Should I Refinance ALL Of My Loans?

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Student loan refinancing is the preferred solution for borrowers looking for a way to lower their monthly payments, get a lower interest rate, or otherwise renegotiate the terms of their loans. This can be a truly attractive option, especially for those who have managed to build their credit history. However, despite the many benefits of refinancing, it’s not always advisable to jump in and refinance all of your student loans.

Which Loans Should I Refinance?

When deciding which loans to refinance, the most important thing you should consider is the interest rates on your current loans vs that of the new refinanced loans. The rate the lender sets for your refinanced loan will depend on several factors, the main one being your credit score. A good credit score will qualify you for a lower rate of interest.

The best way to decide which loans you should refinance is to first get a quote by private lenders for your refinanced loan, then only refinance those loans that have a higher interest rate than the one being offered by the lender.

Parent PLUS and Grad PLUS loans typically have the highest interest rates, so you are likely to benefit most from refinancing these loans first.

Refinancing Can Lose Federal Loan Benefits

One drawback to refinancing is the fact that you’ll lose any federal benefits with your government-issued loans. Since federal loans can only be refinanced through private lenders, you’ll lose access to loan forgiveness programs or certain repayment plans.

The loans that should ideally be refinanced last are those that are eligible for forgiveness under certain circumstances. These loans should only be refinanced if you have absolutely no other option.

Explore Your Options

Before settling on anything, do your homework. Shop around with different lenders to discover what interest rates you might earn. Be sure to weigh the pros and cons of refinancing your federal loans with a private lender. Refinancing can be a big help, but you should be fully informed of your options before committing.

College Raptor Staff

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