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The Ultimate Q&A to Refinance Student Loans

refinance student loans

Refinancing student loans may be the only way out for many Americans struggling with their student debt. Getting into a student loan program may have sounded like the deal of a lifetime at first, but as time passes, this decision starts to turn into a nightmare for many people. There are undoubtedly many student debt relief programs out there, but refinance student loans is arguably one of the best options. 

When you decide to refinance your student loans, you save money. This works by replacing your already existing educational debt with a better low-cost loan. A borrower must take this new loan through a private lender. The idea of refinancing student loans is nothing new, and the market is ever-growing. It’s like debt consolidation but more specific. Some companies have decades of experience in the field. 

To Qualify:

To qualify for refinancing student loans programs, you will need to have the things listed below:

  • Steady Income
  • A credit score that is in the high 600 or higher
  • If you fail to check one of the boxes above, you will need a cosigner that qualifies to them.

Refinance programs are valid for both private and federal loans. This eliminates the barrier some programs put for those that owe specific loans to different institutions. The best part about refinance student loan programs is it’s free, and you could be able to reduce your overall monthly payments or even pay them off faster. Student loan debt may no longer be a significant problem for you after you have refinanced your loans. 

See this article as the ultimate Q&A for refinance student loan programs that are on offer. By the time you are done with this article, you will hopefully be ready to dive headfirst into a more sustainable future with manageable monthly payments, let’s get started!

Is it even worth it to refinance student loans?

refinance student loans

This is a question you might even ask yourself before you refinance student loans. Many lenders are going to warn you regarding the act of refinancing federal student loans. They might even do this while they also state the benefits. Some lenders will go further by saying that you need to have a stable income and savings before you can risk refinancing. In reality, if you qualify for lower interest rates, refinancing can help you accomplish many goals in the struggle for a sustainable future. These goals may be one or more of the points mentioned below:

  • Refinancing parent loans in the child’s name
  • Releasing your cosigner
  • Paying less interest rates over the period of the loan
  • Paying off debt faster
  • Lowering your monthly loan payments. 

Some might even see this as an opportunity to refinance private student loans, which is hard to do. It is highly advised that you use student loan refinancing calculators to help you estimate your actual savings. This is a small but very effective strategy that is recommended by most experts. 

What exactly is refinancing student loans?

You have to look at refinancing student loans as a type of student loan repayment plan that is more sustainable. During the process, a private lender pays off the remaining loans you have. You’re not off the hook yet, because you then have to pay off the lender that has closed your student loans. What you do get in return, however, is one loan that you can pay off with a better payment schedule and interest rate. In the end, you will be paying a single monthly payment towards one lender. 

What is an ideal credit score?

Credit scores are an essential factor in getting the ideal rate from your lender. In most cases, you or your cosigner will need to have a credit score that is in the high 600s. This is the bare minimum score you need to have. Most lenders in the area of refinancing, usually look for borrowers that have a credit score around the 700 range.

As you might have understood by now, the better you or your co signer’s credit, the lower your interest rates will be. This does not mean that you are cornered if you have low credit. There are plenty of institutions and banks that offer student loans for bad credit. Your considerations should not end there, because you will need to have a sufficient income to be able to pay off your monthly payment, and cover other expenses. So, if you are barely making ends meet every month, you will have a hard time finding a refinance lender. 

What are the best banks for refinancing?

refinance student loans

The topic of best banks to refinance student loans may lead to varied conclusions depending on what you are precisely looking for. You could be looking to refinance private student loans; in this case, you might need to focus on a specific area. But in most cases, lenders give out loans for refinancing regardless of the place you owe. 

Penfed Credit Union

Penfed Credit Union can be seen as one of the best options for those looking to refinance student loans. They have a variable APR (Annual Percentage Rate) that is between 2.23-6.97 percent. The fixed APR, however, is between 3.23-5.53 percent. This makes Penfed Credit Union a preferable lender when it comes to refinancing. The difference between the fixed and variable APR is not too broad when compared to many other banks and organizations. The biggest selling point of Penfed may be the convenience it offers to married couples who are looking to refinance their past student loans into a single loan. The services are provided solely online, meaning you don’t have to travel around much and deal with other hassles. 

PNC Student Loan Finance

PNC student loan finance is seen as one of the best banks to refinance student loans. The main reasons for this are the relatively low credit score requirement and the APR that is on offer. The minimum credit score you need to have to apply for refinancing is 660. Which certainly isn’t the lowest on the market, but is relatively forgiving when comparing it to others. The variable APR offered by PNC is between 2.79-5.59 percent. Fixed APR, on the other hand, is between 3.44-6.24 percent. These rates and credit score requirements make PNC student loan finance one of the most desirable lenders that refinance loans.

What should I do if I want to get started?

There are a couple of things you should be doing when looking to refinance student loans. One of the first things you should do is make sure to have enough research on hand regarding your case. There could be small things you might have overlooked regarding your previous student loans. Many banks and lenders might not state every aspect of the deal you will be making. To make sure you are not tricked in the process, it is highly recommended that you read online reviews of the banks and lenders before going ahead with the signature. Remember, your goal is to save yourself the trouble by uniting all of your previous loans into a single payment, and not making more trouble for yourself.