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Student loan debt grows bigger and bigger every year. Students have to get help from various lenders, and many of them choose federal student loans. However, sometimes these loans prove to be too big of a burden for students.
There are student loan refinancing companies which can help you by making your payments more acceptable with lowered interest rates. Refinancing a student loan can reduce the high interest, and it ends up saving a lot of money in time.
Other options
Refinancing your student loans is not the only options you have. There are various income-driven repayment plans that make your payment acceptable. The list includes Pay As You Earn (PAYE), and the Revised Pay As You Earn (REPAYE) plan, Income-Based Repayment (IBR), Income-Contingent Repayment (ICR).
However, these plans are not available for everyone, and you need to check first whether you are eligible. Income-driven plans might have their drawbacks, but it is up to you to check whether they are what you need. You should know that if you choose to refinance your federal loans, you will lose these alternatives.
Another good option could be loan forgiveness. If you want to get a public service job such as teaching, the government might grant you loan forgiveness. If you receive it, your loans will be forgiven after ten years of payment.
Saving money
One of the most significant advantages of refinancing federal student loans is that you will end up saving money by receiving a better interest rate. For many persons, this reward is enough. However, you will need to do the math first and make sure that you are saving enough money. A student loan refinancing calculator is recommended in order to see how much you actually save by refinancing.
If you have a Grad PLUS or Parent PLUS loan, you will definitely benefit from refinancing. That is because you already have high-interest rates, from 6% to 9%, which means that it would be beneficial for you to lower them.
You should be able to check your prospective rate at most refinancing companies. Doing this won’t affect your credit score, and you will be able to find out the best interest rate for you.
Repayment terms
When it comes to refinancing you should also compare repayment terms. It is essential to check your repayment period so you can see when you will pay your loans. You should even compare your interest rates and your monthly payment. Most federal student loans will make you repay them in 10 to 30 years while refinancing them will lead to shorter loans that range from 5 to 20 years.
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This is a featured post by site supporter Costea Lestoc.
Photo by Jonathan Daniels on Unsplash
The post The Pros and Cons of Refinancing Your Student Loans appeared first on The Good Men Project.
