Private Student Loan Refinance
Refinancing private student loans is a bit like a financial spring-cleaning. Instead of dealing with multiple loans, different monthly payments, and different loan servicers, refinance combines multiple loans into one, and makes your repayment process easier. All of the money is in one place, and there s a lot less mess and hassle to deal with. In addition to providing ease and organization, private student loan refinance can also give a borrower a bit of a financial windfall, especially if that borrower meets a certain set of requirements.
A Few Definitions
Private student loans for college aren t a common choice, which makes refinancing private student loans even less common. In the 2007-2008 school year, for example, The Project on Student Debt reports that only 14 percent of students had a private loan. The rest subsidized their education through:
Those who do have private student loans likely got those loans when they had very poor credit ratings. They may have been unable to prove a steady work history or a stellar ability to pay back bills because they were either young or underemployed prior to entering school. As a result, most students who get private student loans have poor credit ratings, and that might mean that their original student loans were a little expensive.
A private bank offering a student loan can look at the going interest rate in the marketplace, as well as the reliability of the person asking for the loan. With these two pieces of information, a banker can come up with a customized interest rate that s reasonable and in line with the marketplace. But that interest rate might be different than the rate another bank might give, and it might reflect the way the economy looks at the moment. In some cases, the loan might even be variable, so the amount of interest charged might dip and sway with time.