Best Student Loan Consolidation & Refinancing
Consolidation is when an you obtains a fresh loan to repay existing debts and liabilities. Generally, multiple small debts are combined into one loan with more favourable repayment terms such as lower interest rates and affordable EMIs.
The biggest news about student loans is that student loan cancellation will now be tax-free. In the new stimulus package — the American Rescue Plan of 2021 — Congress included a provision that would make student loan cancellation tax-free through December 31, 2025.
Refinancing means getting a new (lower) interest rate on an existing loan. Consolidating student loans means combining multiple loans into one monthly payment. Federal Student loans can only be consolidated. Private loans can be consolidated and refinanced together.
You can consolidate loans through the U.S. Department of Education. The consolidation will give you one monthly payment with a new loan term and fixed interest rate that is the weighted average of your previous rates.
Loan Consolidation simplifies the repayment process and allows you to keep a tab on your overall debts efficiently.
Top Student Loan Refinance Companies :
- Overall: RISLA
- Refinancing Marketplace: Credible
- Rates: Splash Financial
- Benefits: SoFi
- No Fees: Discover Student Loans
- Repayment Options: CommonBond
- Student Who Didn’t Graduate: Citizens Bank
- Spousal Loans: PenFed Credit Union
- Parent Loans: Laurel Road
Best Way To Consolidate Debt Without Hurting Credit :
The smartest strategy to pay off credit card debt is through credit card consolidation. When you consolidate credit card debt, you combine your existing credit card debt into a single loan with a lower interest rate
Here are 7 Best ways to consolidate debt without hurting your credit much :
- Ask for Help from Family/Friends:
- Taking a Personal Loan to Cover the Debt:
- Take a Home Equity Loan.
- Balance Transfer Credit Card.
- Cash Out Auto Refinance.
- Retirement Account Loans.
- Using a Debt Management Plan with a Certified Credit Counseling Agency.
3 Best Student Loan Refinance Options :
While student loan experts say refinancing isn’t for everyone, it’s one way to lower an interest rate on a student loan and reduce monthly payments. When you refinance student loans, a private lender pays off your existing loans and replaces them with one loan with a new interest rate and repayment schedule
- Earnest : Earnest offers rates that are among the lowest in the industry, and they are known for offering incredibly flexible repayment terms, plus added protections and top-notch customer service. Earnest also gets extra points for offering lifetime loan servicing, meaning your loans won’t be re-sold to a third party.
- Credible : Credible operates as a comparison tool for student loan refinance options. In just a few minutes, students can get rate offers and compare loan terms from multiple lenders.
- LendKey : LendKey offers a network of not-for-profit local and regional credit unions and community banks for students looking to refinance their student loans
“Refinancing is mostly for the older side – late 20s and 30s – so you’re kind of established in your financial situation, as opposed to being 23 and straight out of college,” says Erin Lowry, author of the upcoming book “Broke Millennial.”
The Refinancing federal student loans means you turn them private. As a result, you lose access to federal programs, such as income-driven repayment and Public Service Loan Forgiveness.
Interest rate increases: The yield in the 10-year Treasury rate has almost doubled since July to a rate of around 2.6 percent in mid-December.
“We have already seen some lenders increase their rates as a result of what we refer to as the ‘Trump effect’ on the 10-year Treasury,” says Stephen Dash, CEO and founder of Credible.com.
More innovative refinancing products: One product that’s in its infancy is using home equity as a cash-out refinance to pay down student loans and receive a lower mortgage rate, loan experts say.
An increasing number of lenders in the space: Student loan borrowers can expect to see more lenders enter the student loan refinance market, experts says. With a competitive market, they say consumers will have more choice and tailored options
How do I know if student loan refinancing is right for me?
The three items to consider when deciding whether to refinance are financial history, interest rates and repayment goals.
First identify whether you qualify; of the lenders that disclosed their minimum credit scores to Forbes Advisor, all had a minimum credit score of 650 or higher. You’ll also generally need to show stable income, a low debt-to-income ratio and a history of on-time debt payments