Refinancing Consolidated Student Loans

Usually the main goal in refinancing consolidated student loans is to lower your monthly payments and/or your interest rate. Many students have federal loans provided by the U.S. Department of Education, and these loans can only be refinanced after consolidation if you are increasing the amount of your loan. However, private loans that have been consolidated can be refinanced because they are not subject to the same requirements as federal loans. Something else that you should know about federal loans is that they can only be consolidated once.

Different lenders have different criteria that must be met for the refinancing of consolidated student loans. Before you begin the process you should review your credit history and your credit score which makes a difference when it comes to approval for refinancing as well as your interest rates. If you find that your credit is not as good as it needs to be, there are non-profit credit counseling programs that can help you improve your credit by creating a repayment plan for debt and guiding you towards eventually building more favorable credit.

If your credit is already in good shape, you may qualify for the lowest interest rates on refinancing. Rates also vary by lender, so after reviewing your credit status you should comparison shop for lenders who offer the most favorable interest rates. You can do this in several ways. First, you can find private lenders in your local Yellow Pages and make a list from there, or you can go online and search the Internet for private lenders who offer, consolidate and refinance loans for students. Narrowing down the list can be done by checking each lender with the Better Business Bureau to make sure they do not have active complaints and crossing off the companies that do.

From there, you are ready to call each lender and inquire about interest rates, fees and policies on refinancing consolidated student loans. Speaking with a financial representative on the phone can help you gauge the level of customer service the company offers. This is another way of shortening your list of potential lenders. Once you’ve tracked down the financial institution who can offer you good customer service and low rates you are ready to begin your application process. Sometimes the company can take your application online or over the phone, but some people prefer dealing with their lender face-to-face.

The majority of lending companies have the requirement that you are not in active status with your loan, as in you are not currently using it to pay for tuition at a school you are attending. Therefore, this type of consolidation refinancing is done after you have left school and are making your payments. There may also be a minimum when it comes to the balance of the loan you want to refinance. And of course, your credit report will be pulled and your history and score will make a difference when it comes to approval and how low your rates will be.

There are benefits of consolidation and refinancing. When you consolidate loans, you are taking a number of loans and putting them together into a single loan, which can lower payments and make the payment process more convenient. Refinancing can change the term of your loan, for example if you lengthen the term your monthly payments can go down. Also, refinancing consolidated student loans from private lenders can secure you better interest rates if rates have dropped and/or if your credit has improved since you obtained the loan. If you have questions about the refinancing or consolidation of federal student loans, speak to a financial aid officer at your school or call the customer service number listed on the bills you receive for your federal loans each month.