Student Loan Refinancing 101 (Financing Your Education 4/4)


Meet Zoe. Zoe recently graduated from college and has
been working at Corporate Co. for the past two years. Recently, an older colleague told Zoe she
might be a good candidate to save money by refinancing her student loans. While Zoe is definitely open to the idea of
saving money, she just doesn’t feel comfortable taking someone’s advice without understanding
the process herself. That’s where we come in. Let’s start with basics. What is student loan refinancing? Well, it’s the practice of combining multiple
federal and/or private student loans into one, simple private loan. This has definite advantages, mainly a lower
interest rate on the new loan, but it also serious flaws, mainly because you lose the
advantages of federal student loans, such tax as income-based repayment plans. So which one she should choose? Well, we recommend this rule of thumb: unless
you have an annual income that exceeds your student loan amount, plus a credit score above
700, avoid refinancing your student loans, especially your federal ones. That’s because for low-earners with poor
credit, no private lender can match the benefits of an income-based repayment plan. Plus, if you work in the public or nonprofit
sector, your federal student loan debt can actually be forgiven after ten years! For details on this, be sure to watch our
video “How to Repay Your Student Loans”. However, let’s say Zoe has meet our requirements,
and has chosen to refinance her student loans. What’s her next step? Well, Zoe will need to reach out to several
student loan refinancers. And don’t worry, this doesn’t have to
be time-consuming, especially if Zoe uses our recommended provider, which makes it easy
to get multiple refinancing offers with one simple application. Finally, let’s say Zoe only chooses only
to refinance her private student loans. Can she consolidate her federal ones without
a private lender? As it turns out, yes. She can combine her federal student loans
into a direct consolidation loan for free through StudentLoans.gov. This will eliminate the confusion of having
multiple payments while still keeping the benefits of federal student loans. Congratulations! You have finished our financing your education
curriculum! If you want to see our preferred student loan
refinancer, or just more educational material, be sure to check out our website!

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