Student loan refinancing is all over the news these days. You may have borrowed federal and private student loans and found that while you can handle the federal student loans, you’ll have tough time with private student loans. Unfortunately, there is no way to refinance federal student loans within the federal student loan system.
There are some unique private student loan refinancing options these days which might provide both immediate and long-term solutions for private student loan borrowers.
The Typical Situation Of The Private Student Loan
It’s not uncommon for students to have a mix of both federal and private student loans. Private student loans generally have fixed interest rates which can be as high as 12.5% with terms as long as 30 years.
These outrageous interest rates and terms mean that most of the monthly payments you make go to interest every month. You are probably on the hook for paying thousands of dollars of interest before you substantially begin to reduce the principal.
That’s why many private student loan borrowers are looking at private student loan refinancing options.
The Pros and Cons Of Private Student Loan Re-Financing
Let’s talk about some of the pros and cons of refinancing private student loans.
The Pros included:
- Lower interest rates,
- Shorter terms,
- No origination fee on the refinancing the private student loans, and
- No prepayment penalty if you pay the loan off early.
The Cons can include:
- Default which can occur after being only 30 days past due on payments,
- No deferments or hardship forbearance,
- No modified repayment terms,
- No graduated income-driven plans,
- No discharge options for death or disability,
- No default resolution options,
- Requirement that the loan can be classified as an educational loan for bankruptcy purposes which means it can be difficult to discharge the loan in bankruptcy, and
- Mandatory arbitration clause which is unfavorable to consumers
Before you make a leap into refinancing your private student loans you owe it to yourself to investigate these options. If you have good credit, a steady job and the prospects of paying off the loan quicker with a reduced payment plan, private refinancing might be an option for you.
However, for most people student loan refinancing is out of reach because the best refinancing programs require both stellar credit and excellent earnings.
What You Need To Do To Learn More About Your Options About Student Loans
Contact student loan attorney Nancy Cavey who can help you determine what refinancing program best suits your needs.
Call today for a complimentary consultation at 727-828-9955.