BASIC FACTS ABOUT STUDENT LOAN REFINANCING

2007-06-20 15:49:53

( Careers )



Student Loan Refinancing, also known as career development loans, is commonly practiced by graduates who apply for a loan at lower rates which they could not afford to do as students.

The idea of student loan refinancing is to consolidate your loans into one monthly bill at a rate running on fixed interest. This allows you repayment extensions in order to reduce your monthly payments.
Most banks have student loan consolidation centers and there are several ways to avail of the program.

STUDENT LOAN CONSIDERATIONS

Several things need to be considered when refinancing your student loans. The first consideration is refinancing your federal student loans and individual loan separately. Due to the structure of federal loans, you can avail of lower equity loan rates on your private loans. Basically, private student loans are personal loans based on the assumption that your income will increase as you continue your education. Combining the two loans when refinancing yields a higher rate of interest than when financing the two loans individually.

Second, school loan consolidation rates may differ by lender and based on your credit history. Before deciding to avail of student loan refinancing programs, ensure that your credit history is in good shape. Check your credit report and initiate actions to fix problems. When that is done, proceed to rate comparison from different lending institutions. Refinancing charges usually change once in a year. .At present, the rates are very low but there’s no saying how it will change which is dependent on economic changes.

BENEFITS OF STUDENT LOAN REFINANCING

For many students, federal loans form part of the loan picture. On the legal aspect, government-subsidized loans can only be granted to students after graduation. It is that time of the year when there is an opportunity to refinance and grab of low interest rates.

Federal loan consolidation typically provide students a drop-down rate of one percent after two years when not in default on the new refinanced loan. This provides another refinancing incentive if you are not expecting to pay off your student loans in less than two years.


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