student loan refinance and consolidation
Posted : November 23, 2015
Last Updated : November 23, 2015
Once you graduate from college and begin dealing with the pressure of repaying your student loans, you may want to consider student loan refinance and consolidation. Refinancing and consolidating can help keep your life simple when it comes to paying off your student loan debt.
What is Student Loan Refinance and Consolidation?
Consolidation has different implications depending on whether a private or federal lender is offering the service. With most private lenders, student loan refinancing and consolidation is the process of combining one or more federal and private student loans into a single loan with new terms, including a new (and hopefully lower) interest rate, monthly payment amount, and/or repayment length. In essence, if you are consolidating with a private lender, you are also refinancing those loans. With the Federal Student Loan Consolidation program, only your eligible federal loans are combined into one payment (private student loans are not eligible), and it uses the weighted average interest rate of the loans being combined rather than the current market interest rates.
Benefits of Private Lender Refinance and Consolidation
Consider the following potential benefits of student loan refinancing and consolidation through a private lender to help decide if this option is right for you:
Lower your monthly payment. If you have student loan debt, refinancing and consolidating your student loans may allow you to extend the repayment period, and/or lower your interest rate, thereby allowing you to lower the amount of your monthly payment. Keep in mind that a longer repayment term also means you pay more interest over the life of the loan, but you can always pay more on your loan whenever possible with no prepayment penalties to chip away at that balance more quickly.
Shorten your loan term. If you're comfortable with your current payment amount or can even afford to contribute a little more, you may want to consider shortening the term of your loan. Shorter loan terms often generate lower interest rates, allowing you to save more money in interest over the life of the loan.
Simplify your loan payment. When you refinance and consolidate multiple student loans, you only have to make one loan payment each month to one company. This would be beneficial if you currently make payments on multiple student loans each month to federal and private lenders. Just keep in mind that depending on your credit score and the interest rates you have on your current loans, it's possible that the new loan may have a higher monthly payment or interest rate.
Get a lower interest rate. Depending on your credit score and financial situation, you may be able to obtain a lower interest rate with student loan refinancing and consolidation. This could reduce the amount of your monthly payments or save you money over the repayment term of your loan.
Get personalized customer service. If you are unhappy with the level of student loan servicing you are currently provided, refinancing and consolidation gives you the opportunity to switch to a company that has an excellent customer service record.
Release a co-signer from your student loan. By refinancing and consolidating your student loans, you may be eligible to release your co-signer, such as a parent. This could allow co-signers to improve their credit scores and gain access to new lines of credit for the purchase of a new home, car, etc.
Is Student Loan Refinance and Consolidation Right for You?
Refinancing and consolidating your education loans may be the right decision for you if you need more money in your pocket right now because it can extend the life of your loan and potentially lower your current monthly payments (depending on the amount of debt you have). If you don't necessarily need the extra cash and just want the simplicity of a single monthly payment, you can still use any extra money you save to pay down the principal faster without any penalties.
If you only have a couple more years or a few thousand more dollars to go until you pay off your student loans, refinancing and consolidating may be more hassle than it's worth. Switching to a new lending institution may eliminate any benefits you've earned over the years, so thoroughly investigate how refinancing and consolidating your student loans will change the terms of your existing student loans.
A Smarter Way to Refinance Your Student Loans
If you decide that student loan refinance and consolidation through a private lender is the right decision for you, consider refinancing and consolidating through ELFI, an education loan finance program offered by SouthEast Bank, a trusted partner of Edsouth Services and eCampusTours. With ELFI student loan finance products from SouthEast Bank, you may be able to:
Choose from flexible options for managing education debt
Have variable and fixed-rate refinancing options to get you the lowest interest rate possible
Conveniently combine multiple loans into a single loan with one payment
Free up your cash flow for other expenses with extended payment options
Take advantage of ELFI's highly competitive rates by selecting a shorter repayment term
For more information about ELFI and to determine which term is right for you, visit elfi.com or call their student loan refinance specialists at 1-844-601-ELFI (3534).