Education these days can be quite expensive, due to this almost more than half the students who attend universities avail a student loan. However, when it comes down to repaying the loan on time, it may seem impossible for some as their monthly payments are too high. To solve this crisis, more and more lenders are offering programs such as student loan refinancing and student loan forgiveness programs. These can benefit an individual who feels that their debt is too much and appears to be growing.
What is Student Loan Refinancing?
The process of student loan refinancing is when a loan provider replaces your existing student loan with a new one. The main benefit to this is that the new loan will have negotiable repayment terms better suited to your current financial situation and better interest rates. When it comes to lenders who offer the option of refinancing a student loan, check to see if you meet the requirements of their eligibility criteria as they may be different qualifications as well as different refinance rates specific to each lender.
It is advisable to consider the option of refinancing your loan if you find yourself in a situation where you are comparing different loan providers to see who is offering the best repayment terms suited for you. Also, if you feel that your present loan is too much of a hassle and will only increase the amount of debt you owe, opt for the process of refinancing your student loan. Some of the main advantages of availing the student loan refinancing option are listed as follows.
Clear Your Debt at a Faster Pace
Anyone who is facing debt should consider getting their loan refinanced. People who have availed student loans can be stuck in this cycle of debt for years if they’re not careful. If you get approved for the loan refinancing process, you can shorten the duration of your new loan term and increase your monthly loan repayment amount in order to clear your loan as soon as possible or you can choose to avail the refinanced loan at a lower rate of interest and stretch out your loan term as the monthly repayments will be more affordable this way.
Monthly Repayments will be Lower
Once you are selected for the student loan refinancing process, you can choose a low interest rate as this will reduce the monthly loan repayment amount but will increase the payback duration of the loan. However, the benefit of this is that the individual availing the loan will not have to compromise on living expenses and spending habits as long as they make the monthly loan payments on time.
Before you choose a loan provider, ensure that you conduct proper research on all the providers who are offering the loan refinancing option. Compare a list of the top 5 loan refinancers and check their terms and conditions carefully, especially the eligibility criteria requirements. Consider the following questions as a checklist to ensure that the loan provider you select is the right one for you.
- How much are you required to pay every month as per the refinancing criteria?
- Does the loan provider offer fixed or variable rates of interest?
- What is the interest rate and how much can you save as a result of this option?
- How reputable and trustworthy is the loan provider?
- Do they have good customer support on hand?
- Are there additional features that come with the refinancing option?
- Is there an origination fee or penalty for prepayment?
- What is the minimum and maximum amount of debt loan refinancing?
- How do other people who have refinanced their loan feel about the loan provider?
What are the Student Loan Forgiveness Programs?
A student loan forgiveness program is when you are not able to repay the loan amount due and are pardoned. Once thi occurs, the remaining amount you owe will be written off. However, not everyone is eligible for student loan forgiveness. In the United States there are loan forgiveness programs by states as well as different types of forgiveness programs, a few of which are listed below.
Student Loan Forgiveness Program for Nurses
This type of student loan forgiveness program caters to nurses who are unable to clear their student loans. They have specific programs such as the NURSE Corps Loan Repayment Program as well as Public Service Loan Forgiveness (PSLF).
Public Service Loan Forgiveness
The Public Service Loan Forgiveness (PSLF) program is the most popular type of forgiveness program and is specifically made for public services employees. You can only qualify after you have made 120 loan repayments, from which the remaining amount owed will be written off.
When it comes to student loans, if one is not too careful they might end up staying in debt for a very long time. The main reason why this occurs comes down to people not having good financial planning, following wrong financial advice and not making smart saving choices. Always ensure that you are able to pay back the monthly loan payments before you avail one in the first place and do not borrow an amount that is well outside your means. If you have already spiralled into debt, then your best option is to consider applying for the refinancing process. Check your state to see what student loan forgiveness programs they have.