Rising interest rates encourage refinancing student loans. But refinancing is not always the right answer. Where to refinance student loans?
When to refinance student loans
Not everyone can be eligible for refinancing student loans. Usually you need a university degree, good credit and income that will allow you to conveniently afford expenses and pay off debts. If you meet these requirements, consider refinancing in the following circumstances:
- Savings will matter. You don’t have to wait until you get the perfect refinancing loan as long as you can get a better rate than today. Check to see if the lender is offering a student loan refinancing premium to further increase your savings.
- You have private student loans. By refinancing private student loans, you have almost nothing to lose because these loans do not qualify for federal loan programs such as income-based repayment and Public Loan Forgiveness.
- You have student loans with high variable rates. Forecasting payments with a floating rate loan can be difficult, and even loans with a low interest rate can be more expensive to pay back. Before increasing, consider refinancing to get a fixed interest rate.
- The rate environment is strong. Both fixed and variable refinancing rates for private loans may change depending on economic factors, such as interest rate increases or interest rate cuts in the Federal Reserve. When rates are reduced, you can take advantage of this situation by refinancing.
- Your finances have improved. If refinancing makes no sense after graduation, think about it when you’re on a more solid financial foundation. And if you’ve refinanced before but just paid off your credit card debt or got a raise, you can get a better rate – you can refinance as often as you like.
The best companies refinancing student loans in 2020
Here are the top 4 lenders for refinancing student loans:
- Credible
- Earnest
- Splash Financial
- CommonBond
Each lender has its own underwriting guidelines, which means you can get better conditions when shopping. You should take the time to compare several lenders and their offerings.
Dozens of private lenders offer refinancing student loans.
Compare many lenders
Shopping to compare loans and interest rates from many lenders will be the key to success. You can check the refinancing rates on each lender’s website or use a portal that shows multiple offers at once. Make sure you understand the terms of the service and find out how much of your information will be shared with third parties.
