000 or more per year. Students who choose private institutes often pay much more. While they can use financial aid to pay some of their costs, it’s rare for a student to graduate today without taking out at least one loan. Graduates often have a hard time paying off their loans because they have so many other expenses like rent and car payments. One way they can get more money back into their pockets is with loan refinancing. Anyone with student loans can determine whether refinancing will help them and how to refinance their loans.
Borrowers should look at several factors to decide if they should refinance their loans. First, they need to look at how much time they have left in their loans and the type of loans they have. Refinancing larger loans can reduce the monthly payments but extend the time it takes to pay them off. According to Lantern by SoFi, refinancing student loans in today’s market can prevent borrowers from using some of the special programs and protection offered by the federal government. This includes repayment plans based on their incomes and programs that let them pause their payments.
Anyone who wants to refinance their college loans should ensure they have all the required information. Lenders need to know the borrower’s name and address, how much debt they have, and the college or university they attended. Sometimes, the borrower may find that the government forgave some of their loans. This often happens if they attended or graduated from a school that lost its accreditation. Lenders will also pay attention to the borrower’s information, such as if they own or rent a home, how much they pay for it, and how much they make.
Borrowers must compare rates to see both how much they can save and how much they will need to pay. For example, someone who owes $35,000 and qualifies for a 3.5 percent interest rate will pay $637 monthly and just over $3,200 in interest. They can also pay off their loan in just five years. For example, a borrower with $35,000 in student loans who want to pay them off in 20 years can qualify for an interest rate of 6.5 percent. They pay only $261 a month but pay more than $27,000 in additional interest.
Using a Calculator
A student loan calculator is the best way to check rates when refinancing student loans. It asks for basic information such as the amount left on the loan and the current interest rate the borrower has. The calculator then shows the person what interest rates they can get and how much they will pay in interest along with their monthly payments.
Millions of people in the country have student loans, some of whom cannot afford to pay them. Refinancing is an excellent way to pay off those loans with affordable monthly rates with a new lender.