Refinancing is nothing but paying off your existing loan by availing another loan which is usually at better terms and lower interest rates. However, when it comes to student loans, it is usually done to reduce monthly payments.
You can find several options to accomplish it, such as consolidation programs and even through programs and banks of the government. However, there are several things to consider in refinance student loans.
Private student loan and a federal loan
In case you have a private student loan and a federal loan then you will have to refinance it using separate plans. You can receive a lower interest rate plan with a federal loan compared to a private loan. It is because they are private loans which are usually based on assumptions that the income level would increase after the student graduates.
Therefore student loan refinancing is often rated at higher levels. In case you try and mix up these two different loan types then you might often end up paying a higher interest rate through a combined principal than what you can expect to pay separately for refinancing.
Research the rates
It is important that you research well as student loan refinance rates can vary from lender to another. Make sure to check your credit scores before applying because the interest rates can vary according to your credit history. So, make sure your credit card history show positive results before refinancing.
However the rates for federal student loan refinancing might only change …