Refinancing A Consolidated Student Loan – Refinance Student Loans

By | August 16, 2013

Refinance student loans means refinancing student loans that have already been consolidated is possible if there’s a decrease in interest rates. However, the chances of refinancing it will depend on the type of loan you have. If the type you have right now is the private student loan, then you can only refinance student loans after all of your loans have been consolidated. On the other hand, if you have the federal student loan, refinancing it is possible once new funds are added into it. If you have both of these loans, consolidating and refinancing them separately will be your best option, otherwise, your federal loan will be treated as a private one and you will lose all of the benefits you can get from your federal loan.

Remember that you cannot consolidate federal loan with private loan when you refinance student loans.

If there is one thing good about refinancing a consolidated student loan, that is helping you get a hold of an interest rate that is comparably lower than the rest. Before refinancing your consolidated student loan, you need to make sure that all of your student loan accounts are closed and that you have opened a new loan account where all of your previously closed loans have been consolidated as one, giving you a better repayment period. The next thing you need to do is call a lender and find out the interest rates for a refinance.

Normally, the rate for refinance student loans changes every year.

You have to make sure though that the interest rates are fixed, otherwise, you will end up paying more than the usual. After gathering enough rate information from lenders, compare and look for the one with the lowest rate. Then lastly, evaluate your payments. If you have avail for a lower interest rate and had it secured, chances are, your repayments will be less.

For federal student loans, repayment includes the following options:

Standard Payments are payment schedules automatically assigned to a borrower. This payment option has a term of between five to ten years, that’s why monthly repayments for this plan are high.

Extended Payment. If your outstanding student loan exceeds $30,000 you have the option to extend the term of your loan up to 25 years. Although your monthly payments may decrease, you will be paying more in the interest over the duration of your loan.

Graduated Payment. For someone who is just starting a career, this scheme is perfect for them.

Income based Payments.

Perkins Loan Payment.

Private student loans repayment programs:

While some private student loan programs require you to pay the loan at a faster turn around period, there are also others that let pay the loan while you are still in school. With this type of program, you are given an option to pay only the monthly interest. This way, the interest will not sum up to your principal amount, allowing you to save a lot after you finish college.

Here are some of the benefits you can get from refinancing your consolidated student loan.

1. It allows you to pay only a single repayment amount every month at a lower interest rate. With this, you will have extra amount of cash that you can use to meet your daily needs.

2. It allows you to acquire lower interest rates. When you consolidate your student loans, you have the option to manage your monthly repayments. However, during the time that your student loans have been consolidated, you are expected to get a fix interest rate. This means that when there is a decrease in interest rates, you will not enjoy its benefits. But because of consolidated student loan refinancing, you will enjoy the benefit of lower interest rates.

3. Payment term is increased. With consolidated student loan refinance, your repayment term is stretched to 30 years from the standard of 10 years. This condition depends of course on the amount of your education loan. Because you have the option to increase your loan’s terms of payment, you can expect a drop off on your monthly repayments as high as 53 percent.

4. Refinancing your consolidated student loan can actually increase your credit card standing. You will realize that you’re credit score has significantly increased after you have consolidated your loans.

Basic Requirements for Refinancing Consolidated Student Loans

There should be a minimum outstanding amount of $20,000 in federal loans
There must be no delinquencies on federal loans. Make sure that your payments are current and not in default. In any case you are a month behind in repaying your student loan, prior to refinancing your student loan, make sure that to contact your lender and ask about how you can secure a hardship deferment. This way you can move ahead and refinance your student loan
It is a must that you graduate.

Prior to taking a step in refinancing your consolidated student loan, make sure to check your credit history and see to it that everything is okay. If you are trying to refinance your student loan after consolidating it to get a lower rate, you could opt for your home’s equity loan. With that equity loan, you can now start paying your consolidated loans. Yet the only way you could lessen your interest rate to at least .60% is to refinance student loans during your loan’s post-graduation grace period where lower interest rates can be locked all throughout the life of your loan.

Another way to save more off your monthly pay is through lender incentives program. The most common of these incentive programs is the reduction program for on-time payment, where lenders can actually give one percent interest reduction rate to those who pay on time for 36 consecutive months. Remember that the terms applied during the refinancing of your consolidated student loan may differ from that of others. This is because terms will depend on the consolidation agreements you had in the past. Seeking advices from loan advisor is still the best thing to do.

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