Should you refinance you federal student loans?
Federal student loans are:
- Direct Subsidized Loans and Direct Unsubsidized Loans
Direct Subsidized Loans are available to undergraduate students with financial need. Interest does not accrue on Direct Subsidized Loan in the follow situations
- While you’re enrolled at least half-time.
- During the first six months after you leave school (grace period).
- During a deferment.
Direct Unsubsidized Loans are available to undergraduate and graduate students. There’s no requirement to demonstrate financial need. Interest begins to accrue after you accept the loan.
- Direct PLUS Loans
Direct PLUS Loans are unsubsidized loans for the parents of dependent students and for graduate/professional students.
- Federal Perkins Loans.
Federal Perkins Loan are low-interest loans for undergraduate and graduate students. With Federal Perkin loans, your school is the lender. The loan is made with government funds, and funds contributed by your school.
The benefits of federal loans
- Repayment for your federal loans does not start until you graduate, leave school, or change your enrollment status to less than half-time.
- The interest rate is fixed.
- If you qualify for a subsidized loan, the interest doesn’t accrue while you’re enrolled at least at half-time status.
- Most federal student loans don’t require a credit check(except for PLUS loans).
- You won’t need a cosigner to get a federal student loan in most cases.
- Interest may be tax deductible.
- Loans are forgiven if you become permanently disabled.
- Loans can be consolidated into a Direct Consolidation Loan. Learn about your consolidation options.
- You can temporarily freeze or lower your payments, if you fall into financial trouble.
- There are several repayment plans. You can also change your repayment plan if necessary.
- There’s no penalty fee for prepayment.
- There are loan forgiveness programs you may qualify for.
Reasons to refinance
- To consolidate multiple student loans for easier management
If you have multiple federal and private loans and you prefer to just make one payment
- To obtain a lower interest rate
If you’re considering refinancing your student loans use the links below to learn more. Check out the article “Comparing student loan refinancing options”. Here I lay out all the information you need to know to decide which company will best suit your needs. You can also check out the articles for each of the leading student loan refinancing companies separately if you’re already sure which company you want to use, and are just looking for more details.