Hi Girl Gang!
If your new, welcome! And if you’re not ~welcome back~ Here we chat about all things beauty and finance because we’re keeping it cute and securing the bag ladies. This week I opened up my Instagram to requests and the FIRST one I got was refinancing student loans. So without further ado, let’s jump right into it!
BUT FIRST! Student Loans Spiel
If you happened to goto college in the number one country for coronavirus cases chances are you also have student loan debt!
When it comes to student loans there are two main avenues. 1) Federal Loans and 2) Private Loans. I’m going to break down the difference real quick.
These are loans provided by the US Government. They most likely come from Corner Stone, FedLoan Servicing, Garnite State, GreatLakes, HESC, MOHELA, Navient, Nelnet, OSLA, or ECSI. You can find a complete list on the StudentAid.gov website.
There are some great perks with having your loans provided by the government such as: up to 36 months of deferment, no payments while enrolled full-time, no payments for 6 months after graduation, flexible payment plans i.e. pay as you earn (based off of your current income), and loan forgiveness.
Federal Loans should be the first avenue you take when you’re looking to finance your education. The government typically provides lower interest rates and provide more perks than private lenders.
If you have exhausted all other options: Federal loans, scholarships, grants, giving your first born child…then I would say it’s time to consider private loans.
Don’t get me wrong, your education is the most valuable investment in yourself and you should take whatever avenues are necessary to get that degree! I’m just saying…private loans can be vicious.
Private loans are most likely going to come from your typical brick and mortar bank i.e. Chase, Bank of America, etc. These major players are banking for profit so you are going to see higher interest rates and late payment fees.
Sadly, private lenders don’t offer diverse payment plan options or deferment so you may even be getting that bill while you’re still in school. Big yikes.
If you must go this route I cannot stress enough do your research and start with non-for-profit credit unions.
When Should I Consider Refinancing?
Whew loaded question! Here are some things you should ask yourself before considering refinancing federal loans into private student loans:
- Have I maxed out my deferment period?
- Do NOT leave deferment on the table. These are months you can use (at your discretion) to skip student loan payments.
- Fun fact! If you find yourself unemployed – don’t use deferment! Switch to an income based repayment plan and your payments will drop to $0
- What current payment plan am I on?
- If you’re on an income based repayment plan it’s likely your monthly payments may increase once you refinance
- Could I potentially qualify for loan forgiveness?
- What’s my credit score?
- To make refinancing worthwhile you’ll need an impressive credit score
- What is my current interest rate?
- You should never refinancing for an interest rate that’s the same or greater than what you’re paying now – defeats the whole purpose!
What To Look For When Refinancing
Low low low interest rates! In my experience federal loan interest rates vary from 4 – 7% so you will need a good (great) credit score to get your loans refinanced for 1-3% interest rate – this is how you save money on your loans!
If you’re unable to secure a refinancing interest rate that’s lower than your current rate – forget about it! It’s better to stay where you’re at in that case.
LET’S REFINANCE THESE HOES
So you’re ready to refinance? My friend’s at Money Under 30 put together some awesome reviews on the best refinancing options. I personally have not refinanced any of my student loans so I do not have any experience with these providers 🙂
- SoFi – interest rates as low as 2.3%!
- Earnest – flexible repayment options i.e. skip a payment once a year!
- Credible – compare multiple refinance partners with one click!
Have any lingering questions? Feel free to drop a comment below or slide into my DMs.