If you’ve been paying down your student loans for a few years, it’s time to take a look at how much money you’re saving or losing with each monthly payment. So, you might be able to make some changes that could save you thousands of dollars over the life of your loan—even if it means taking out a new loan altogether. Here they are sharing why comparing student loan refinance rates is important:
To Save Money
As a student, you know the importance of saving money. After all, college is expensive, and you are likely to pay more each month than your parents did in their entire lives.
Refinancing school loans with a lower interest rate is one way to save money by reducing what you pay in interest each month on your loan payments. As such, comparing different refinancing offers is one of the best ways to ensure potential savings when refilling your student loans at a new lender or servicer.
To Lower Your Monthly Payments
If you have federal or private student loans and are looking for ways to lower your monthly payments, refinancing is one of the most effective ways. Refinancing lets you consolidate your current loans into one new loan with a lower interest rate.
This helps lower your monthly payments since the new loan charges a higher interest rate than your current loans, increasing how much money goes toward paying off that principal balance each month.
To Change Your Loan Term
To change your loan term, you must be able to afford the monthly payments for each loan. If you are unsure how much you can afford, try using a student loan calculator. This will allow you to enter your income and expenses and other information about loans and credit reports.
When comparing different terms for refinancing your college debt, remember that shorter terms usually mean higher interest rates, and longer terms usually mean lower interest rates. However, this is only sometimes true because some lenders may offer lower rates on longer terms or vice versa.
To Switch to a Different Type of Loan
You can also switch from a federal loan to a private loan or vice versa.
- If you have been borrowing unsubsidized loans and would like to switch to subsidized loans, you can compare your options and select the one that suits your needs better.
- Suppose you are currently repaying a fixed-rate loan. In that case, it may be wise to consider an adjustable-rate option that offers lower monthly payments in exchange for higher interest rates over time. This way, once your credit score improves after graduation or employment as an established professional with steady income begins (and thus increases), switching back should be easy enough.
To Qualify for Public Service Loan Forgiveness
Public Service Loan Forgiveness (PSLF) is a federal program that forgives federal student loans for borrowers who work in public service. Congress introduced it to encourage individuals to enter or continue working in government, non-profit and other qualifying organizations.
Students must make 120 monthly payments on an eligible loan while employed full-time at an eligible organization to qualify. Only direct federal loans qualify. “To check the rates and terms you may qualify for, Lantern by SoFi conducts a soft credit pull.”
The bottom line is that comparing school loan refinance rates is always a good idea. You never know when you might find a better deal—and if there’s one thing you know, it’s that life is too short not to save money!