What are private student loans?
- Private student loans are loans that are not federally funded. Private student loans can be provided by a bank, credit union, state agency, or a school.
Reasons to refinance
- If your loans require payments while you’re still enrolled. You may want to consider refinancing your loan. There are companies that now will allow you to temporary pause your payments while you are enrolled. Some companies even offer a grace period of six months after you graduate before your payments start, a benefit mostly offered by federal student loans.
- If you have private student loans with a high variable interest rates, you can refinance for a lower fixed rate.
- Private student loans are not subsidized.
- Many people take out private student loans when they are young and have very little to no credit history. This can cause them to receive a high variable interest rates. Refinancing for a lower fixed rate would save the borrower thousands.
- Individuals with little to no credit history or low income require a cosigner to receive private student loans. If you are now financially capable, refinancing your private student loans can release your cosigner.
- If you have a private student loan that is not tax deductible. Refinancing will allow you to take advantage of the $2,500 tax deduction on interest paid.
- If you have private loans and federal loans, and want to consolidation them for a single payment. The top refinancing companies will allow you to consolidation private student loans with federal student loans. Do keep in mind federal loans have benefits that private loans do not. Make sure you understand the benefits before you decide to consolidate federal and private student loans. If you’re not familiar with the benefits of federal loans check out “link “
- If your private student loans do not offer forbearance or deferment options. You may want to refinance with one of the below companies to better protect yourself.
- If you’re looking to reduce your monthly payment. Refinancing could be a good option.
- If you loan has prepayment penalty fees. You should look into refinancing.
- Sofi and Elfi also will reduce your balance by $100 if you use the below link.
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.