Graduate school is when you’re supposed to work toward your future. With the right financial planning, you can ensure that your education doesn’t break the bank. One way to do this is by refinancing graduate student loans. Here are four reasons why:
To consolidate loans with different interest rates
Consolidation is a wise choice for any student with multiple loans. Consolidating your loans into one loan can lower your monthly payments, help you qualify for more desirable loan terms and interest rates, and simplify the repayment process.
Consolidating or refinancing is for more than just consolidating/refinancing graduate school student loans. It also applies to consolidating undergraduate student loans too (although this isn’t recommended because of the higher interest rates).
Lantern by SoFi experts says, “Many lenders let you prequalify online without impacting your credit score. It means the creditor has done a basic review of your creditworthiness to know if you’re ready to qualify for a loan.”
To lock in a lower interest rate
One of the best reasons to refinance graduate loans is to lock in a lower interest rate. The federal government offers borrowers with a good credit score access to many low-interest loan options, including the Federal Direct PLUS Loan. If you have good credit, take advantage of these lower rates and save yourself some money over the life of your loan.
Refinancing graduate loans can be an excellent way to save money on interest payments and pay off your debt faster than if you were making payments on your current loan.
To save with biweekly payments
If your loan servicer offers biweekly payment plans, consider making them. You’ll pay less interest over the life of the loan and save money in the long run. That’s because you’re making 26 payments per year instead of 12 payments per year.
You’re also spreading out your monthly payment over two months instead of one, so there’s more time for interest to accrue and compound itself each month—meaning extra costs for you! But if you can afford to pay more than what’s required on a monthly basis (in other words, if you have some money leftover after allocating your income appropriately), then by all means, go with a biweekly plan where possible.
To free up more cash for other financial goals
As you can see, there are many reasons to refinance graduate loans. The extra cash you’ll have available to you can help you achieve your financial goals and make life more comfortable. If you still need to figure out what those goals are, that’s okay too! Just use the extra money as a safety net for today, then start planning for tomorrow once your finances are in order.
The bottom line is that refinancing your graduate loans can save you money, improve your credit score and help you get out of debt faster. If you have questions about whether refinancing is right for you, please read online for more information. You will surely gain some more knowledge then.