Are you one of the approximately 45 million U.S. adults carrying a student loan balance? Then you might be able to benefit from a student loan refinance. Those who refinance are often able to vastly improve their overall financial health. Here’s what to do before refinancing student loans.
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What Does It Mean to Refinance Student Loans?
It’s likely that you’ve heard of refinancing before, even if a student loan refinance will be your first rodeo. While the basic principles of refinancing are universal, there are a few little details that are unique to student loans.
So, what is refinancing? On the most essential level, it’s taking out a new loan that will take the place of your old one. By doing this, your new loan can come with more advantageous features, such as a lower interest rate or a different repayment term.
What’s important to note is that you can only refinance student loans with a private lender. You’ll see in the next section why this is an important piece of knowledge for borrowers who want to know what to do before refinancing.
What to Do Before Refinancing Student Loans
Now that you’ve seen the basics in terms of what it means to refinance, let’s look at the details. There are a few critical pieces of information you need to evaluate before you decide a student loan refinance is the right move. This is what to do before refinancing student loans:
Know what loans you want to refinance
If you have more than one student loan, you’re going to want to determine which ones are worth refinancing. The thing is, there are some loans you might not want to refinance, even if you can potentially lower your interest rate. Since all student loan refinancing has to be done through a private lender, those who have federal student loans will lose some inherent benefits such as income-driven repayment or forbearance plans.
Individuals who believe they’ll need to utilize these programs at some point in the future should likely refrain from refinancing. Those who already have private loans, or less desirable federal loans, such as Direct PLUS Loans, will be the ones who will want to look most closely at refinancing student loans.
Know your credit score
Again, since all student loan refinancing must be done through a private lender, you’re going to have to meet certain credit score requirements. If you have a lower credit score, you’re going to either have to raise it or find someone who will co-sign your student loan refinance. Most lenders are going to want to see a credit score of at least 650—though you might be able to find a few who will work with a lower score.
Find the best student loan refinance offer
It used to be tough for consumers to find the best rates and terms on a student loan refinance. Thanks to companies like Juno, however, this is no longer the case. Juno takes bids from a large pool of lenders that all want to access their member borrowers. Since Juno takes a flat rate no matter what, they’re only motivated to select the absolute best deals for consumers, who don’t have to pay anything for the service.
This is a winning solution for anyone who’s sure they want to refinance student loans. And if you’re able to find a better offer out there, Juno will even match it. That’s how confident they are in providing you with the best student loan refinance on the market.
These are the main things borrowers need to do before refinancing student loans. By going through and accounting for all of these elements, you can ensure you’ll end up with the right loan for your financial situation.