Want to refinance your student loans at a lower rate? Here’s what experts say to do

While interest rate cuts and financial assistance programs have been helpful during the pandemic, corrective measures over the past year have left many pinching pennies — and they’re far from over. In October, the federal government Resume Federal Student Loan Repayment.

“Now that federal student loan payments are starting again, many people are looking for ways to lower their payments or interest rates. Depending on your situation, refinancing your student loans can help meet either of those goals,” says Brian Walsh, Ph.D. , CFP at SoFi.

However, you have to be careful that you don’t give up more than you gain. Here’s how experts advise you to communicate Student loan refinancing Landing at a low rate.

Start by checking out your personal student loan options here to see if this might be a path for you.

Assess your creditworthiness

Start the refinancing process by reviewing your financial situation and credit report to see where you stand.

“Don’t underestimate the power of your credit score. This three-digit number can be your best friend or worst enemy when looking for a low rate,” says Andrew Gosselin, CPA and founder of Business Tutoring.

Lenders look at factors such as your credit score, payment history, income and job stability to assess the amount of risk you present. Strengthen your financial health and credit, Your chances are good Qualify for competitive rates and terms.

“If your credit score is low, work to improve it before refinancing,” says Michael Hammelberger, CFA of Bottom Line Group, “paying your bills on time, reducing your credit card balances, and correcting any errors on your credit report. Help improve creditworthiness.”

Learn more about how you can qualify for competitive student loans right here.

Review your current debt

Before you can find one Good student loans, it is important to fully understand your current debt. Note the outstanding loan amount, interest rate, fees, hardship options, discounts and any other benefits or protections offered by your lender. You’ll want a complete picture of exactly what you’re looking to gain from refinancing your loan and what current benefits you’ll be prepared to give up.

Shop around and get quotes

If your credit and finances are in good shape, it’s time to shop around. “Look for a variety of lenders that offer student loan refinancing options with competitive interest rates, flexible repayment terms and positive customer feedback,” says Hammelberger.

Once you have a shortlist of lenders, get quotes.

“Many lenders have interest rate ranges online, but it’s helpful to check your rate with a soft credit check to understand the unique options available to you,” says Walsh, “A soft credit check won’t negatively affect your credit score as much as a hard inquiry. Don’t count.”

With actual rates at hand, you can view as well as compare offers which is the best And if it beats your current debt.

“Check the terms of each refinancing offer carefully. Look for features like automatic payments, interest rate discounts, forbearance options and loan forgiveness programs. Compare the total cost of the loan, including any fees and penalties,” says Hammelberger.

Be aware of the terms of the loan

When reviewing loan offers, pay careful attention to wording options.

“It’s about balancing your current financial ability with your long-term financial health,” says Gosselin. A long-term one can help lower your monthly payments, but also allows you to pay more in the long run. A shorter term, on the other hand, may result in higher payments now but will get you out of debt faster — with lower overall interest.

“If your priority is getting the lowest possible interest rate and you can handle a higher monthly payment, then a shorter repayment term may be the way to go,” adds Walsh.

Consider a cosigner

If you can’t qualify for a lower rate on your own, consider applying with a well-qualified cosigner.

Hammelberger says, “A creditable cosigner can help you get a lower interest rate. But, remember that cosigners share the responsibility of paying off the loan.”

To go this route, you need to find someone who is both qualified and comfortable taking on the responsibility.

When refinancing may not be the best move

Refinancing a student loan can be helpful, but it won’t always be the best solution. In some cases, you may lose more than you gain. For example, federal student loans come with protections like income-based repayment plans, loan forgiveness programs, and hardship options that you forfeit when you refinance. In a personal loan.

“While refinancing can lower your interest rate and potentially save you money, you must consider the trade-offs, such as the loss of certain federal loan protections,” Hammelberger says. “A qualified financial advisor can provide personalized advice based on your unique situation.”

Learn more about private student loans and your options here.