Should You Refinance Your Student Loans?

student-debt

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.

If your loans are private, or if you have done your homework and know for certain that you will not be eligible for federal loan forgiveness or any other favorable federal repayment programs, the next thing to look at is your interest rate. If all of your interest rates are below 5.50% then it is likely not even worth looking into refi options.

Not sure how to find out what your interest rate is or if your loans are federal? The National Student Loan Data System (NSLDS) is a resource where you can find this information. Go to www.nslds.ed.gov where you can create a login ID and gather the info you need on your student loans.

There are many more considerations to be made when looking into student loan repayment and refinance options, if you have questions, let’s have a conversation.