May graduation season is approaching quickly, and many of you will be getting ready to begin repayment of the student loans you have accumulated during your education. Student loan debt has reached record levels in the US, with many young people owing in the 6 figures. There are now a lot of repayment options available, including the potential for federal loan forgiveness after a period of repayment. Refinancing with a private company may seem enticing, but is it a good idea for you?
The answer can be complicated, but there are two things you need to know before even considering any refi options:
- Are your loans private or federal?
- What interest rates are you paying on your loans?
If you have federal loans, and believe that you will someday be eligible for a federal loan forgiveness program (or even if you are uncertain!), you can immediately rule out loan refinance.
Private student loan refinance renders the borrower ineligible for federal forgiveness programs