Student loans are a huge part of debt crisis. Next to mortgage loans, student loans are the reason why most individuals are in extreme debt. Students are forced to take out various loans to cover the yearly changes in college costs all the time. After graduation, they either struggle to find employment to cover the costs of the student loans or end up with a job that cannot cover the costs to pay the loan back. Sure, there is the option of deferment, which lenders allow you the chance to improve your financial situation by pushing back payments on the loans. But your deferment years go by so quickly, you do not even realize it until your first bill comes in the mail from your student loans establishment. Also, there is the option to consolidate all of your loans to pay one set fee per month, but even those payments can be too much to keep up with. Luckily, there are student loan refinance companies that are set in place to help individuals with paying back student loans. Keep reading for more information on companies that offer student loan refinance.
Consolidating and Refinancing: Know the Difference
One thing that confuses individuals who are in need of student loan refinancing is that they assume that refinancing will bring all of their loans together to equal one summation of a payment to cover all of the loans. Student loans can be handled in that manner, but it is not called refinancing. It is called consolidating your student loans. Here are some key differences between the two terms:
- Consolidating your loans is the option that could make your payments lower, but your interest rate stays the same.
- Consolidating your loans stretches your payments over a longer period of time to make your payments lower each month. Your debt will be stretched longer too.
- Refinancing your loan means that you negotiate new terms for a new loan.
Ultimately, if you want to pay lower payments, but have your debt stretch over a longer period of time, choose to consolidate your loans. If you want to pay off the debt quickly and lower the interest rates of the loan, choose to refinance your loans.
Using Refinancing Companies
There are a variety of companies that offer student loan refinancing. And as the student debt number continues to rise, more companies will come to light to offer assistance to individuals suffering in student loan debt. You can research student loan refinancing companies over the internet or contact your school’s financial aid offer from some suggestions. When you are deciding on the student loan refinancing companies, make sure to consider the following aspects:
· Trustworthiness of the Company
Can you trust the company you are refinancing your student loans through? Keep in mind that you will be working with this company for a long time until your loans are paid off in full. You want to make sure that you are comfortable with using the company. If you cannot make sure that you are comfortable when reading about the company online, then do not choose that company to work with regardless of how great the company seems to be. You want someone on your side that will help get rid of your student loan debt, not give you more issues with it.
· Rates Associated With Refinancing
Remember that each student loan refinance company operates on different rates. Fixed rates and variable rates difference from company to company. Make sure to choose a company whose rates suite your spending ability.
· Implications behind Refinancing
Make sure that you understand all of the implications that come with refinancing student loans. In the case of federal loans, you lose the ability to pay back loans on the basis of your income when you decide to refinance. You also lose the ability to defer student loans.
Remember, when you choose to use student loan refinance companies, you are allowing them the ability to adjust the interest rates for your loan. You want to make sure that you trust the company you are going with, and make sure you know all that will be involved in the refinancing process.
The Empowerment of Refinancing
Graduating college and facing loan repayment may be your first attempt at negotiating seemingly unchangeable terms. Refinancing can work wonders for you financial situation. It will allow you the opportunity to negotiate new terms of your student loans to a place that is affordable for you. It can raise you up out of debt, and allow you opportunities to do a variety of things. You can save up money to make payments to your student loans in bigger amounts that you had originally expected. Student loan refinancing can even allow you the opportunity to obtain further education because your previous loans were stopping you from pursuing other degrees.
Keep in mind that when you decide to use student loan refinance, you are simply negotiating new loan terms and taking out a brand new loan. Refinance works to decrease your interest rates, not erasing your debt entirely.