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By Rachel Layne
/ CBS News
President Biden’s student announced in August may bring relief to millions of federal student loan borrowers. But if you have a private loan – that is, a loan you took out directly from a bank, credit union or finance company and not the government – you’re not eligible.
Don’t despair, however. You have options, including refinancing. This can help lower your monthly private student loan payment and put money back in your pocket. You can easily apply for a refinance loan right now.
To learn more about this unique financial opportunity, read on.
When you refinance a private student loan, you take out a new loan from a bank or other financial institution, use it to pay off the old one, and begin making payments on the new student loan. The idea is to replace your old student loan with one that has more favorable terms for your current situation – and one that keeps your .
For students and graduates with private loans, refinancing can offer some relief in a number of ways, including lower monthly payments or interest rates, depending on the borrower’s and need.
You can refinance a public student loan with a private loan, but not the other way around. Some student loan borrowers combine public and private loans into one private loan.
Take note, though. You won’t be eligible to apply for federal programs like forbearance, deferral or forgiveness if you take your public loan private. That exclusion includes programs for those in public service, including the armed forces. So thoroughly research the move before moving ahead and make sure there aren’t any government programs open to you.
Private student loans cannot be consolidated or refinanced into public (government) loans.
You can explore your private student loan refinance options today to determine if makes sense for you.
To refinance your private student loans, you’ll need to apply at a bank or financial institution.
Your lender will evaluate your financial health, just like they would for any other kind of loan. It’s a good idea to shop around for better interest rates and terms than your existing student loan and take stock of the requirements to apply. Compare and contrast lenders to find the best one for you.
If you have a (typically 670 or higher), a steady job, money in an emergency savings account and aren’t likely to qualify for federal aid programs, private loan refinancing may be a good option. Many lenders look for a below 50% to refinance a student loan.
It’s a good idea to thoroughly research the pros and cons of your particular situation before applying to refinance your student loan. Closely compare the total payoff amount of your prospective new loan to your current loan, including interest. Longer loan periods can ultimately cost far more than your original loan because of the larger number of interest payments – even if monthly payments are lower.
If you decide to refinance, shop around. Before you apply, experts recommend you check with a credit counselor or financial adviser.
Once you’ve chosen a lender, you’ll need:
It’s also a good idea to ask for a loan checklist from the lender ahead of time.
If refinancing sounds like something you could benefit from, it’s easy to get started.
First published on September 7, 2022 / 8:12 AM
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