Looking to refinance student loans? Want to consolidate student loans?
1,2 and 3 steps to help you choose between refinancing and consolidating your student loans.
No More Searching. Look no further! Here are three quick steps to help you decide whether refinancing or consolidation is the best option for you.
Before you can decide whether refinancing or consolidation is the best option for you, you first have to understand what each option entails, as well as the pros and cons of one over the other. Here’s a quick breakdown of the two different processes.
The type of loans you have will help you determine whether refinancing or consolidation is the best option for you. If, for example, you have federal student loans, you can choose to either consolidate or refinance them. However, if you have private student loans, your only option is to refinance them with a private lender.
While both refinancing and consolidation can be very helpful options, not everyone may qualify for them.
In order to qualify for loan consolidation, you must:
- Have at least one Direct Loan or FFEL Program loan that you are in the process of repaying, or that is in a deferment or forbearance period.
- If you are in default for a loan but wish to consolidate it, you must first make a repayment arrangement with your current loan provider, or agree to repay the new consolidated loan under one of the government’s income-driven repayment programs (PAYE, REPAYE, IBR).
- If you wish to re-consolidate a consolidated loan, you must usually add another Direct Loan or FFEL Program loan before doing so.
In order to get the best offer when refinancing your loans you should:
- Be in good credit standing and have a good credit score of at least 650.
- Have long term work experience. Stable employment for at least one year shows financial stability and will improve your chances of qualifying for a better offer.
- Consider adding a cosigner. Adding a cosigner with really good credit history can help you qualify for an offer you might not have qualified for by yourself.
- Compare offers from multiple lenders. Different lenders have different eligibility requirements, so be sure to compare a variety of options. Using Credible’s student loan marketplace, you can compare offers from multiple, vetted lenders and find the best offer for you.
Not all lenders are alike — each lender will consider different things when evaluating you as a borrower, and will offer you different terms and benefits with your loan. So how do you decide which lender is best for you? You can start by asking them the following questions:
- Is the lender offering a competitive rate?
- Does the lender offer both fixed and variable interest rate loans?
- Can they refinance federal and private student loans together?
- What protections can the lender offer you if you lose your job, or can’t afford to make your payments?
- Do they offer loan benefits such as interest rate discounts?
- Can you choose between making lower monthly payments or having a shorter overall repayment term?
- Do they offer any other benefits, such as helping you with your career and networking needs?
- What does the application entail, is it available online, and how long does it take?
- Do they offer you a dedicated client services contact to answer your questions?
- How much will it cost you? Are there any fees, like origination fees or a prepayment penalty?
