Learn how to get, refinance or consolidate student loans
Many Americans require student loans to complete their higher-education pursuits. Getting a new student loan or refinancing existing student loans requires a thorough understanding of the available options.
Federal student loans offer attractive rates and terms, but carry funding limits and may not be available to all. Private student loans are comparatively less flexible, but can be used to cover expenses when federal loans are insufficient or unobtainable.
If you are one of the more than 44 million Americans with an existing student loan, consider refinancing or consolidating multiple loans — federal, private or both — to potentially reduce interest rates and monthly payments.
$57,500 (undergraduate), $138,500 (graduate)
3.4% to 8.5%
Federal student loans — like Stafford, Perkins and PLUS parent loans — are backed by the government. They are more flexible and less expensive than private loans, but private lenders are increasingly competitive, especially with the current low interest rates.
In 2017, federal PLUS parent loans carried a 6.31 percent interest rate and 4.3 percent origination fee, where available private student loans offer lower rates and no origination fee. Compare several private student loans with federal loan options before committing.
Here are a few things to be aware of when comparing private student loans.
Before you sign up for anything, do your research to cover the following points.
Consolidate or refinance existing student loans to obtain a lower interest rate, simplify the repayment process or remove a cosigner. Federal and private student loans can be refinanced together or separately.
In debt consolidation, several loans are combined into a single loan and interest rate, with one monthly payment to a single lender. In debt refinancing, a new loan with new rates and terms is taken out to pay off an existing loan. There are federal and private options.
Here are some factors to consider when refinancing private student loans.
Do some research – and math – before you refinance your student loan.
Once you refinance or consolidate federal student loans through a private lender, you are no longer eligible for federal direct consolidation, federal loan forgiveness programs or income-based repayment programs the government offers.