How to Refinance Student Loans with a Lower Interest Rate

Student Loan Help

How to Refinance Student Loans with a Lower Interest Rate 

All graduates have a few common goals: end their academic career on a high-note, get a profitable job, start down the road to a rewarding career, and cut financial corners wherever possible to make ends meet until they reach their goals. Of course, there are several ways in which to save money. However, with the current questionable state of our economy, people’s purse strings are pulled tighter than ever. One of the best ways for recent graduates, or even individuals whom have long since bid farewell to their alma mater, to save money is for them to refinance student loans with a lower interest rate.

Why Should I Refinance Student Loans with a Lower Interest Rate?

Many graduates often wonder if they should refinance student loans with a lower interest rate. How will I benefit? Is this the best course of action for my financial situation? Do I qualify? How do I begin the refinancing process? These are just a few of the concerns expressed by many of the young and mature graduates who are experiencing financial difficulties.

To refinance student loans with a lower interest rate results in several benefits:

  1. Lower Monthly Payment – the most obvious reason to refinance student loans with a lower interest rate is to save money in the short-term; refinancing lowers the amount an individual will pay each month, thereby reducing the amount of financial burden during slow economic times.
  2. Combine Multiple Loans – refinancing options usually include combining all of an individual’s applicable loans into a single account; not only does this reduce the number of creditors in which a person must remain in good standing, it also allows for a single monthly payment instead of several installments spread throughout the month.
  3. Less Paperwork – having five or six loans combined under one loan provider will greatly reduce the amount of time and effort needed to accurately maintain financial records.

How to Begin the Refinancing Process

In order to refinance student loans with a lower interest rate, one must determine if he meets certain qualifications. Depending upon the institution with which a borrower wishes to refinance, there are different requirements and stipulations he must meet before he can be considered for their respective programs. Most lenders have two basic requirements: all loans must be currently in repayment (no in-school or grace period loans) and have a minimum balance. The required minimum balance will vary across institutions, so be sure to contact your chosen lender to determine if your loans qualify.

How are Payments Actually Lowered?

Lenders typically will refinance student loans with a lower interest rate in order to ease financial stress on the borrower, but borrowers also have the option to extend their repayment duration in order to lower payments. Most graduates opt to simply refinance instead of lengthening their repayment time frame since this results in less repaid monies in the long run.

Refinancing works for most borrowers since it combines all chosen loans under one lower interest rate repayment plan; this allows borrowers to leave low-interest loans as is, while combining higher-interest loans under a lower interest rate plan.

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