Best Rates To Refinance Student Loans

It’s been reported that student loan rates will increase by 0.25% this year, making refinancing even more attractive. We have put together some tips to help you get the best rate possible.

The first step is to understand what types of loans you have outstanding. Do you have federal Stafford loans? If not, then you should consider applying for them first. Federal loans do not carry any prepayment penalty, unlike private loans.

Next, find out how much money you could save if you refinance. You will need to calculate your expected monthly payments after graduation and compare that to your current payment amount. You will want to consider your FICO score as well; lower scores may make lenders wary of approving you for a loan. A good rule of thumb is to try and avoid paying less than 8% interest.

You will also want to review your credit history before trying to apply for a loan. Make sure there are no negative marks on your report. Your debt-to-income ratio (DTI) will also play a role in determining your eligibility. The higher your DTI, the tougher time you will have getting approved.

While looking at different options, always ask about fees associated with each lender. There are many companies that are willing to lend cash directly to borrowers without charging fees. These companies don’t necessarily need collateral, so they can offer easier terms than traditional lenders. Also be careful where you choose to borrow. Some places charge exorbitant upfront fees and interest rates.

There are two major types of private student loans: direct and indirect. Direct loans require you to pay only the interest on the loan each month, while indirect loans generally allow you to ppay your balance. Both options come with their own pros and cons, so use these tips to determine which option is right for you.

Best Rates To Refinance Student Loans

Federal Direct Loan Program :

The federal student loan program is administered by the U.S. Department of Education and has three major loan programs including subsidized loans, unsubsidized loans, and consolidation loans. You must have a valid Social Security Number (SSN) and income above a certain amount to qualify for a student loan. The interest rate on federal student loans range from 4% to 6%. There are some borrowers who do not pay attention to their payments or have difficulty making repayments are eligible for government-sponsored loan forgiveness programs. These include the Public Service Loan Forgiveness Program and the Teacher Education Assistance for College and Higher Education (TEACH). If you want to consolidate your loans or have questions about repayment options, contact your lender directly or go online at www.finaid.org/loans/student/.

Private Student Loan Programs:

Private student loans are offered by banks and credit unions and may offer lower rates than those offered by federal financial aid programs. One disadvantage of private student loans is they may require you to submit a co-signer to guarantee the loan.

Consolidation:

If you have outstanding student debt and have trouble paying off your loans, you may want to consider consolidating them. A consolidation loan is a single monthly payment that includes all of the outstanding balances on your loans. This makes it easier to manage your finances. You should speak with a loan officer before deciding whether or not to consolidate your debts.

Best Rates To Refinance Student Loans

Personal loans

Personal loan rates vary greatly based on the lender’s creditworthiness, interest rate spread, and term length of the loan. In general, personal loans tend to offer lower interest rates than unsecured student loans. However, they carry higher risk factors, including prepayment penalties, higher fixed costs, and restrictions on how much you can borrow. If you are looking to refinance a personal loan, remember that there may be additional fees associated with refinancing.

Private education loans

Private education loans are often referred to as PLUS loans. These types of loans are offered exclusively by government agencies, and students who choose to pursue non-traditional career paths like medical professions, teacher training, law enforcement, or firefighting are eligible for these loans. Because private education loans are only issued by federal agencies, they have some advantages over other types of student loans.

Unsubsidized Stafford Loans

Unsubsidized Stafford loans are generally considered to be the best option for first-time borrowers. The interest rate is set at 6.8 percent, the maximum amount borrowed is $20,500 per year, and repayment terms last 10 years.

The interest rates for unsubsidized Stafford loans range between 5.4% – 8.5%. There are no prepayment penalties for Stafford loans. However, there are limitations on how much you can pay back each month depending on your income level. For example, if your adjusted gross income (AGI) is less than $50,000, you cannot make payments greater than 12.5% of your discretionary income. AGI is calculated by taking your total income and subtracting any taxes paid.

Subsidized Stafford Loans

Subsidized Stafford loans are available to undergraduate students whose parents earn below a certain threshold. Depending on the state, an individual’s household income can fall anywhere between $0-$95,500. Parents receive income tax credits to cover the difference between their earned income and their subsidized limit. While parents do not pay anything toward their child’s college tuition, they still end up paying more in taxes than they would have otherwise.

Income Based Repayment Plans

Income Based Repayment plans allow students to repay their loans over extended periods of time without accruing interest. Generally, the amount you pay is capped at 15% of your discretionary income while your income exceeds 250%, you will pay 25% of your discretionary income towards your debt. In addition, borrowers with high incomes could even qualify for 0% interest payments under the Public Service Loan Forgiveness Program.

Federal Perkins Loans

Federal Perkins loans are designed to provide financial assistance to low-income students. Unlike subsidized Stafford loans, you do not need to meet a minimum family income requirement to apply for Perkins loans. You simply need to demonstrate that you are financially able to attend school without using your own money.

Perkins loans have two different sets of repayment terms. Standard Perkins loans require borrowers to pay 10% of their monthly discretionary income for ten years. Extended Duration Perkins loans require borrowers to start repaying immediately after they graduate, and then pay 15% of their discretionary income until they reach age 27. Both programs have a set monthly payment cap of approximately $70.

Best Rates To Refinance Student Loans

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Best Rates To Refinance Student Loans

10 year fixed rate – 2.19% APR (variable rate)

Fixed rate loan for ten years at 2.19% APR and a variable rate for five years. The variable rate could go anywhere between 0%-4%. The interest rates below are calculated using a 30 year repayment term and include principal and fees.

15 year fixed rate – 2% APR (variable rate – subject to change)

Fixed rate loan that lasts fifteen years at a variable rate from 2-8%. The interest rates below assume a 30 year repayment term with no prepayment penalties.

25 year fixed rate – 1.59% APR (variable rate, subject to change)

25 year fixed loan at a variable rate between 1.59-3.99%, based off a current benchmark index. These loans have different terms than above, including a 5 year grace period after graduation before payments begin.

10 year adjustable rate – 4.06% APR & variable rate

10 year loan at an initial fixed rate of 4.06% then adjusts annually for the remainder of the loan term (subject to change). This loan includes a 5 year grace period before payments begin. Annual percentage rates may range from 0.01%-5.00%.

5 year adjustable rate – 4% APR (variable rate subject to change)

5 year adjustable rate loan at an annual percentage rate ranging from 2.50%-18.75%, depending on your credit profile. There is a 5 year grace period for this loan and no prepayment penalties apply.

15 year adjustable rate – 4%-4.125% APR (variable rate), subject to change

15 year adjustable rate loan at a rate varying from 4%-4.125%, subject to change. This loan has a 5 year grace period and no prepayment penalty.

15 year fixed rate loan – 2.75% APR (variable rate

15 year fixed rate loan at a variable rate of 2.75-11.25%. You do not have a grace period on these loans and they have higher minimum amounts. In order to qualify, you need to make 120 monthly payments before paying any money back.

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