Student Loans Lower Interest Rate Refinance

Student Loan Lower Interest Rate Refinance

Interest rates have been on a downward trend since July 2014. According to Freddie Mac’s latest Primary Mortgage Market Survey (PMMS), published June 2015, 30-year fixed rate mortgages averaged 4.55 percent nationally and 5.41 percent for 15-year fixed rate loans. However, a refinance loan may be a good option if you can get a lower interest rate than what you currently owe. If you have some equity left over after paying off your original student loan debt, and you want to eliminate the monthly payments, then consider refinancing your student loans with a new refi loan at a lower interest rate.

Student Loan Consolidation

If you are carrying several federal student loans with different lenders, consolidating them could save you money. You should consolidate your loans if you think you might be able to pay them back faster, and if you have a high credit score. Your lender will work with you to find out how much you qualify for based on your income and expenses. There are two types of consolidation loans: private and public. Public loans are offered by the Department of Education and are subsidized by taxpayers. Private loans are backed by a bank or financial institution and are not guaranteed by the government.

Student Loan Income Based Repayment

An income-based repayment plan lets borrowers repay their loans over a period of 10 years or longer, depending on the amount borrowed and the borrower’s income level. While the principal and interest payment remains the same throughout the repayment term, the borrower would make fewer payments toward the loan total. In general, those who borrow less and earn higher incomes tend to benefit the most from these plans. However, borrowers must meet certain requirements before they qualify for this type of plan. Visit Sallie Mae’s website for details.

Federal Direct Parent PLUS Loans

For parents who need additional funding beyond the standard Stafford loan limits, the Department of Education offers parent direct PLUS loans for undergraduate students. Parents must demonstrate a strong commitment to education and a willingness to help repay student loans. Parents must contact their school’s financial aid office to apply for PLUS loans.

Student Debt Relief

The U.S. Treasury provides relief to people whose student loans were discharged under bankruptcy laws. Students who receive discharge do not have their loans forgiven, but their loan balances are reduced to $0. The Department of Education also provides deferments and forbearances, as well as loan forgiveness, for a variety of reasons including illness, job loss and death. Check with your lender to determine what options are available to you.

Student Loans Lower Interest Rate Refinance

Student loan debt

In 2014, student loan debt surpassed credit card debt in the United States to become the second largest consumer debt type after mortgages. In 2017, student loan debt owed totaled $1.52 trillion. And while about half of students who took out loans borrowed less than $10,000, others borrowed much more—$100,000 was the median amount taken out by borrowers in 2015-16. Student loan interest rates may be lower than those on other types of loans, but they still add up. If you have outstanding student loan payments, refinancing at a low rate could help you save money.

Low-interest rate refinance

For many people, getting a new loan won’t make sense until their old loans come due. But if you take advantage of a program called a low-interest rate refinance, you might get a break now without having to worry about future payments. You don’t need to wait until your current loan’s last payment date, either. You can use a low-rate refinance to pay off your existing balance over five years instead of 10 years.

What you’ll need

To qualify for a low-interest rate loan, you must meet these requirements:

You must owe no more than $30,000 in federal direct lending (student loans) and private non-federal lending (mortgage).

Your monthly payments must fall under 5 percent of your income.

Either:

Your income must exceed $25,000 per year; or – You must not have an active bankruptcy petition in progress.

You can’t have had any late payments or defaulted on any previous loans in the past three years.

If you qualify for a low-rate loan, you can choose between two different loan plans. A fixed plan lets you spread your payments out evenly each month, whereas an adjustable plan reduces your monthly payment by 0.25 percentage points at certain times throughout the term of the loan. If you go with an adjustable plan, you can adjust your payments based on whether your income increases or decreases.

How it works

The federal government offers two programs that provide low-interest rate loans: Direct Subsidized Loan Consolidation and Direct Unsubsidized Loan Repayment. Both let you consolidate your federal student loans into a single loan with a lower interest rate. The difference is whether or not you have to pay upfront fees to the lender.

Student Loans Lower Interest Rate Refinance

What’s a student loan?

A student loan is any type of private debt that you borrow for education-related purposes. Student loans can help students pay for college tuition, books, room, board and other expenses related to attending school. Private student loans work much like home equity loans; they let people take out cash advances on their homes at low rates while they’re still paying down their principal balances.

How do I qualify for a lower interest rate?

You might get a lower interest rate if you have good credit, no late payments, and a stable job history. If you meet these qualifications, apply for a refinance before your current student loan payment date. You’ll want to make sure you don’t miss the application deadline — since both refinancing and consolidation options expire after six months. Also, check to see whether your lender offers a special rate for military veterans or active duty service members.

