Student Loan Refinancing
Is student loan refinancing something you should consider?
If you have taken out student loans to help pay your way through college, depending on the loan you may have not had to make payments on it until 6 months after you graduated.
The problem is it's not always easy to find a job that soon, particularly one in your field that pays well. So if you are having trouble paying these loans, student loan refinancing might be something you should consider.
With college tuition and other expenses reaching upwards of $60,000; taking out a student loan was likely a necessity. But the reality is once the payments become due, it's not always easy to fit them in your budget.
I know my niece and her husband both have massive student loan debt but have thus far elected to bite the bullet and pay what they can. Since you can take up to 10 years to pay back your loan, that helps, but if the interest rate is 5 to 8 percent, that could be a problem.
Advantage of Student Loan Refinancing
The advantage is that you may be able to lower your interest rate significantly; thereby saving thousands of dollars over the term of the loan or loans.
In some cases, undergraduate students take out a student loan called a Parent Loan, it is called PLUS (Parent Loan to Undergraduate Students). The PLUS loan payments are not deferred, and the payments start two months after they take out the loan.
The interest rate can be quite high, so without a doubt there may come a time when it is more to your advantage to seek out refinancing.
Your credit rating is simply too important to ruin it by not meeting your obligations. But before you go to a lender and ask about student loan refinancing, you need to get a copy of your credit report. If you have any unpaid bills that are headed for collection, you must get them paid before a negative mark is put on your credit history.
The reason for this is when you apply for refinancing, your interest rates will likely be determined by your credit rating. It it is not good, you may not get a interest rate lower than your current loan. So this may defeat your purpose to refinance in the first place.
Student loan refinancing just might make a difference between whether you are able to pay your bills or whether you are headed to financial ruin. It makes sense to investigate either refinancing your loan or, if more than 1, consolidating them, and it certainly makes sense to shop around for the best terms.
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