Refinance Government Student Loans
| There are several benefits of refinancing or consolidating a student loan. Apart from reduced interest rates and monthly mortgage payments, refinanced student loans also help in improving the credit scores. Refinanced student loans significantly reduce the worries of keeping track of various loans and their repayment dates. |
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Refinancing a student loan is an efficient debt management solution which is applicable to government and private student loans.
Government loans are low-interest rate federal loans such as Stafford loans offered to students for the purpose of providing financial help to their education. Government loans have the option of deferring payment of interest and principal till the end of graduation. However, repayment of these loans could sometimes be difficult once the student has graduated. A viable solution for this problem is refinancing. Refinancing government student loans could be broadly categorized into four different options.
- Standard repayment plans are fixed-term plans where the interest rate on the loan is fixed and repayment period is shorter. Borrowers are required to pay back their loan in the form of monthly payment with 10 years.
- Extended repayment plans where the loan repayment period ranges between 12-30 years. This repayment option is particularly beneficial to students who are having huge debts. As the repayment period is longer, the amount paid towards interest is more.
- Graduated repayment plans where the monthly payments are low during the initial years and are gradually increased at the end of every two years.
- Income Contingent Repayment (ICR) plans where the monthly payments are determined based on the income of the family and the loan amount.
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