There are tens of millions of Americans with student loan debt and many more taking out student loans to cover the costs of their college education each and every year. It’s one of the only options available for most people who want to get a degree or college diploma of some kind, as well as those who want to pursue their education even further with a Master’s or PhD, but it’s leading to huge amounts of debt for countless people. Fortunately, there is a way to cut down on your student loan debt in an instant, and it’s called student loan refinancing.
An Overview of Student Loan Refinancing
In the past, students were stuck with the student loan interest rates they got when taking out their loans. There were no options, no ways out. Student loan refinancing has changed all of that. Many people have heard of this service, but a lot of students and graduates aren’t sure exactly how it works.
In simple terms, student loan refinancing is when a loan provider basically pays off your student loan debt and then gives you a new loan to pay back to them, rather than the original provider, with a new interest rate. It’s important to note that it isn’t the same as consolidation, as debt consolidation doesn’t offer any kind of interest saving, while refinancing does.
Student loan refinancing is usually available with most lenders for both federal and private student loans, and it’s an attractive option for a lot of people since it can reduce their interest rates, leading to lower repayments in the long term and an earlier end to your debt. Through student loan refinancing, you can cut down your interest rates enormously, so it often seems like the perfect choice.
Should I Get Student Loan Refinancing?
Since student loan refinancing seems so attractive on the outside, you might be asking “Should I refinance my student loans?” and you might even think that there’s no possible downside, but it’s still important to consider a few things before going ahead with refinancing.
For example, when you take out student loan refinancing, you start a contract with a private lender, meaning that you won’t be dealing with the federal government and won’t have the same kind of federal protections you had with your federal student loans. This isn’t always a bad thing or a problem in any way, but it’s something to think about.
You also need to know that refinancing student loans is a one-way street. Once you’ve agreed to a refinancing plan with a lender, the decision is final and you’ll be locked in with them until the debt has been repaid in full.
This is why it’s so important to consider all your options and read through reviews of student loan refinancing providers in order to see which company can give you the best possible deal. Some lenders offer superior rates to others, for example, with other lenders providing unique customer perks and benefits that might interest you.