The idea of refinancing your student loan is entertained at an increasing rate. Considering how thousands of students apply for loans and cannot seem to pay them off without having to risk an arm and a leg, the idea of student loan refinancing and employing student loan forgiveness programs appears to be coming to the forefront. If you find yourself in this situation and are not sure as to how to go about it, read on.
Student Loan Refinancing
The student loan refinancing process involves having a lender replace your current loan with an entirely new one. The new loan ought to have better repayment terms and rates, and of course, better interest rates.
Keep in mind that each lender has different refinance rates and eligibility criteria, depending on the type of loan you want to refinance. Here are a few scenarios where refinancing can prove to be useful:
- If your current loan is too much of a burden to fend off, and you are looking for much reasonable loan repayment terms and rates, refinancing can help you.
- If you find yourself comparing different lenders to select the one that offers the ideal loan repayment terms, opt for student loan refinancing.
Advantages of Student Loan Refinancing
Here are a couple of advantages of student loan refinancing:
Lower Monthly Payments
Getting your student loan refinanced fetches you the chance to avail of a loan with a significantly low-interest rate. This, of course, is bound to lower your monthly payments.
Several borrowers opt for loan refinancing because the minimum payment upfront tends to be too high, which forces them to compromise on their living expenses, including groceries, utility bills, rent, and so on.
Faster Repayment of Loans
Getting out of debt as soon as possible should be the first thing on your mind as a student loan borrower. Refinancing your loan at a lower rate can help you prevent stretching your loan term. On the other hand, shortening the duration of the loan term can increase your monthly payments. If you can manage the surge in the monthly payments to clear the loan, refinancing may be for you.
How do you find the Best Student Loan Refinancing Lenders?
You will have to do your research, check their criteria for eligibility, and shortlist a few student loan refinancing options from which you can choose. Once you have done that, ask yourself the following questions and decide on the refinance option that best suits your needs. Here are the factors you need to think about:
- Does the lender have a good reputation?
- Does the lender offer fixed or variable rates of interest?
- How much should you pay every month as per the plan?
- Are there any additional features that come with the plan?
- What is the interest rate, and how much will you be able to save as a result of it?
- How do other borrowers see this lender, and what is the feedback?
- Does this lender have excellent customer support?
- What are the minimum and maximum debt amounts for loan refinancing?
- Is there an origination fee or penalty for prepayment?
Student Loan Forgiveness Programs
Student loan forgiveness allows you not to pay a chunk or all of your federal loan debt. This may sound like the ideal way to go, but most people are not eligible for student loan forgiveness. There are a variety of forgiveness programs, including loan forgiveness programs by states.
Public Service Loan Forgiveness
The Public Service Loan Forgiveness (PSLF) program is designed for public services employees.
If you qualify, you can avail the option of having your loan balance forgiven after ensuring 120 loan repayments. Keep in mind that you will have to make loan repayments as part of the income-driven repayment plan if you wish to use the public service loan forgiveness program.
State-sponsored Repayment Assistance programs
As mentioned earlier, you also have student loan forgiveness programs sponsored by states. Nurses, licensed teachers, doctors, lawyers, and so on benefit from these programs. If you want to find out if you qualify for this student loan forgiveness program, make sure you check with your state’s higher education department.
Income-Driven Repayment Forgiveness Program
You can avail of four main income-driven repayment plans by the federal government. You can expect these plans to help you cap your loan repayments at a certain percentage of your monthly income. You may have your loan balance forgiven after 20 – 25 years if you enroll in one of these loan repayment plans.
Student Loan Forgiveness Program for Nurses
This plan helps nurses who are having to shoulder the weight of student loans through a variety of options, including, NURSE Corps Loan Repayment Program and public service loan forgiveness. The public service loan program seems to be employed more than any other program, considering how getting the other plans is tedious.
Student loan debt is one of the greatest burdens you can carry. A big part of why people struggle with this is the lack of smart and efficient planning. However, now that you know what you are up against, and the options you have at your disposal, you can make more informed decisions. Be sure to consider going student loan refinancing or student loan forgiveness programs if you happen to qualify, and you could watch your student loan debt wane with time.