by Tom O'Hare | Jun 30, 2025 | During & After - Just Thinking, Student Loan Repayment
Should I refinance my education loans?
Refinancing your college loans is a significant financial decision that can save you money, but it’s not the right choice for everyone. Here’s a breakdown of factors to consider to help you decide:
Reasons to consider refinancing:
- Lower interest rate: If you can qualify for a lower interest rate than your current loans, you can save thousands of dollars over the life of the loan.
- Improve credit score: A good credit score can lead to lower refinance interest rates. Refinancing could be beneficial if your credit has improved since you took out your original loans.
- Simplify payments: Refinancing allows you to consolidate multiple loans into a new loan with one monthly payment.
- Switch to a Fixed Rate: Refinancing to a fixed-rate loan can provide more predictability if you have a variable interest rate loan and are concerned about the rate increasing.
- Removing a Co-signer: Most loans carry a co-signer release of 24-36 months based on eligibility. If eligible, removing a co-signer from the note earlier can benefit the co-signer’s credit and ability to borrow.
- Pay off debt faster: A lower interest rate can allow you to put more money towards the principal balance, enabling you to pay off your debt sooner.
- Steady income: Lenders will evaluate your income and debt-to-income ratio to ensure you can afford the new loan. A steady income can increase your chances of being approved and getting a good rate.
- No need for federal loan protections: Refinancing may be a good option if you don’t require the flexibility and protections offered by federal loans, such as income-driven repayment or forbearance.
When refinancing may not be the best option:
- Federal loan benefits: Refinancing federal student loans with a private lender means losing access to federal protections and benefits like income-driven repayment plans, loan forgiveness programs (e.g., Public Service Loan Forgiveness), deferment, and forbearance options.
- High-interest rate: Refinancing might not be worthwhile if you cannot secure a lower interest rate than your current one.
- Bankruptcy or default: If you have recently defaulted on loans or declared bankruptcy, you will unlikely qualify for refinancing.
- Fees outweigh savings: For borrowers with low loan balances, the cost of fees associated with refinancing may outweigh the interest savings.
- Unstable income: If your income is unpredictable, it’s best to stick with federal loans, as they offer more flexible repayment options.
- Pursuing loan forgiveness: Refinancing will make you ineligible if you pursue a federal loan forgiveness program.
In summary:
Refinancing can be smart if you can secure a lower interest rate, have a stable financial situation, and don’t require the protections offered by federal student loans. However, it’s crucial to carefully consider the potential loss of federal benefits and assess your circumstances before deciding.
To make an informed decision:
- Prequalify with multiple lenders: Compare rates and terms that different refinance companies offer.
- Use a student loan refinancing calculator: Estimate your potential savings based on different interest rates and repayment terms.
- Evaluate your financial situation: Consider your credit score, income, and overall debt levels.
- Understand the trade-offs: Weigh the benefits of a lower interest rate against the loss of federal loan protections.
By carefully evaluating these factors, you can determine if refinancing is the best way to manage your college loans effectively.
Call use at Get College Going. Were happy to review best practice options for you and make recommendations on a ender or credit union.
by Tom O'Hare | Jul 5, 2023 | Student Loan Repayment
Returning to Repayment – What’s Ahead for Student Loan Borrowers?
The freeze on student loan payments expires in September. In place since March 2020, the start of the pandemic, Federal Student Loan borrowers have been exempted from making monthly payments and saw their interest rates drop to zero during this time.
Beginning on September 1, 2023, interest on all Federal student loans, Direct Student Loans, Direct PLUS, and the older FFELP and Parent Loans will begin to accrue interest. Monthly repayments begin again on October 2023, based on arrangements made with the borrower’s loan servicer.
What next steps should borrowers take to prepare for repayment?
- Eye on Washington! The Administration appears to be working quickly to create a new program to provide debt relief and support to student loan borrowers. Initial details were released on 7/5/2023, revealing new repayment and forgiven options. If approved, the program will take a year before it begins.
- In the meantime, borrowers of Federal Direct Student Loans, Federal PLUS Loans, and the older FFELP should visit studentaid.gov, check their loan account for accuracy and payment details, and double-check the name and location of their loan servicer. Since the freeze, many borrowers many have seen their loan accounts moved to a new loan servicer.
- After reviewing their loan account, borrowers should examine their ability to restart their loan payment. If unable to resume making their payment, borrowers should investigate eligibility for one of the many repayment-sensitive options, including:
- Graduated loan payments
- Income-Driven (IDR) or Income Contingent (ICD)
- Temporary interest-only payments.
- Borrowers can log in to their account at studentaid.gov or speak with their loan servicer to determine their options.
Borrowers on a qualified Public Services Loan Forgiveness Program (PSLF) should contact their servicer to restart their loan payment and verify the official completion date (which may have already occurred.
Borrowers may be eligible for one-time Payment Count Adjustments towards Income-Driven Repayment and Public Service Loan Forgiveness Program repayment timelines.
Other Things to Consider
Taking advantage of private education loan refinancing can provide relief from high-interest rates or the need to lower monthly payments. But, borrowers should “check their rate” and get pre-qualified. Comparing rates and benefits is essential before refinancing one’s federal loans to a private education loan program. Switching federal loans to a private relationship will eliminate all future government benefits. Borrowers can refinance current private loans while leaving their federal loans alone. Contact an established education loan refinancing lender for a rate quote.
New employer-employee programs are coming online every day. These programs allow employers to contribute to an employee’s student loan payment through various tax-free benefits typically reserved for advanced education credentials. Resources can be redirected to an employee’s student loan repayment and college planning needs using these and other critical financial resources. Programs can be instrumental to an organization’s efforts to hire and retain talent. Consult with your HR Department to determine the benefits your organization offers.
Always pay off high-interest-rate consumer debt first, including credit cards and loans. Student loan consolidation and private education loan refinancing can be an option.
Consult with your financial planner before significantly changing your retirement and financial profile. Beware of tax implications.
We will be monitoring developments from Washington and across the higher education landscape. Stay Connected to stay up-to-date.
Tom O’Hare is the founder of Get College Going, author of “Pivotal College Planning Workbook”, and a partner of Pivotal College Years. As an education advisor, Tom works to guide parents, students, and employers through the complexity of planning and funding education pathways after high school. He
frequently writes about higher education access, completion, and affordability.
