There is infinite info out there about student loan refinance, however some debtors should be confused concerning the course of and their choices. What’s truth and what’s fiction? We may also help! Here are three widespread student loan refinance myths debunked.
MYTH #1: I’ve to refinance all of my student loans.
While you sometimes can refinance and consolidate your whole student loans into one new loan, you don’t have to! There could also be causes to exclude a few of your loans from a student loan refinance. For instance, federal student loans include sure advantages reminiscent of income-based reimbursement or student loan forgiveness for public service, and you might want to maintain these loans separate. You can select which loans to roll into your refinance and proceed making common funds on any you exclude.
MYTH #2: I can solely consolidate/refinance my federal student loans with the federal authorities.
The U.S. Department of Education presents a consolidation program for federal student loans, which mixes a number of federal student loans right into a single fee. A Direct Consolidation Loan has a set rate of interest for the lifetime of the loan. The mounted fee is the weighted common of the rates of interest on the loans being consolidated, rounded as much as the closest one-eighth of 1 p.c.
However, you might also have the ability to refinance your federal student loans with a non-public lender like a Student Choice credit union. Our refinance answer means that you can mix each federal and personal student loans into a brand new loan with one straightforward fee. Depending on the lender you choose, you will have a selection of a set or variable fee, in addition to completely different reimbursement phrases. (Keep in thoughts you might lose sure advantages of your federal student loans if you happen to roll them into a non-public student loan refinance.)
MYTH #3: Once I’ve refinanced my student loans, I can not refinance once more.
If you have got beforehand refinanced or consolidated your student loans, you might want to refinance once more at a later date to benefit from decrease rates of interest or to alter your reimbursement phrases. Plus your credit rating could enhance over time, presenting a possibility for a decrease fee.
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It’s essential to keep in mind that each student loan scenario is exclusive. There are many components to contemplate when refinancing student loans, together with a doable lack of loan advantages for any federal student loans you presently maintain.
In addition, the CARES Act was handed in response to occasions associated to the COVID-19 pandemic and consists of broad aid measures for federal student loan debtors, that are set to run out after May 1, 2022. If you might be contemplating refinancing your federal student loans, please make sure that to assessment these measures at www.studentaid.gov/coronavirus to know your choices.