Many students rely on federal and private student loans to help them achieve the dream of higher education. But when it's time to repay, it can sometimes be stressful and confusing—especially if you're dealing with multiple loans and lenders, and different monthly payments and due dates.
If you're feeling overwhelmed by your student loans, refinancing could be a good option. When you refinance, you take out a single new loan to pay off your old ones. The new loan will often come with a new interest rate, new term and a different monthly payment amount.
Are you wondering if student loan refinancing makes sense for you? It all depends on your unique situation. Wright-Patt Credit Union can help simplify your experience and make the big picture clearer. Contact our student loan and college access counselors to learn more.
Here are a few possible reasons to consider refinancing your student loans:
#1. Lock in a lower interest rate
One of the best reasons to refinance any loan is to secure a lower interest rate. With a lower interest rate, more of your payment will go towards the principal balance each month. This can help you save more money in interest over the life of your loan!
If you want to pay off your loans even faster, consider a loan with a better rate and a shorter term. Keep in mind that a shorter loan term usually means higher monthly payments. But, you'll likely pay less in interest over time and pay off your loan much sooner. If you have a little extra money in your budget, refinancing with a shorter-term loan could be a smart move for you.
Using a student loan refinancing calculator will help you get an idea of how much you could save!
#2. Reduce your monthly payments
If you're having a hard time making student loan payments, refinancing may help you lower your monthly payment to an amount that fits your needs. There are a few ways refinancing could reduce your monthly payments.
First, if you refinance and get a lower interest rate, your monthly payment will likely go down. This way, you'll pay less each month and less over time in interest.
You could also refinance and stretch your payments over a longer timeline. There is a potential drawback of extending your loan term. While your monthly payment will go down, you'll likely end up paying more in total since you'll be paying interest over a longer period of time.
#3. Simplify your loan repayment
Another good reason to refinance is to combine multiple student loans into one, easier to manage loan. If you have several loans, you may also have several lenders. This can make it a little more complicated to keep track of due dates and interest rates. When you consolidate and refinance your loans, you'll have a single monthly payment with only one lender and due date to remember.
Impacted by the Coronavirus Pandemic?
As we face the current coronavirus (COVID-19) situation, please know that your well-being and financial needs are our top priorities. With that in mind, in regard to your student loan account we have taken steps to ensure that you have access to the services and personalized support that you may need.
Please also note that the federal government is currently waiving interest and has suspended federal student loan payments. It is unknown when interest charges and payments on these loans will be reinstated. With these provisions, you should carefully consider your options for refinancing any federal student loans at this time. For the latest information, visit studentaid.gov/announcements-events/coronavirus.
WPCU Helps Make Lending a Little Easier
Deciding to refinance your student loans is a personal decision that depends on your goals and unique situation. Wright-Patt Credit Union can help simplify your experience and make the big picture clearer. We'll show you how to refinance and consolidate your student loans into one easy-to-manage payment at a great low rate.
WPCU's student loan refinancing allows eligible borrowers to refinance and consolidate private and federal student loans (including PLUS loans) into one manageable loan. We offer competitive rates and flexible repayment terms to fit your needs. Plus, you'll be borrowing from the credit union you know and trust.
If you do currently have federal loans, one thing to keep in mind is by refinancing federal student loans, you may lose certain borrower benefits from your original loans. These may include interest rate discounts, principal rebates, deferral options or some cancellation benefits that can significantly reduce the cost of repaying your loans.
Learn more about WPCU's student loan refinancing and calculate your potential savings. You can also contact our student loan and college access counselors with any questions you have about student loan funding and repayment.