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Does Refinancing Your Education Loans Make Sense?

Does Refinancing Your Education Loans Make Sense?

Each year millions of students graduate from college optimistic about their futures while at the same time facing the reality of heavy student loan debt. According to data from Experian, student loan borrowers carry an average of 3.7 loans totaling more than $34,000 in debt. Many want to find ways to ease that pressure.

Fortunately there are ways borrowers can regain their financial footing through refinancing their student loan debt. By taking stock of all the loans you owe, you can evaluate if refinancing makes sense for you.

Here are a few simple tips that should be top of mind when considering a refinancing option:

1. Take a look at all of the loans you have, from both private lenders and the Federal government. Calculate your current outstanding loan balances, interest rates and remaining payments. Then, find an online calculator (there are many out there, including the one on PNC’s Education Loan Center) to determine how much a refinancing option may save you on monthly payments and/or the term of your loan.

2. Know your complete financial picture. Loan approval and the terms of the new loan (if approved) are typically based on your credit and payment history. Know the requirements of the lender, which may include your financial and payment history and your current outstanding education loan obligations.

3. Fixed or Variable? Know the difference. Most lenders offer both fixed and variable interest rate options, so it’s vital to know which may best fit your financial situation. As the terms imply, a fixed rate stays constant over time and will not change, while a variable rate varies with the market and could change, up or down, over the life of the loan.

4. Look at the terms. Many lenders do not require application or origination fees and there is no prepayment penalty if the loan is paid off early.  Also consider whether the lender offers an interest rate deduction when payments are made directly from a checking or savings account or other rate discounts.

After considering all of these points, if you believe refinancing is the right move for you, take that step to help you achieve your long-term financial goals.

About The Author:

Today’s guest article comes from Naimesh Patel who serves as the General Manager for personal & student lending at PNC Bank

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CheapScholar’s Education Loan Resource Center

CheapScholar’s Education Loan Resource Center

Paying for college sometimes requires a student to research available loan options. In an effort to help families navigate this process, CheapScholar.org is pleased to offer the following education loan resources:

Federal Loan Programs – StudentLoans.gov

Federal Loans come in many different forms.  Some of the loans are only available to students (Federal Direct Student Loan) and others are specifically geared for parents (PLUS Loan).  All of these Federal Loan Programs can be accessed through StudentLoans.gov.

Private Student Loan Comparison Tool

If you have exhausted all of your federal loan options, a private education loan may help you to bridge the gap in covering your college expenses. Utilize CheapScholar.org’s loan comparison tool to help find the right private education loan for you.

Education Loans – Additional Articles and Resources

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