As you accumulate more and more student loan debt throughout your college experience, you will begin to receive offers to refinance student loans. You may wonder if this is as good as it sounds. Although it may make sense for you to refinance after you have already gotten all of your education out of the way, there are many other times that it can be beneficial to you.
What Type of Loans Should I Refinance?
You should refinance student loans if you have mostly unsubsidized or private student loans. Subsidized student loans should not be refinanced as a rule, unless you are out of school and interest has begun to accumulate. When you refinance subsidized loans, the interest subsidy ends and you become responsible for paying the interest on those loans.
Pay Attention to Your Interest Rates
Another factor in determining when to refinance student loans is the current interest rate. If the interest rate you are currently paying is much more than the average interest rate today, you can greatly benefit from refinancing now. This is especially true if you can lock in a fixed interest rate lower than the fixed or adjustable rate of your current loans. You will save a lot of money in the long run. Your payments will suddenly drop in number and amount, making your student loan debt much easier to manage now and in the future.
Refinance While Still in School or Wait Until You’re Done?
You do not have to wait until you graduate to refinance your student loans, and in some cases it may be unwise to do so. However, if you do not consolidate or refinance by the time you graduate, you should definitely refinance student loans as soon as you have your degree in hand. By this point, you will have around a dozen or more student loans, all at different interest rates and payment terms. Refinancing will consolidate these into one loan, which in addition to saving you money will make your student loan debt easier to manage as you enter the work force.