How do I consolidate my student loans?

If you’ve got several student loans and your monthly payments add up to too high of a total, consolidating them could save money. Consolidation means taking out just one loan instead of many. To find out if you can consolidate your student loans, contact your student loan servicer directly.

Can I combine federal loans with private student loans?

Yes! Sometimes lenders use the terms “private student loan,” “government-sponsored student loan” and “federal loan” interchangeably. But actually, none of those three things mean what you think they mean. So, keep reading to understand how private and government-backed student loans differ, along with some tips about combining them.

Do private student loans have different repayment plans than federal ones?

Private student loans often offer smaller introductory interest rates than federally backed student loans. However, private student loans may not offer the same flexible repayment programs that federal loans do. On the plus side, private student loans tend to be cheaper than their federal counterparts. Before deciding which kind of student loan to take out, consider your budget, projected earnings, and long-term goals.

What is a forbearance?

Forbearance lets you delay making payments until later. A lot of borrowers choose to take advantage of forbearances because they know they have time to figure out a repayment plan that works for them. But once you start missing payments, you won’t be able to extend the length of your forbearance period. And if you skip two consecutive payments, the forbearance period ends.

Is there a difference between private and federal student loans?

The biggest difference between private and federal loans is who backs them. Federal student loans are backed by the U.S. Department of Education. Private student loans are backed by various companies. While private student loans are regulated at the state level, federal student loans are issued nationally. Because of this, federal student loans are generally considered safer investments than private student loans.

Student Loans Lower Interest Rate Refinance

For some students, paying off student loans may not seem feasible, especially if their loan amount is high. However, the federal government offers many programs designed to help borrowers refinance their loans at lower interest rates. These options range from private lenders to the federal government. In order to qualify for either option, however, students must first meet certain criteria. If they do, they could save thousands of dollars over the lifetime of the loan with refinancing. Here are three ways to benefit from refinancing.

Refinancing Your Student Loan Through Private Lenders

Private lenders offer refinancing services, often referred to as “private loans.” A private lender is a company authorized by the federal government to issue these loans. Students are eligible for a private loan even if they have been denied a traditional loan. They are generally much easier to get than federal loans and come with fewer restrictions. Because private lenders are not backed by the U.S. Government, they charge higher interest rates and fees than federal loans. But, they might provide a better rate than what you currently pay.

In addition to offering a higher interest rate than federal loans, private lenders also charge less upfront fees. You will likely pay between 0% and 5% of the total loan amount as an application fee, plus $50 – $200 depending on the type of loan being applied for. Private lenders rarely charge any other fees, though they may require payment plans for payments.

If you are considering refinancing a private student loan, use our loan search tool to find out how much money you would actually save.

Refinancing Through the Federal Direct Loan Program

The federal direct loan program works similarly to a standard private loan; however, the government backs the loan. There are two types of federal loans—subsidized and unsubsidized. Both types provide students with low interest rates and flexible repayment terms.

Subsidized student loans are popular among college students who plan to continue their education after completing their degree. These loans give students the opportunity to consolidate their debt into a single monthly payment. While subsidized loans are attractive to students, they are often difficult to obtain after graduation. As long as you maintain good grades and a minimum GPA, you should be able to receive a subsidized loan during your final year of school.

Unsubsidized loans are offered to students who intend to pursue graduate degrees or professional careers. Like subsidized loans, they allow students to consolidate their debt and lower their interest rates. Unlike subsidized loans, they are available throughout the duration of your studies, regardless of whether you earn a B+ average.

Once again, our online student loan calculator can help you determine which type of loan is best for you.

Refinancing through the federal bankruptcy code

While it’s uncommon, a student borrower may file for Chapter 13 bankruptcy instead of defaulting on her loans. Students with bad credit scores or recent defaults on their loans will be ineligible for Chapter 13 unless they are able to prove that they will not incur additional debts while repaying their existing loans. Even then, they will need to demonstrate that they will repay their entire loan balance within five years.

Although the federal bankruptcy code provides an avenue for students to deal with debt, it’s only recommended for those who have exhausted all other options. Before filing for bankruptcy, students should contact their creditors to negotiate a settlement.

Student Loans Lower Interest Rate Refinance

Student loans lower interest rate refinance. Do not miss out on this opportunity!

You can refinance your student loan debt at no cost to you. You may qualify if you have federal Direct Subsidized Loan (Direct Loans), Federal Parental PLUS Loans (Parent Loans) and/or Federal Consolidation Loans (Consolidation Loans). To view rates and terms, click here.

Student loans lower interest rates. Make sure to apply today.

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