What Are the Benefits of Refinancing Student Loans?

Student loans can be a huge burden on borrowers. Many people associate student loan debt with young people; but this doesn’t tell the full story. About 30 percent of those who carry a student loan balance are age 40 or older, and five percent are 60 and up. This means student loan debt can stick around for a long time, eating into someone’s saving potential. Refinancing is one way borrowers can potentially improve their situation. But what are the benefits of refinancing student loans? What Is a Student Loan Refinance?You’ve probably at least heard of the concept of refinancing before. Though, not everyone knows the precise definition of this term, despite it being commonplace. So, what is refinancing student loans? The basic idea behind refinancing student loans is that you’re getting a new loan that pays off and takes the place of your old one. This can be done with basically all kinds of debt. As you might guess, people don’t just do this for the fun of it. There are certain benefits to refinancing student loans.  What Are the Benefits of Refinancing Student Loans?You won’t want to waste time on any financial products that don’t serve your best interests. Therefore, you need to be able to see a substantive reason in order to pursue a student loan refinance. These are some of the benefits of refinancing student loans: 

• You can lower your interest rate – Probably the most-cited benefit of student loan refinancing is that you can lower your interest rate. The interest rate is an important piece of your loan because it determines how much you’ll pay back. While you borrow a certain amount, the lender wants to get some kind of reward for extending you this money. Their payment comes in the form of interest. Since student loan interest accrues on the current balance, getting the lowest possible rate can make a big difference over time. 
• You can easily find the best student loan refinancing deals – For those who are confident they want to refinance their student loans; there are some services that can help in the process. Juno connects borrowers with the absolute best student loan deals available. Instead of lending money themselves, Juno takes bids from a huge pool of lenders that want access to Juno’s member base. By only accepting a flat fee from the lender, Juno can provide a non-biased opinion for getting people the best deals. This service is totally free for the consumer.
• Refinancing student loans doesn’t cost you anything – When you refinance most kinds of loans, you’re going to have to pay an origination fee. Being able to improve the interest rate or repayment term of your student loan through refinancing for free is a great tool for borrowers. 

 It’s easy to see that refinancing student loans comes with some nice benefits. But there are some other factors you should take into consideration before refinancing as well.  Is There Anything Else to Know About Refinancing Student Loans? While there’s no doubt refinancing can be highly beneficial for student borrowers, there are some individuals who might not want to alter their loans too much. The key thing to note is that a student loan refinance can only be done through a private lender. This can have some major implications for those who have federal student loans.  There’s absolutely nothing wrong with private lenders. They, however, can’t offer the same kinds of benefits and protections as the federal government. These include things like a wide range of student debt repayment plans—including income-driven repayment. Furthermore, loans that come from the federal government have the potential for forbearance for forgiveness, which isn’t the case for private loans. The bottom line is that many who have highly desirable federal student loans might not want to give them up. At the same time, even some federal loans are debatably not as good at refinancing to a private loan with a much lower interest rate. Those with Direct PLUS loans, or those who already have private loans, should strongly consider if refinancing is in their best interest.  Student loan refinancing can be a beneficial process for those who are able to fully take advantage of it. Understanding the advantages of a student loan refinance can help guide you to the right decision.